Internal Revenue Bulletin 2009-38 (PDF rendition): IRS Notices

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Bulletin No. 200
9-38
September 21, 20
09
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
INCOME TAX
Rev. Rul. 2009–25, page 365.
E&P determinations for section 264(a)(4) disallowed in-
terest.This ruling addresses when interest that is disallowed
as a deduction under section 264(a)(4) of the Code is taken
into account in determining earnings and profits.
Rev. Rul. 2009–26, page 366.
Single insured-reinsurance.This ruling presents two situ-
ations to illustrate the application of insurance principles to
whether a reinsurance arrangement is sufficient for the assum-
ing company to qualify as an insurance company under sec-
tion 831(c) of the Code. The guidance holds that 1) where the
only business of the assuming company is the assumption of a
block of business that itself constitutes insurance, the assum-
ing company qualifies as an insurance company and 2) where
the assuming company enters into agreements with various in-
surance companies, an agreement with one ceding company
that involves the risks of a single policyholder should be treated
as reinsuring risks such that the assuming company qualifies
as an insurance company.
Notice 2009–73, page 369.
2009 Section 43 inflation adjustment factor.This no-
tice announces the inflation adjustment factor and phase-out
amount for the enhanced oil recovery credit for taxable years
beginning in the 2009 calendar year. The notice also contains
the previously published figures for taxable years beginning in
the 1991 through 2008 calendar years.
Notice 2009–74, page 370.
2009 marginal production rates.This notice announces
the applicable percentage under section 613A of the Code to
be used in determining percentage depletion for marginal prop-
erties for the 2009 calendar year.
Rev. Proc. 2009–39, page 371.
This procedure amplifies, clarifies, and modifies Rev. Proc.
2008–52, which provides procedures for taxpayers to obtain
automatic consent for the changes in method of accounting
described in its APPENDIX. This procedure also clarifies and
modifies Rev. Proc. 97–27, as amplified and modified by
Rev. Proc. 2002–19, as amplified and clarified by Rev. Proc.
2002–54, and as modified by Rev. Proc. 2007–67, which pro-
vides the general procedures for obtaining non-automatic con-
sent for changes in method of accounting. Rev. Procs. 97–27
clarified and modified, 2005–63 modified, and 2008–52 am-
plified, clarified, and modified.
Announcement 2009–67, page 388.
This announcement corrects certain procedures in Rev. Proc.
2009–39 for a taxpayer that has a refund or credit under review
by the Joint Committee on Taxation and that wants to obtain the
Commissioner’s consent to a change in method of accounting
under Rev. Proc. 2008–52 (automatic change) or Rev. Proc.
97–27 (non-automatic change). Rev. Proc. 2009–39 modi-
fied.
Announcements of Disbarments and Suspensions begin on page 388.
Finding Lists begin on page ii.

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a’s taxpayers top quality service by helping them
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d meet their tax responsibilities and by applying
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Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are compiled semiannually into Cumulative Bulletins,
which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement are not published; however, statements of internal
practices and procedures that affect the rights and duties of
taxpayers are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers
or technical advice to Service field offices, identifying details
and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B, Leg-
islation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Secre-
tary (Enforcement).
Part IV
.—Items of General Interest.
This par
t includes notices of proposed rulemakings, disbar-
ment an
d suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The c
ontents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S.Government Printing Office, Washington, DC 20402.
September 21, 20092009–38 I.R.B.

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 101.—
Certain
Death Benefit
s
This revenue r
uling addresses when interest that is
disallowed as
a deduction under section 264(a)(4) of
theCodeistak
en into account in determining earn-
ings and prof
its. See Rev. Rul. 2009-25, page 365.
Section 264.—Certain
Amounts Paid in Connection
With Insurance Contracts
This revenue ruling addresses when interest that is
disallowed as a deduction under section 264(a)(4) of
the Code is taken into account in determining earn-
ings and profits. See Rev. Rul. 2009-25, page 365.
Section 312.—Effect on
Earnings and Profits
26 CFR 1.312–6: Earnings and profits.
(Also §§ 101, 264.)
E&P determinations for section
264(a)(4) disallowed interest.This ruling
addresses when interest that is disallowed
as a deduction under section 264(a)(4) of
the Code is taken into account in deter-
mining earnings and profits.
Rev. Rul. 2009–25
ISSUE
When is interest that is disallowed as a
deduction under § 264(a)(4) of the Inter-
nal Revenue Code (“Disallowed Interest”)
taken into account in determining earnings
and profits?
FACTS
A,ani
ndividual, holds a paid-up life in-
sura
nce contract on his own life. Upon the
deat
hofA, the death benefit under the con-
trac
t ($500) is payable to the beneficiary
name
d in the contract.
Xis a
calendar year subchapter C cor-
pora
tion unrelated toA. On the first day
of Ye
ar 1,XpurchasesA’s life insurance
cont
ract for $100 in a transaction that is
not
described in § 101(a)(2)(A) or (B), and
nam
es itself the beneficiary under the con-
tra
ct.
On t
he first day of Year 1,Xborrows
$10
0 at seven percent simple interestper
annumto purch
ase the life insurance con-
tract. The int
erest on the loan is uncondi-
tionally paya
ble at the end of Year 1 and
Year 2 and the
interest was in fact paid at
the end of Yea
r 1 and Year 2. But for its
disallowanc
e under § 264(a)(4),Xcould
deduct seven
dollars of interest on the loan
in both Year
1 and Year 2 under § 163.
Other than t
he initial purchase price, the
interest on
the loan is the only amountX
incurs in co
nnection with the contract.
Adies on the
first day of Year 3, and
Xreceives t
he $500 death benefit under
the life in
surance contract. Pursuant to
§101(a)(2
),Xincludes $386 in gross
income ($5
00 (death benefit) - ($100
(amount pa
id for the contract) + $14 (Dis-
allowed In
terest deductions in Year 1 and
Year 2)))
.
LAW AND AN
ALYSIS
Section 1
01(a)(1) provides that except
as otherw
iseprovidedin§§101(a)(2),
101(d), 1
01(f), and 101(j), gross in-
come does
not include amounts received
(whethe
r in a single sum or otherwise)
under a l
ife insurance contract, if such
amounts
are paid by reason of the death of
the insu
red.
Section
101(a)(2) generally provides
that in t
he case of a transfer for valuable
conside
ration, by assignment or otherwise,
of a lif
e insurance contract or any interest
therei
n, the amount excluded from gross
income
by § 101(a)(1) shall not exceed an
amount
equal to the sum of the actual value
of such
consideration and the premiums
and “o
ther amounts” subsequently paid by
the tr
ansferee. The term “other amounts”
inclu
des interest paid or accrued by the
trans
feree on indebtedness with respect to
the co
ntract or any interest therein if such
inter
est paid or accrued is not allowable as
aded
uction by reason of § 264(a)(4).
Sect
ion 163(a) generally provides that a
dedu
ction is allowed for all interest paid or
accr
ued within the taxable year on indebt-
edne
ss.
Sect
ion 264(a)(4) generally provides
that
no deduction shall be allowed for
any i
nterest paid or accrued on any in-
debt
edness with respect to 1 or more life
ins
urance policies owned by the taxpayer
covering the l
ife of any individual, or any
endowment or a
nnuity contracts owned by
the taxpayer c
overing any individual.
Earnings and p
rofits are a measure of
economic inco
me, or a corporation’s ca-
pacity to pay
dividends.See e.g.,S.Rep.
No. 169, Vol.
1, 98th Cong., 2d Sess.,
198 (1984). “
In general, the computa-
tion of earni
ngs and profits of a corpora-
tion . . . is b
ased upon reasonable ac-
counting co
ncepts that take into account
the economi
c realities of corporate trans-
actions as w
ell as those resulting from the
applicati
on of tax law. Thus, losses and
expenses t
hat are disallowed as a deduc-
tion for Fe
deral income tax purposes, char-
itable con
tributions in excess of the limi-
tation pro
vided therefore [sic], and other
items tha
t have actually depleted the as-
sets of th
e corporation, even though not
reflecte
d in the income computations, are
allowed a
s deductions in computing earn-
ings and p
rofits.” Rev. Rul. 75–515,
1975–2 C
.B. 117,obsoleted byRev. Rul.
2003–99
, 2003–2 C.B. 388 (holding cod-
ified in
§312(l)).See alsoRev. Rul.
71–165,
1971–1 C.B. 111 (“An expense
of an ac
crual basis corporation that under
the Cod
e is never an allowable deduction
in comp
uting taxable income usually is re-
flecte
d in earnings and profits in the year
to whic
h it is attributable, except where the
Code s
pecifically provides that the corpo-
ratio
n’s earnings and profits shall not be re-
duced
by any amount which is not allow-
able a
s a deduction in computing its tax-
able i
ncome.”); Rev. Rul. 77–442,1977–2
C.B.
264 (quoting Rev. Rul. 71–165 and
Rev.
Rul. 75–515). Because Disallowed
Inte
rest depletes the assets of a corporation
at th
etimetheinterestwouldbeallowed
as a d
eduction but for its disallowance un-
der §
264(a)(4), earnings and profits are
als
o reduced in that year. Accordingly,X
in b
oth Year 1 and Year 2 reduces its earn-
ing
s and profits by the seven dollars of Dis-
all
owed Interest.
In Y
ear 3,Xreceives the $500 death
ben
efit under the life insurance contract
pur
chased fromAand, under § 101(a)(2),
ex
cludes from grossincome an amount
re
presenting the $14 of Disallowed Inter-
es
t.
2009–38 I.R.B.365September 21, 2009

Items excluded from gross income gen-
erally increase earnings and profits.See
§ 1.312–6(b). Furthermore, even though
the Disallowed Interest in Year 1 and Year
2 actually depletes the amount of earnings
available for distribution,Xpreviously re-
duced its earnings and profits by the Disal-
lowed Interest in each of those years. Sec-
tion 1.312–6(d) (“A loss sustained for a
year before the taxable year does not af-
fect the earnings and profits of the taxable
year.”); Rev. Rul. 76–299, 1976–2 C.B.
211 (“A capital loss carryover does not af-
fect the earnings and profits of the taxable
year in which it is used because the loss
giving rise to the carryover is reflected in
the accumulated earnings and profits at the
beginning of the taxable year of the carry-
over”). Reducing earnings and profits in
Year 3 by the amount of Disallowed Inter-
est taken into accountunder § 101(a)(2)
would cause an unwarranted double re-
duction of earnings and profits and, there-
fore, is not permitted.See,e.g.,Bangor &
Aroostook Railroad Co. v. Commissioner,
16 T.C. 578, 586 (1951),aff’d193 F.2d
827 (1
st
Cir. 1951).
AlthoughXin Year 3 includes in its
gross income only $386 of the $500 death
benefit because of the applicable offsets
under § 101(a)(2) (including the $14 of
Disallowed Interest),Xincludes $400
($500 (the death benefit) less $100 (the
amount X pays for the contract)) in its
earnings and profits in Year 3.
HOLDING
Disallowed Interest under § 264(a)(4)
reduces earnings and profits for the taxable
year in which the interest would have been
allowable as a deduction but for its disal-
lowance under § 264(a)(4). It does not fur-
ther reduce earnings and profits when the
death benefit is received under a life insur-
ance contract.
DRAFTING INFORMATION
The principal author of this revenue rul-
ing is Russell P. Subin of the Office of
Associate Chief Counsel (Corporate). For
further information regarding this revenue
ruling, contact Russell P. Subin at (202)
622–7790 (not a toll-free call).
Section 831.—Tax on
Insurance Companies
Other than Life Insurance
Companies
Single insured-reinsurance.This rul-
ing presents two situations to illustrate
the application of insurance principles
to whether a reinsurance arrangement is
sufficient for the assuming company to
qualify as an insurance company under
section 831(c) of the Code. The guidance
holds that 1) where the only business of
the assuming company is the assumption
of a block of business that itself consti-
tutes insurance, the assuming company
qualifies as an insurance company and
2) where the assuming company enters
into agreements with various insurance
companies, an agreement with one ceding
company that involves the risks of a single
policyholder should be treated as reinsur-
ing risks such that the assuming company
qualifies as an insurance company.
Rev. Rul. 2009–26
ISSUE
In the situations described below, isZ’s
agreement withIC Ytreated as “reinsuring
risks” underwritten by insurance compa-
nies for purposes of determining whetherZ
is an insurance company within the mean-
ing of § 831(c)?
FACTS
Situation 1.IC YandZare stock corpo-
rations that are licensed and regulated as
insurance companies in all jurisdictions in
whichtheydobusiness.IC Yis an insur-
ance company for federal income tax pur-
poses, subject to tax under § 831(a).
For valid, non-tax business purposes,
IC Yentered into a contract, or treaty, with
Zat the beginning of Year 1. Under the
contract,IC Yagreed to pay toZ90 percent
of all the premiums received with regard to
all the insurance contracts issued byIC Yin
the commercial multiple peril line of busi-
ness in a 10-state region. In exchange,Z
agreed to indemnifyIC Yfor 90 percent of
all the losses under those contracts.IC Y
remained directly liable to its policyhold-
ers. A contract of this type is sometimes
referred to as indemnity reinsurance.
During Year 1, insurance contracts that
IC Yentered into with 10,000 unrelated
policyholders were subject to the contract
betweenIC YandZ.Zpossessed adequate
capital to fulfill its obligations under the
contract, and in all respects operated at
arms-length in its transaction withIC Yand
in accordance with the applicable require-
ments of state law. The contract withIC Y
wasZ’s only business during Year 1.
Situation 2. The facts are the same
as in Situation 1, except that the contract
betweenIC YandZcoveredonlythe
risks ofX, a policyholder ofIC Yunre-
lated toZ. In addition,Zassumed risks
of policyholders unrelated toXbut in the
same line of business through contracts
with other insurance companies. The con-
tracts withIC Yand with other insurance
companies wereZ’s only business dur-
ing Year 1. HadZassumed these risks
by entering into contracts with each of
the original policyholders (includingX)
directly, those contracts would have qual-
ified as insurance contracts for federal
income tax purposes, andZwould have
qualified as an insurance company for fed-
eral income tax purposes.See,
e.g.,Rev.
Ruls. 2005–40, 2005–2 C.B. 4; 2002–91,
2002–2 C.B. 991; 2002–90, 2002–2 C.B.
985; and 2002–89, 2002–2 C.B. 984.
LAW
Section 831(a) of the Internal Revenue
Code provides that taxes, computed as pro-
vided in § 11, are imposed for each tax-
able year on the taxable income of each
insurance company other than a life insur-
ance company. Section 831(c) provides
that, for purposes of § 831, the term “in-
surance company” has the meaning given
to such term by § 816(a). Under § 816(a),
the term “insurance company” means “any
company more than half the business of
which during the taxable year is the issu-
ing of insurance or annuity contracts or the
reinsuring of risks underwritten by insur-
ance companies.”
Neither the Code nor the regulations
define the terms “insurance” or “insur-
ance contract.” The Supreme Court of
the United States has explained that in
order for an arrangement to constitute in-
surance for federal income tax purposes,
both risk shifting and risk distribution
must be present.Helvering v. Le Gierse,
312 U.S. 531 (1941). The risk transferred
must be risk of economic loss.Allied
Fidelity Corp. v. Commissioner, 572 F.2d
September 21, 20093662009–38 I.R.B.

1190, 1193 (7
th
Cir. 1978). The risk must
contemplate the fortuitous occurrence of
a stated contingency,Commissioner v.
Treganowan, 183 F.2d 288, 290–91 (2d
Cir. 1950), and must not be merely an
investment or business risk. Rev. Rul.
2007–47, 2007–2 C.B. 127. In addition,
the arrangement must constitute insurance
in the commonly accepted sense.See,
e.g.,OceanDrilling&ExplorationCo.
v. U.S., 988 F.2d 1135, 1153 (Fed. Cir.
1993);AMERCO, Inc. v. Commissioner,
979F.2d162(9
th
Cir. 1992).
Risk shifting occurs if a person facing
the possibility of an economic loss trans-
fers some or all of the financial conse-
quences of the potential loss to the insurer,
such that a loss by the insured does not af-
fect the insured because the loss is offset
by a payment from the insurer. Risk dis-
tribution incorporates the statistical phe-
nomenon known as the law of large num-
bers. Distributing risk allows the insurer to
reduce the possibility that a single costly
claim will exceed the amount taken in as
premiums and set aside for the payment of
such a claim. By assuming numerous rel-
atively small, independent risks that occur
randomly over time, the insurer smooths
out losses to match more closely its receipt
of premiums.Clougherty Packing Co. v.
Commissioner, 811 F.2d 1297, 1300 (9th
Cir. 1987).
Courts have recognized that risk dis-
tribution necessarily entails a pooling of
premiums, so that a potential insured is
not in significant part paying for its own
risks.Humana, Inc. v. Commissioner,
881 F.2d 247, 257 (6th Cir. 1989).See
also Ocean Drilling & Exploration Co.,
988 F.2d at 1153 (“Risk distribution in-
volves spreading the risk of loss among
policyholders.”);Beech Aircraft Corp. v.
U.S., 797 F.2d 920, 922 (10th Cir. 1986)
(“[R]isk distributing means that the party
assuming the risk distributes his potential
liability, in part, among others.”) Thus,
purported insurance arrangements that in-
volve an issuer who contracts with only
one policyholder do not qualify as insur-
ance contracts for federal income tax pur-
poses. Rev. Rul. 2005–40.
The Code and administrative guidance
treat reinsurance in a manner similar to in-
surance for many purposes. For example,
gross premiums of both life and non-life
insurance companies include not only pre-
miums on direct business, but also gross
premiums in respect of assumed liabili-
ties under contracts issued by another com-
pany. Section 803(b)(1)(E); Rev. Rul.
77–453, 1977–2 C.B. 236. Consistently,
both life insurance reserves under § 807
and discounted unpaid losses under § 846
include not only reserves and losses on di-
rect business, but also reserves and losses
on liabilities assumed under contracts is-
sued by another company. Furthermore, a
contract that reinsures another contract is
treated in the same manner as the reinsured
contract under § 848(e)(5) for purposes of
computing the amount of specified policy
acquisition expenses that must be capital-
ized and amortized asdeferred acquisition
costs (DAC) under § 848. Most impor-
tantly, both direct insurance and reinsur-
ance business may qualify a taxpayer as
an insurance company under § 816(a) or
§ 831(c), as applicable.But see§845
(granting the Secretary explicit authority
to reallocate, recharacterize, or make other
adjustments with respect to certain reinsur-
ance arrangements, but not referring to di-
rect insurance).
Courts have generally analogized rein-
surance to insurance, as well. For ex-
ample, inOcean Drilling & Exploration
Co., 988 F.2d at 1153 n25, the court noted
that “[d]irect insurance and reinsurance
are both considered insurance,” and in
Cologne Life Reinsurance Co. v. Com-
missioner, 80 T.C. 859, 862 (1983),acq,
1985–2 C.B. viii, the court noted that
“[u]nder [part I of subchapter L], the is-
suance of indemnity life reinsurance is
treated generally as the issuance of life
insurance”, except where specified other-
wise.
InAlinco Life Insurance Co. v. United
States, 373 F.2d 336 (Ct.Cl. 1967), a large
finance company formed a wholly-owed
subsidiary corporation (Alinco), which
qualified as a life insurance company un-
der the laws of Indiana. Customers of the
finance company (borrowers) purchased
credit life insurance from an unrelated in-
surance company, which in turn reinsured
a fixed proportion of those contracts with
Alinco. Even though Alinco reinsured
risksunderwrittenbyonlyoneinsurance
company, those risks aggregated nearly
one billion dollars of business, with a large
number of customers, for which Alinco
was required by the state insurance depart-
ment to maintain reserves. Interpreting
regulatory language that was identical to
what now appears in § 816(a), the court
concluded that Alinco was in the business
of “reinsuring risks” underwritten by in-
surance companies.
In the context of captive insurance,
courts have likewise looked through a
fronting arrangement to analyze whether
the requirements of risk shifting and
risk distribution were met.See, e.g.,
Carnation Co. v. Commissioner,71T.C.
400 (1978),aff’d640 F.2d 1010 (9th Cir.
1981) (concluding that premiums paid
by taxpayer to an unrelated insurer were
not deductible to the extent risks under
the contract were in turn reinsured with
taxpayer’s wholly-owned subsidiary);
Kidde Industries, Inc. v. United States,40
Fed. Cl. 42 (1997).
ANALYSIS
Situation 1
In Situation 1, the contracts issued by
IC Yto 10,000 unrelated policyholders
involved commercial multiple peril risks,
which are insurance risks. The contracts
shifted those insurance risks from those
policyholders toIC Y, and distributed those
risks such that a loss by one policyholder
was not borne, in substantial part, by the
premiums paid by that policyholder. The
contracts were insurance in the commonly
accepted sense. The contracts thus were
insurance contracts for federal income tax
purposes.
The contract, or treaty, betweenIC Y
andZin turn shifted 90 percent of the
risks under those insurance contracts from
IC Y, an insurance company, toZ.Asin
Alinco Life, the transaction shifted insur-
ance risks which were funded by reserves
and constituted reinsurance in the com-
monly accepted sense. As toZ,therisks
of each original policyholder were still dis-
tributed such that a loss by one such poli-
cyholder was not borne, in substantial part,
by the premiums paid by that policyholder.
Hence, by entering into its arrangement
withIC Y,Zwas “reinsuring risks” within
the meaning of §§ 816(a) and 831(c).
Because, under the arrangement with
IC Y,Zwas treated as “reinsuring risks”
underwritten by an insurance company,
and the arrangement represented more
than half the business ofZfor Year 1,Z
qualified as an insurance company within
the meaning of § 831(c), even though the
2009–38 I.R.B.367September 21, 2009

contract withIC YwasZ’s only business
for the year.
Situation 2
In Situation 2, the facts are the same
as in Situation 1, except that the arrange-
ment betweenIC YandZshifted toZonly
the risks ofX, a policyholder ofIC Yunre-
lated toZ. Zassumed additional risks of the
same line under contracts with other insur-
ance companies in the same line of busi-
ness.
The risks assumed byZunder the ar-
rangements withIC Yandwithotherin-
surance companies were insurance risks.
Those risks were shifted from the original
policyholders (includingX) to the primary
insurers (includingIC Y),andinturntoZ.
As toZ, the risks of each original policy-
holder (includingX) were distributed such
that a loss by one policyholder was not
borne, in substantial part, by the premiums
paid by that policyholder. Hence, by enter-
ing into its arrangements with the primary
insurers (includingIC Y),Zwas “reinsur-
ing risks” underwritten by insurance com-
panies within the meaning of §§ 816(a) and
831(c).
Because under the arrangements with
the primary insurers (includingIC Y)Z
is treated as “reinsuring risks” underwrit-
ten by insurance companies, and those ar-
rangements represented more than half the
business ofZfor Year 1,Zqualified as an
insurance company within the meaning of
§ 831(c).
HOLDINGS
In Situation 1,Z’s agreement with
IC Yis treated as “reinsuring risks”
underwritten by an insurance company
because, even though the agreement was
Z’s only business during Year 1, the
requirement of risk distribution was still
met from the standpoint ofZas to each
original policyholder. Accordingly,Zwas
an insurance company within the meaning
of § 831(c).
In Situation 2,Z’s agreement with
IC Yis treated as “reinsuring risks”
underwritten by insurance companies
because, even though the agreement
covered only the risks of a single
policyholder,Zassumed sufficient risks
under agreements with other insurance
companies in Year 1 such that requirement
of risk distribution was met from the
standpoint ofZas to each original
policyholder. Accordingly,Zwas an
insurance company within the meaning of
§ 831(c).
DRAFTING INFORMATION
The principal author of this revenue rul-
ing is John E. Glover of the Office of As-
sociate Chief Counsel (Financial Institu-
tions & Products). For further informa-
tion regarding this revenue ruling, con-
tact Mr. Glover at (202) 622–3970 (not a
toll-free call).
September 21, 20093682009–38 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous
2009 Section 43 Inflation
Adjustment
Notice 2009–73
Section 43(b)(3)(B) of the Internal
Revenue Code requires the Secretary to
publish an inflation adjustment factor.
The enhanced oil recovery credit under
§ 43 for any taxable year is reduced if
the “reference price,” determined under
§ 45K(d)(2)(C), for the calendar year
preceding the calendar year in which the
taxable year begins is greater than $28
multiplied by the inflation adjustment fac-
tor for that year. The credit is phased out
in any taxable year in which the reference
price for the preceding calendar year ex-
ceeds $28 (as adjusted) by at least $6.
The term “inflation adjustment factor”
means, with respect to any calendar year,
a fraction the numerator of which is the
GNP implicit price deflator for the preced-
ing calendar year and the denominator of
which is the GNP implicit price deflator
for 1990.
Because the reference price for the 2008
calendar year ($94.03) exceeds $28 mul-
tiplied by the inflation adjustment factor
for the 2008 calendar year ($42.01) by
$52.02, the enhanced oil recovery credit
for qualified costs paid or incurred in 2009
is phased out completely.
Table 1 contains the GNP implicit price
deflator used for the 2009 calendar year,
as well as the previously published GNP
implicit price deflators used for the 1991
through 2008 calendar years.
Notice 2009–73 TABLE 1
GNP IMPLICIT PRICE DEFLATORS
Calendar YearGNP Implicit Price Deflator
1990112.9 (used for 1991)
1991117.0 (used for 1992)
1992120.9 (used for 1993)
1993124.1 (used for 1994)
1994
126.0 (used for 1995)*
1995107.5 (used for 1996)
1996109.7 (used for 1997)**
1997
112.35 (used for 1998)
1998112.64 (used for 1999)***
1999
104.59 (used for 2000)
2000106.89 (used for 2001)
2001109.31 (used for 2002)
2002110.63 (used for 2003)
2003
105.67 (used for 2004)****
2004
108.23 (used for 2005)
2005
112.129 (used for 2006)
2006116.036 (used for 2007)
2007
119.656 (used for 2008)
2008122.407 (used for 2009)
* Beginning in 1995, the GNP implicit price deflator was rebased relative to 1992. The 1990 GNP implicit price deflator
used to compute the 1996 § 43 inflation adjustment factor is 93.6.
** Beginning in 1997, two digits follow the decimal point inthe GNP implicit price deflator. The 1990 GNP price deflator
used to compute the 1998 § 43 inflation adjustment factor is 93.63.
*** Beginning in 1999, the GNP implicit price deflator was rebased relative to 1996. The 1990 GNP implicit price deflator
used to compute the 2000 § 43 inflation adjustment factor is 86.53.
**** Beginning in 2003, the GNP implicit price deflator was rebased, and the 1990 GNP implicit price deflator used to
compute the 2004 § 43 inflation adjustment factor is 81.589.
Table 2 contains the inflation adjust-
ment factor and the phase-out amount
for taxable years beginning in the 2009
calendar year as well as the previously
published inflation adjustment factors and
phase-out amounts for taxable years be-
ginning in the 1991 through 2008 calendar
years.
2009–38 I.R.B.369September 21, 2009

Notice 2009–73 TABLE 2
INFLATION ADJUSTMENT FACTORS AND PHASE-OUT AMOUNTS
Calendar YearInflation Adjustment FactorPhase-out Amount
19911.00000
19921.03630
19931.07080
19941.09920
1995
1.11600
1996
1.1485
0
19971.17200
19981.19990
19991.20300
20001.20870
2001
1.2353
0
20021.26330
2003
1.2785
0
2004
1.2952
0
2005
1.32660
20061.3743100 percent
20071.4222100 percent
20081.4666100 percent
2009
1.5003
100 percent
DRAFTING INFORMATION
The principal author of this notice
is Brian J. Americus of the Office of
Associate Chief Counsel (Passthroughs
and Special Industries). For further in-
formation regarding this notice, contact
Mr. Americus at (202) 622–3110 (not a
toll-free call).
2009 Marginal Production
Rates
Notice 2009–74
This notice announces the applicable
percentage under § 613A of the Internal
Revenue Code to be used in determining
percentage depletion for marginal proper-
ties for the 2009 calendar year.
Section 613A(c)(6)(C) defines the term
“applicable percentage” for purposes of
determining percentage depletion for oil
and gas produced from marginal proper-
ties. The applicable percentage is the per-
centage (not greater than 25 percent) equal
to the sum of 15 percent, plus one per-
centage point for each whole dollar by
which $20 exceeds the reference price (de-
termined under § 45K(d)(2)(C)) for crude
oil for the calendar year preceding the cal-
endar year in which the taxable year be-
gins. The reference price determined un-
der § 45K(d)(2)(C) for the 2008 calendar
year is $94.03.
Table 1 contains the applicable percent-
ages for marginal production for taxable
years beginning in calendar years 1991
through 2009.
September 21, 20093702009–38 I.R.B.

Notice 2009–74 Table 1
APPLICABLE PERCENTAGE FOR MARGINAL PRODUCTION
Calendar YearApplicable Percentage
1991
15 percent
199218 percent
199319 percent
199420 percent
1995
21 percent
199620 percent
199716 percent
199817 percent
199924 percent
200019 percent
2001
15 percent
2002
15 percent
2003
15 percent
2004
15 percent
200515 percent
2006
15 percent
2007
15 percent
2008
15 percent
2009
15 percent
The principal author of this notice
is Brian J. Americus of the Office of
Associate Chief Counsel (Passthroughs
and Special Industries). For further
information regarding this notice, contact
Mr. Americus at (202) 622–3110 (not a
toll-free call).
26 CFR 601.204: Changes in accounting periods and
in methods of accounting.
(Also: Part I, §§ 118, 162, 167, 168, 263A, 446,
451; 461, 471, 472, 481, 904, 953; 1.118–2, 1.162–3,
1.162–4, 1.446–1, 1.446–5, 1.461–1, 1.471–2.)
Rev. Proc. 2009–39
SECTION 1. PURPOSE
This revenue procedure amplifies, clar-
ifies, and modifies Rev. Proc. 2008–52,
2008–2 C.B. 587, which provides proce-
dures for taxpayers within the scope of
that revenue procedure to obtain automatic
consent for the changes in method of ac-
counting described in its APPENDIX. This
revenue procedure also clarifies and mod-
ifies Rev. Proc. 97–27, 1997–1 C.B. 680,
as amplified and modified by Rev. Proc.
2002–19, 2002–1 C.B. 696, as amplified
and clarified by Rev. Proc. 2002–54,
2002–2 C.B. 432, and as modified by Rev.
Proc. 2007–67, 2007–2 C.B. 1072, which
provides the generalprocedures for ob-
taining the advance consent of the Com-
missioner of Internal Revenue to change a
method of accounting.
SECTION 2. CHANGES TO REV.
PROC. 2008–52
.01Change to section 2.05, Method
changewitha§481(a)adjustment.Sec-
tion 2.05(1) of Rev. Proc. 2008–52 is
clarified to read as follows:
(1)Need for adjustment. Section 481(a)
requires those adjustments necessary to
prevent amounts from being duplicated or
omitted to be taken into account when the
taxpayer’s taxable income is computed
under a method of accounting different
from the method used to compute taxable
income for the preceding taxable year.
When there is a change in method of ac-
counting to which § 481(a) is applied,
income for the taxable year preceding the
year of change must be determined under
the method of accounting that was then
employed, and income for the year of
change and the following taxable years
must be determined under the new method
of accounting as if the new method had
always been used. The § 481(a) adjust-
ment is computed notwithstanding that the
period of limitations on assessment and
collection of tax may have closed on the
years (closed years) in which the events
giving rise to the need for an adjustment
occurred.See Superior Coach of Fla., Inc.
v. Commissioner, 80 T.C. 895, 912 (1983).
In computing the net § 481(a) adjustment,
a taxpayer must take into account all rele-
vant accounts. For example, the § 481(a)
adjustment for a change in the proper time
for deducting salary bonuses under § 461
should reflect any necessary adjustments
for amounts of salary bonuses capitalized
to inventory under § 263A.
Example. A taxpayer that is not required to
use inventories uses the overall cash receipts and
disbursements method and changes to an overall ac-
crual method. The taxpayer has $120,000 of income
earned but not yet received (accounts receivable)
and $100,000 of expenses incurred but not yet paid
(accounts payable) as of the end of the taxable year
preceding the year of change. A positive § 481(a)
adjustment of $20,000 ($120,000 accounts receiv-
able less $100,000 accounts payable) is required as a
result of the change.
.02Changes to section 3.08, Definition
of “under examination.”
(1)Change to section 3.08(1)(a). Sec-
tion 3.08(1)(a) of Rev. Proc. 2008–52 is
modified to read as follows:
(1)In general.
(a) Except as provided in sections
3.08(2), (3), (4), (5) and (6) of this revenue
procedure, an examination of a taxpayer
with respect to a federal income tax return
begins on the date the taxpayer is con-
tacted in any manner by a representative
of the Internal Revenue Service (Service)
for the purpose of scheduling any type of
2009–38 I.R.B.371September 21, 2009

examination of the return. An examination
ends:
***
(2)New sections 3.08(4), 3.08(5) and
3.08(6). Section 3.08 of Rev. Proc.
2008–52 is modified by adding new sec-
tions 3.08(4) and 3.08(5) and is clarified
by adding a new section 3.08(6) to read as
follows:
(4)Certain foreign corporations.Afor-
eign corporation that is not required to file
a federal income tax return is under ex-
amination if any of its controlling domes-
tic shareholders, as defined in § 6.02(3)(b)
of this revenue procedure, is under ex-
amination for a taxable year(s) in which
it was a United States shareholder of the
foreign corporation. For purposes of this
revenue procedure, a foreign corporation
is no longer under examination when the
controlling domestic shareholders are no
longer under examination, as defined in
section 3.08 of this revenue procedure.
(5)Taxpayer before Joint Committee on
Taxation. If an examination of a taxpayer
involves a refund or credit in excess of the
statutory sum that is subject to review by
the Joint Committee on Taxation pursuant
to § 6405, then, for purposes of this rev-
enue procedure, the taxpayer is under ex-
amination while the taxpayer has a refund
or credit under review by the Joint Com-
mittee on Taxation and continues to be un-
der examination until Joint Committee on
Taxation review procedures and any nec-
essary follow-up are complete.SeeRev.
Proc. 2005–32, 2005–1 C.B. 1206.
(6)Taxpayer in Compliance Assurance
Process. For purposes of this revenue
procedure, a taxpayer participating in the
Compliance Assurance Process (CAP) is
considered to be underexamination as of
the date the taxpayer executes the Memo-
randum of Understanding for the CAP.
.03Change to section 3.09, Definition
of “issue under consideration.”Section
3.09 of Rev. Proc. 2008–52 is modified
by adding a new section 3.09(4) at the end
of section 3.09 to read as follows:
(4)Certain foreign corporations.In
the case of a controlled foreign corpora-
tion (CFC) as defined in § 953(c)(1)(B)
or § 957 or a noncontrolled section 902
corporation as defined in § 904(d)(2)(E)
(10/50 corporation), a foreign corpora-
tion’s method of accounting for an item
is an issue under consideration if any of
the corporation’s controlling domestic
shareholders receives notification de-
scribed in section 3.09(1), (2) or (3) that
the treatment of a distribution or deemed
distribution from the foreign corporation,
or the amount of its earnings and profits
or foreign taxes deemed paid, is an issue
under consideration.
.04Change to section 4.02, Scope “In-
applicability”. Section 4.02(1) of Rev.
Proc. 2008–52 is modified and section
4.02(4) of Rev. Proc. 2008–52 is clarified
to read as follows:
(1)Under examination.If,onthedate
the taxpayer (or if section 6.02(3)(b) of
this revenue procedure applies, the desig-
nated shareholder) would otherwise file a
copy of the application with the national
office, the taxpayer is under examination
(as provided in section 3.08 of this revenue
procedure), except as provided in sections
6.03(2) (90-day window), 6.03(3) (120-
day window), 6.03(4) (consent of direc-
tor), 6.03(5) (changes lacking audit protec-
tion), and 6.03(6) (issue pending) of this
revenue procedure;
***
(4)Section 381(a) transaction.Ex-
cept as otherwise provided in this section
4.02(4) or in final regulations issued under
§ 381, if the taxpayer engages in a trans-
action to which § 381(a) applies within
the proposed taxable year of change (de-
termined without regard to any potential
closing of the year under § 381(b)(1)):
***
.05Changes to section 5, TERMS AND
CONDITIONS OF CHANGE, and section
6, GENERAL APPLICATION PROCE-
DURES.
(1)Changes to sections 5.06(4) and
6.02(3)(b). Section 5.06(4) of Rev.
Proc. 2008–52 is clarified by delet-
ingthereferencetothetemporaryreg-
ulations under § 1.964–1T(c)(3) and
inserting reference to the final regula-
tions under §§ 1.964–1(c)(3). Section
6.02(3)(b) is clarified by deleting the ref-
erences to the temporary regulations under
§§ 1.964–1T(c)(3) and 1.964–1T(c)(5) and
inserting references to the final regulations
under §§ 1.964–1(c)(3) and 1.964–1(c)(5),
respectively.
(2)Changes to sections 6.02(1)(b),
6.02(11), 6.03, 6.04 and 6.05 of Rev. Proc.
2008–52. Sections 6.02(1)(b) of Rev.
Proc. 2008–52 is clarified and sections
6.02(11), 6.03, 6.04 and 6.05 of Rev. Proc.
2008–52 are modified to read as follows:
.02Filing requirements.
(1)Applications.
***
(b)Separate applications.
(i)In general. Ordinarily, a taxpayer
must submit a separate application for each
change in method of accounting.
(ii)Single application for two or more
changes. In some cases, the provisions of
this revenue procedure or other guidance
published in the IRB applicable to particu-
lar changes in method of accounting may
require or allow a taxpayer to file a sin-
gle application for two or more concurrent
changes. See, for example, section 14.03
of the APPENDIX of this revenue proce-
dure.
When the taxpayer is required or al-
lowed to file a single Form 3115 for two
or more concurrent changes, the taxpayer
must attach to the single Form 3115 the in-
formation required by Part II, line 12, and
Part IV, line 25 (including the amount of
any § 481(a) adjustment), of Form 3115 for
each change in method of accounting in-
cluded on that single Form 3115. Also at-
tach an explanation for any other line(s) on
the single Form 3115 where the taxpayer’s
answer is different for any of the con-
current changes to which the single Form
3115 relates.
***
(11)Additional copies required.
(a)Scope restrictions waived for tax-
payer under examination.If(i)oneor
more of the scope limitation provisions
of section 4.02 of this revenue procedure
would otherwise preclude a taxpayer from
making a change under this revenue pro-
cedure, but (ii) the scope limitation provi-
sions of section 4.02 of this revenue pro-
cedure do not apply to the change sought
by the taxpayer (see, for example section
2.01 of the APPENDIX of this revenue
procedure), and (iii) the taxpayer is under
examination (as provided in section 3.08
of this revenue procedure) on the date it
files the copy of its application with the na-
tional office, then the taxpayer (or if sec-
tion 6.02(3)(b) of this revenue procedure
applies, the designated shareholder) must
provide a copy of the application to the
examining agent(s) at the same time that
it files a copy of the application with the
national office. The application must con-
tain the name(s) and telephone number(s)
of the examining agent(s).
September 21, 20093722009–38 I.R.B.

(b)Taxpayer before an appeals office or
a federal court and issue not under con-
sideration. If a taxpayer that is otherwise
within the scope of this revenue procedure
(orifsection6.02(3)(b)ofthisrevenue
procedure applies, any controlling domes-
tic shareholder of a CFC or 10/50 corpora-
tion) is before an appeals office or a fed-
eral court and the present method to be
changed is not an issue under considera-
tion by the appeals office or the federal
court on the date the copy of its applica-
tion is filed with the national office, then
the taxpayer (or if section 6.02(3)(b) of
this revenue procedure applies, the desig-
nated shareholder) must provide a copy of
the application to the appeals officer(s) or
counsel(s) for the government, as applica-
ble, at the same time that it files a copy
of the application with the national office.
The application must contain the name(s)
and telephone number(s) of the appeals of-
ficer(s) or counsel(s) for the government,
as applicable.
.03Taxpayer under examination.
(1)In general. Except as otherwise pro-
vided in the APPENDIX of this revenue
procedure (see, for example, section 2.01
of the APPENDIX of this revenue proce-
dure), a taxpayer that is under examina-
tion(asprovidedinsection3.08ofthis
revenue procedure) may file an applica-
tion to change a method of accounting un-
der section 6 of this revenue procedure
only if the taxpayer is within the provi-
sions of section 6.03(2) (90-day window),
6.03(3) (120-day window), 6.03(4) (con-
sent of director), 6.03(5) (changes lacking
audit protection), or 6.03(6) (issue pend-
ing) of this revenue procedure. A taxpayer
(orifsection6.02(3)(b)ofthisrevenue
procedure applies, the designated share-
holder) that files an application beyond the
time periods provided in the 90-day and
120-day windows is not eligible for the au-
tomatic extension of time and will not be
granted an extension of time to file under
§ 301.9100, except in unusual and com-
pelling circumstances.
(2)90-day window period.
(a) A taxpayer (or if section 6.02(3)(b)
of this revenue procedure applies, the des-
ignated shareholder) may file a copy of
the application with the national office to
change a method of accounting under this
revenue procedure during the first 90-days
of any taxable year (the 90-day window)
if the taxpayer has (or in the case of a tax-
payer that is a CFC or 10/50 corporation,
all of its controlling domestic shareholders
that are under examination have) been un-
der examination for at least 12 consecutive
months as of the first day of the taxable
year. This 90-day window is not available
if the method of accounting the taxpayer is
changing is an issue under consideration at
the time the taxpayer (or designated share-
holder) would otherwise file the copy of
the application or an issue the examining
agent(s) has placed in suspense at the time
the taxpayer (or designated shareholder)
would otherwise file the copy of the appli-
cation.
(b) A taxpayer changing a method of
accounting under this90-day window (or
if section 6.02(3)(b) of this revenue proce-
dure applies, the designated shareholder)
must provide a copy of the application to
the examining agent(s) at the same time it
files the copy of the application with the
national office. The application must con-
tain the name(s) and telephone number(s)
of the examining agent(s).
(3)120-day window period.
(a) A taxpayer (or if section 6.02(3)(b)
of this revenue procedure applies, the des-
ignated shareholder) may file a copy of
the application with the national office to
change a method of accounting under this
revenue procedure during the 120-day pe-
riod following the date an examination of
the taxpayer (or in the case of a taxpayer
that is a CFC or 10/50 corporation, of
each of its controlling domestic sharehold-
ers that were under examination) ends (the
120-day window), regardless of whether a
subsequent examination has commenced.
This 120-day window is not available if
the method of accounting the taxpayer is
changing is an issue under consideration at
the time the taxpayer (or designated share-
holder) would otherwise file a copy of
the application or an issue the examining
agent(s) has placed in suspense at the time
the taxpayer (or designated shareholder)
would otherwise file a copy of the appli-
cation.
(b) A taxpayer changing a method of ac-
counting under this 120-day window (or if
section 6.02(3)(b) of this revenue proce-
dure applies, the designated shareholder)
must provide a copy of the application to
the examining agent(s) for any examina-
tion that is in process at the same time it
files the copy of the application with the
national office. The application must con-
tain the name(s) and telephone number(s)
of the examining agent(s).
(4)Consent of director.
(a) A taxpayer under examination may
change its method ofaccounting under this
revenue procedure if the director consents
to the filing of the application. The direc-
tor will consent to the filing of the applica-
tion unless, in the opinion of the director,
the method of accounting to be changed
would ordinarily be included as an item
of adjustment in the year(s) for which the
taxpayer is under examination. For ex-
ample, the director will consent to the fil-
ingofanapplicationtochangefroma
clearly permissible method of accounting,
or from an impermissible method of ac-
counting where the impermissible method
was adopted subsequent to the years un-
der examination. The director’s consent is
limited to the director’s consent to file the
application and does not constitute the di-
rector’s agreement to, or approval of, the
requested change in method of account-
ing. The question of whether the method
of accounting from which the taxpayer is
changing is permissible or was adopted
subsequent to the years under examination
may be referred to the national office as a
request for technical advice under the pro-
visions of Rev. Proc. 2009–2 (or any suc-
cessor).
(b) A taxpayer changing a method of
accounting under this revenue procedure
with the consent of the director (or if sec-
tion 6.02(3)(b) of this revenue procedure
applies, the designated shareholder) must
attach to the copy of the application filed
with the national office a statement from
the director consenting to the filing of the
application. In addition, the taxpayer (or
designated shareholder) must attach to its
original application attached to its timely
filed original federal income tax return a
statement certifying that it has obtained the
written consent of the director to the fil-
ing of the application and that the taxpayer
(or designated shareholder) will maintain a
copy of such consent available for inspec-
tion. The taxpayer (or designated share-
holder) must provide a copy of the appli-
cation to the director at the same time it
files a copy of the application with the na-
tional office. The application must con-
tain the name(s) and telephone number(s)
of the examining agent(s).
(5)Changes lacking audit protection.
2009–38 I.R.B.373September 21, 2009

(a) A taxpayer under examination may
change its method of accounting under this
revenue procedure if the description of the
change in the APPENDIX of this revenue
procedure provides that the change is not
subject to the audit protection provisions
of section 7 of this revenue procedure.
(b) A taxpayer changing a method of ac-
counting under this section 6.03(5) (or if
section 6.02(3)(b) of this revenue proce-
dure applies, the designated shareholder)
must provide a copy of the application to
the examining agent(s) for any examina-
tion that is in process at the same time it
files the copy of the application with the
national office. The application must con-
tain the name(s) and telephone number(s)
of the examining agent(s).
(6)Issue pending.
(a) A taxpayer that is under examination
with respect to any income tax issue may
request to change a method of accounting
if the method of accounting to be changed
is an issue pending for any taxable year un-
der examination. However, the audit pro-
tection provisions of section 7 of this rev-
enue procedure do not apply to a taxpayer
changing its method of accounting under
this section 6.03(6). For purposes of this
section 6.03(6), an issue is pending for a
taxable year under examination if the Ser-
vice has given the taxpayer (or if section
6.02(3)(b) of this revenue procedure ap-
plies, any controlling domestic sharehold-
ers of a CFC or 10/50 corporation) writ-
ten notification indicating an adjustment is
being made or will be proposed with re-
spect to the taxpayer’s method of account-
ing. The notification by the Service may
result from an inquiry by the Joint Com-
mittee on Taxation. This notification nor-
mally will occur after the Service or the
Joint Committee on Taxation has gathered
information sufficient to determine that an
adjustment is appropriate and justified, al-
though the exact amount of the adjustment
may not yet be determined.
(b) A taxpayer that requests to change
a method of accounting under this sec-
tion 6.03(6) (or if section 6.02(3)(b) of this
revenue procedure applies, the designated
shareholder) must provide a copy of the
application to the examining agent(s) at the
same time it files a copy of the application
with the national office. The application
must contain the name(s) and telephone
number(s) of the examining agent(s).
.04Taxpayer before an appeals office.
A taxpayer otherwise within the scope of
this revenue procedure that is before an
appeals office with respect to any income
tax issue (or if section 6.02(3)(b) of this
revenue procedure applies, a CFC or 10/50
corporation with a controlling domestic
shareholder that is before an appeals office
with respect to any income tax issue) may
request a change in method of accounting.
However, the audit protection provisions
of section 7 of this revenue procedure do
not apply if the method of accounting to
be changed is an issue under consideration
by the appeals office. A taxpayer that
requests to change a method of account-
ing under this section 6.04 (or if section
6.02(3)(b) of this revenue procedure ap-
plies, the designated shareholder) must
provide a copy of the application to the
appeals officer at the time it files a copy
of the application with the national office.
The application must contain the name(s)
and telephone number(s) of the appeals
officer(s).
.05Taxpayer before a federal court.A
taxpayer otherwise within the scope of this
revenue procedure that is before a federal
court with respect to any income tax is-
sue (or if section 6.02(3)(b) of this revenue
procedure applies, a CFC or 10/50 corpo-
ration with a controlling domestic share-
holder that is before a federal court with
respect to any income tax issue) may re-
quest a change in method of accounting.
However, the audit protection provisions
of section 7 of this revenue procedure do
not apply if the method of accounting to
be changed is an issue under consideration
by the federal court. A taxpayer (or desig-
nated shareholder) that requests to change
a method of accountingunder this section
6.05 must provide a copy of the applica-
tion to the counsel(s) for the government
at the time it files a copy of the original
application with the national office. The
application must contain the name(s) and
telephone number(s) of the counsel(s) for
the government.
.06Change to section 13, EFFECT
ON OTHER DOCUMENTS. Rev. Proc.
2008–52 is clarified by inserting a new
paragraph at the end to read as follows:
Rev. Proc. 2008–18, 2008–10 I.R.B.
573, is modified, and, as modified, is su-
perseded.
.07New section 3.05 of the APPENDIX,
Materials and supplies. Section 3 of the
APPENDIX of Rev. Proc. 2008–52 is
modified by adding a new section 3.05 to
read as follows:
.05Materials and supplies.
(1)Description of change.
(a)Applicability. This change applies
to a taxpayer that wants to change its
method of accounting for materials and
supplies on hand to the method of treating
the cost of materials and supplies as a de-
ferred expense to be taken into account in
the taxable year in which they are actually
consumed and used in operation, consis-
tent with § 1.162–3.
(b)Inapplicability. This change does
not apply to a taxpayer that is required un-
der § 263A and the regulations thereunder
to capitalize the costs with respect to which
the taxpayer wants to change its method of
accounting under section 3.05 of this AP-
PENDIX if the taxpayer is not capitaliz-
ing these costs, unless the taxpayer con-
currently changes its method to capitalize
these costs in conjunction with a change to
a UNICAP method under section 11.01 or
11.02 of this APPENDIX (as applicable).
(2)Amounts taken into account. Appli-
cable provisions of the Code, regulations,
and other guidance published in the IRB
prescribe the manner in which a liability
that has been incurred is taken into ac-
count. For example, for a taxpayer with
inventories, certain indirect material costs
must be included in inventory costs and
may be recovered through the cost of
goods sold.See§ 1.263A–1(e)(3)(ii)(E).
A taxpayer may not rely on the provisions
ofsection3.05ofthisAPPENDIXtotake
a current deduction.
(3)Concurrent automatic change.A
taxpayer that wants to make both this
change and a change to a UNICAP method
under section 11.01 or 11.02 of this AP-
PENDIX (as applicable) for the same year
of change should file a single Form 3115
for both changes and enter the designated
automatic accounting method change
numbers for both changes on the appropri-
ate line on that Form 3115.
(4)Proposed regulations.TheDe-
partment of the Treasury has published
proposed regulations that address the def-
inition and treatment of materials and
supplies under § 162.SeeGuidance Re-
garding Deduction and Capitalization of
Expenditures Related to Tangible Prop-
erty, REG–168745–03, 73 FR 12838–01
(March 10, 2008), 2008–18 I.R.B. 871.
September 21, 20093742009–38 I.R.B.

The proposed regulations are not effective
until publication of a Treasury decision
adopting them as final regulations in the
Federal Register. Thus, taxpayers may not
change a method of accounting in reliance
upon the rules contained in the proposed
regulations until the rules are published
as final regulations in the Federal Regis-
ter. If final regulations are adopted with
positions that are inconsistent with the
method of accounting implemented by
the taxpayer under section 3.05 of this
APPENDIX, that method will no longer
be regarded as proper. In such event, the
taxpayer will be required to follow any in-
structions in the final regulations or other
guidance published in the IRB concerning
methods of accounting for materials and
supplies for future taxable years.
(5)Designated automatic accounting
method change number. The designated
automatic accounting method change
number for a change in method of account-
ing under section 3.05 of this APPENDIX
is “143.”Seesection 6.02(4) of this rev-
enue procedure.
(6)Contact information. For further
information regarding a change under
this section, contactJustin G. Meeks at
202–622–5020 (not a toll-free call).
.08New section 3.06 of the APPENDIX,
Repair and maintenance costs. Section 3
of the APPENDIX of Rev. Proc. 2008–52
is modified by adding a new section 3.06
to read as follows:
.06Repair and maintenance costs.
(1)Description of change.
(a)Applicability. This change applies
to a taxpayer that wants to change its
method of accounting from capitalizing
under § 263(a) costs paid or incurred to
repair and maintain tangible property (in-
cluding network assets) to treating the
repair and maintenance costs as ordinary
and necessary business expenses under
§ 162 and § 1.162–4. This change also
applies to a taxpayer that wants to change
the unit of property it uses to determine the
deductibility of repair and maintenance
costs to a unit of property that is permissi-
ble under applicable legal authority.
(b)Inapplicability. This change does
not apply to:
(i) A taxpayer that is required under
§ 263A and the regulations thereunder to
capitalize the costs with respect to which
the taxpayer wants to change its method of
accounting under section 3.06 of this AP-
PENDIX if the taxpayer is not capitaliz-
ing these costs, unless the taxpayer con-
currently changes its method to capitalize
these costs in conjunction with a change to
a UNICAP method under section 11.01 or
11.02 of this APPENDIX (as applicable);
(ii) A taxpayer that wants to change its
method of accounting for dispositions of
depreciable property, including a change in
the unit of property used for such disposi-
tions (but see sections 6.24 and 6.25 of this
APPENDIX); or
(iii) Any property subject to the re-
pair allowance under § 1.167(a)–11(d)(2)
(including expenditures incurred after
December 31, 1980, for the repair, main-
tenance, rehabilitation, or improvement of
property placed in service before January
1, 1981).
(2)Manner of making change.Atax-
payer making this change must attach to its
Form 3115 a statement with the following:
(a) A detailed description of the types
of tangible property to which this change
applies;
(b) A detailed description of the types
of repair and maintenance costs to which
this change applies;
(c) If the taxpayer is changing any unit
of property determination, a detailed de-
scription of the unit(s) of property under
its present method of accounting for de-
termining the deductibility of repair and
maintenance costs and a detailed descrip-
tion of the unit(s) of property it will use
under its proposed method of determining
the deductibility of repair and maintenance
costs, together with a description of the
legal authority supporting the taxpayer’s
proposed unit(s) of property for determin-
ing the deductibility of repair and mainte-
nance costs;
(d) The following statements regarding
the costs to which this change applies:
(i) “The taxpayer represents that the re-
pair and maintenance costs are incurred to
keep the taxpayer’s property in ordinarily
efficient operating condition.”
(ii) “The taxpayer represents that the re-
pair and maintenance costs do not materi-
ally increase the value or substantially pro-
long the useful life of any unit of property
compared to the value or useful life of the
property before the general wear or tear or
particular event that led to the repairs or
maintenance.”
(iii) “The taxpayer represents that the
repair and maintenance costs do not adapt
anyunitofpropertytoanewordifferent
use.”
(iv) “The taxpayer represents that the
repair and maintenance costs do not in-
clude costs to replace any unit of prop-
erty or any major components or substan-
tial structural parts of any unit of property.”
(v) “The taxpayer represents that the
repair and maintenance costs are not in-
curred as part of a plan of rehabilitation,
modernization, or improvement to any unit
of property.”
(vi) “The taxpayer represents that the
repair and maintenance costs do not result
from any prior owner’s use of any unit of
property.”
(3)Additional copy of Form 3115 re-
quired. A taxpayer changing its method of
accounting under section 3.06 of this AP-
PENDIX must, in addition to the timely
duplicate filing requirements in section
6.02(3) of Rev. Proc. 2008–52, send a
copy of its completed Form 3115 (includ-
ing attachments) to the following address
on or before the date the taxpayer files a
copy of the Form 3115 with the national
office: Internal Revenue Service, 1973
North Rulon White Blvd., Mail Stop 4917,
Ogden, UT 84404.
(4)Amounts taken into account.Ap-
plicable provisions of the Code, regula-
tions, and other guidance published in the
IRB prescribe the manner in which a liabil-
ity that has been incurred is taken into ac-
count. For example, for a taxpayer with in-
ventories, certain repair and maintenance
costs must be included in inventory costs
and may be recovered through the cost of
goods sold.See§ 1.263A–1(e)(3)(ii)(E).
A taxpayer may not rely on the provisions
ofsection3.06ofthisAPPENDIXtotake
a current deduction.
(5)No ruling on unit of property.The
consent granted under this revenue proce-
dure for this change is not a determina-
tion by the Commissioner that the taxpayer
is using the appropriate unit of property
in determining the deductibility of repair
and maintenance costs and does not create
any presumption that the proposed unit of
property is permissible. The director will
ascertain whether the taxpayer’s determi-
nation of its unit of property is correct.
(6)Concurrent automatic change.A
taxpayer that wants to make both this
change and a change to a UNICAP method
under section 11.01 or 11.02 of this AP-
PENDIX (as applicable) for the same year
2009–38 I.R.B.375September 21, 2009

of change should file a single Form 3115
for both changes and enter the designated
automatic accounting method change
numbers for both changes on the appropri-
ate line on that Form 3115.
(7)Proposed regulations. The Depart-
ment of the Treasury has published pro-
posed regulations that address the appli-
cation of §§ 162 and 263 to expenditures
paid or incurred to repair, maintain, or
improve tangible property.SeeGuidance
Regarding Deduction and Capitalization
of Expenditures Related to Tangible Prop-
erty, 73 FR 12838–01 (March 10, 2008),
2008–1 C.B. 871. The proposed regu-
lations are not effective until publication
of a Treasury decision adopting them as
final regulations in the Federal Register.
Thus, taxpayers may not change a method
of accounting in reliance upon the rules
contained in the proposed regulations un-
til the rules are published as final regula-
tions in the Federal Register. If final regu-
lations are adopted with positions that are
inconsistent with the method of accounting
implemented by the taxpayer under sec-
tion 3.06 of this APPENDIX, that method
will no longer be regarded as proper. In
such event, the taxpayer will be required
to follow any instructions in the final reg-
ulations or other guidance published in
the IRB concerning methods of accounting
for the repair, maintenance, or improve-
ment of tangible property for future tax-
able years.
(8)Designated automatic accounting
method change number. The designated
automatic accounting method change
number for a change in method of account-
ing under section 3.06 of this APPENDIX
is “144.”Seesection 6.02(4) of this rev-
enue procedure.
(9)Contact information.Forfur-
ther information regarding a change un-
der this section, contact Mon Lam at
202–622–4950 (not a toll-free call).
.09New section 6.23 of the APPENDIX,
Tenant construction allowances. Section 6
of the APPENDIX of Rev. Proc. 2008–52
is modified by adding a new section 6.23
to read as follows:
.23Tenant construction allowances.
(1)Description of change and scope.
(a)Applicability. This change applies
to a taxpayer that wants to change its
method of accounting for tenant construc-
tion allowances:
(i) from improperly treating the tax-
payer as having a depreciable interest in
the property subject to the tenant construc-
tion allowances for federal income tax pur-
poses to properly treating the taxpayer as
not having a depreciable interest in such
property for federal income tax purposes;
or
(ii) from improperly treating the tax-
payer as not having a depreciable interest
in the property subject to the tenant con-
struction allowances for federal income
tax purposes to properly treating the tax-
payer as having a depreciable interest in
such property for federal income tax pur-
poses.
(b)Inapplicability. This change does
not apply to:
(i) any tenant construction allowance
that qualifies under § 110;
(ii) any portion of a tenant construction
allowance that is not expended on depre-
ciable property; or
(iii) any amount expended for deprecia-
ble property in excess of the tenant con-
struction allowance.
(2)Definition. For purposes of section
6.23 of this APPENDIX, the term “ten-
ant construction allowance(s)” means any
amount received by a lessee from a lessor
to construct, acquire, or improve property
for use by the lessee pursuant to a lease.
(3)Manner of making the change.
(a) The change in method of accounting
under section 6.23 of this APPENDIX is
made using a cut-off method and only ap-
plies to leases entered into on or after the
beginning of the year of change.Seesec-
tion 2.06 of this revenue procedure.
(b) If a taxpayer wants to change its
method of accounting for tenant construc-
tion allowances under existing leases, the
taxpayer must file a Form 3115 with the
Commissioner in accordance with the re-
quirements of § 1.446–1(e)(3)(i) and Rev.
Proc. 97–27. A change involving ten-
ant construction allowances under existing
leases will require a § 481(a) adjustment.
Consent to change a method of accounting
for tenant construction allowances under
existing leases is granted only if the tax-
payer’s treatment of the property subject to
the tenant construction allowances is con-
sistent with the treatment of such property
by the counterparty for federal income tax
purposes. The following information must
be submitted with a Form 3115 submitted
under Rev. Proc. 97–27:
(i) If a lessee is filing the Form 3115, the
lessee must submit with the Form 3115:
(A) a statement that provides the amount of
the tenant construction allowance received
by the lessee, the amount of such tenant
construction allowance expended by the
lessee on property, and the name of the
lessor that provided the tenant construc-
tion allowance; and (B) a representation,
signed under penalties of perjury, from
such lessor that provides the amount of the
tenant construction allowance provided to
the lessee and an explanation as to how
the lessor is treating the property sub-
ject to such tenant construction allowance
for federal income tax purposes. If the
lessor capitalized the tenant construction
allowance (or any portion thereof) pro-
vided to the lessee and depreciated the
property subject to such tenant construc-
tion allowance, the representation must
also include the amount that was capital-
ized by the lessor, the Internal Revenue
Code section under which the property is
depreciated by the lessor, and the life over
which the property is depreciated by the
lessor.
(ii) If a lessor is filing the Form 3115,
the lessor must submit with the Form 3115:
(A) a statement that provides the amount
of the tenant construction allowance pro-
vided to a lessee and the name of the
lessee that received such tenant construc-
tion allowance; and (B) a representation,
signed under penalties of perjury, from
such lessee that provides the amount of
the tenant construction allowance received
fromthelessor,theamountofsuchten-
ant construction allowance recognized as
gross income by the lessee, the amount
of the tenant construction allowance ex-
pended by the lessee on property, and
an explanation as to how the lessee is
treating the property subject to the tenant
construction allowance for federal income
tax purposes. If the lessee capitalized the
tenant construction allowance (or any por-
tion thereof) received from the lessor and
depreciated the property subject to such
tenant construction allowance, the repre-
sentation must also include the amount
that was capitalized by the lessee, the In-
ternal Revenue Code section under which
the property is depreciated by the lessee,
and the life over which the property is
depreciated by the lessee.
(4)No audit protection. A taxpayer
does not receive audit protection under
September 21, 20093762009–38 I.R.B.

section 7 of this revenue procedure in con-
nectionwiththischange.
(5)Designated automatic accounting
method change number. The designated
automatic accounting method change
number for a change under section 6.23
of this APPENDIX is “145.”Seesection
6.02(4) of this revenue procedure.
(6)Contact information. For further
information regarding a change under
this section, contact Ruba Nasrallah at
202–622–4930 (not a toll-free call).
.10New section 6.24 of the APPENDIX,
Dispositions of structural components of a
building (section 168). Section 6 of the
APPENDIX of Rev. Proc. 2008–52 is
modified by adding a new section 6.24 to
read as follows:
.24Dispositions of structural compo-
nents of a building (section 168).
(1)Description of change.
(a)Applicability. This change applies
to a taxpayer that wants to change to a unit
of property that is permissible under appli-
cable legal authority for determining when
the taxpayer has disposed of a building (as
defined in § 1.48–1(e)(1), except as oth-
erwise provided under any other applica-
ble provision of the Code or regulations re-
lating to depreciation or amortization (for
example, § 1400I(f)(3))) and its structural
components (as defined in § 1.48–1(e)(2))
for depreciation purposes. This change
also will affect the determination of gain
or loss from the disposition of the building
(including its structural components).
(b)Inapplicability. This change does
not apply to:
(i) a taxpayer that is required under
§ 263A and the regulations thereunder to
capitalize the costs with respect to which
the taxpayer wants to change its method of
accounting under section 6.24 of this AP-
PENDIX if the taxpayer is not capitalizing
these costs, unless the taxpayer concur-
rently changes its method to capitalize
these costs in conjunction with a change to
a UNICAP method under section 11.01 or
11.02 of this APPENDIX (as applicable);
(ii) any property that is not depreciated
under § 168 under the taxpayer’s present
and proposed methods of accounting;
(iii)anysection1245propertyordepre-
ciable land improvement (but see section
6.25 of this APPENDIX for making this
change);
(iv) any leasehold improvement,
whethermadebythelessororthelessee
(unless the taxpayer leased land and con-
structed a building on such leased land,
and such building (including its structural
components) is the leasehold improve-
ment and is the unit of property under the
taxpayer’s proposed method of accounting
under section 6.24 of this APPENDIX);
(v) any property disposed of by the tax-
payer in a transaction to which a non-
recognition section of the Code applies
(for example, § 1031, transactions subject
to § 168(i)(7));
(vi) any property subject to a general
asset account election under § 168(i)(4)
and the regulations thereunder;
(vii) any building with multiple condo-
minium or cooperative units (unless each
condominium or cooperative unit is the
unit of property under the taxpayer’s pro-
posed method of accounting under section
6.24 of this APPENDIX); or
(viii) any multiple buildings (includ-
ing their structural components) that are
treated as a single building (single unit
of property) under the taxpayer’s present
method of accounting or will be treated as
a single building (single unit of property)
under the taxpayer’s proposed method of
accounting.
(2)Manner of making change.Atax-
payer making this change must attach to its
Form 3115 a statement with the following:
(a) A detailed description of the types
of property to which this change applies;
(b) A detailed description of the unit
of property under the taxpayer’s present
and proposed methods of accounting for
determining when the building (including
its structural components) is disposed of
by the taxpayer for depreciation purposes
(when depreciation ends);
(c) A detailed description of how the
taxpayer determined the unit of property
under its present method of accounting for
determining when the building (including
its structural components) is disposed of
by the taxpayer for depreciation purposes
and will determine the unit of property
under its proposed method of accounting
for determining when the building (includ-
ing its structural components) is disposed
of by the taxpayer for depreciation pur-
poses. If this proposed unit of property
is not each building (including its struc-
tural components) (except as provided in
section 6.24(1)(b)(vii) of this APPENDIX
regarding condominium or cooperative
units), also provide the legal authority
supporting the taxpayer’s proposed unit of
property for determining when the build-
ing (including its structural components)
is disposed of by the taxpayer for depreci-
ation purposes; and
(d) A statement as to whether the tax-
payer’s proposed unit of property for de-
termining when the building (including its
structural components) is disposed of by
the taxpayer for depreciation purposes is
the same as the taxpayer’s present unit of
property for determining when the build-
ing (including its structural components) is
placed in service by the taxpayer (when de-
preciation begins). If not, also provide the
unit of property for determining when the
building (including its structural compo-
nents) is placed in service by the taxpayer
and explain why the taxpayer is using a
different unit of property for determining
when the building (including its structural
components) is placed in service.
(3)Additional copy of Form 3115 re-
quired. A taxpayer changing its method of
accounting under section 6.24 of this AP-
PENDIX must, in addition to the timely
duplicate filing requirements in section
6.02(3) of Rev. Proc. 2008–52, send a
copy of its completed Form 3115 (includ-
ing attachments) to the following address
on or before the date the taxpayer files a
copy of the Form 3115 with the national
office: Internal Revenue Service, 1973
North Rulon White Blvd., Mail Stop 4917,
Ogden, UT 84404
(4)No ruling on unit of property.The
consent granted under this revenue proce-
dure for this change is not a determina-
tion by the Commissioner that the taxpayer
is using the appropriate unit of property
for determining when the building (includ-
ing its structural components) is placed in
service or disposed of by the taxpayer for
depreciation purposes and does not cre-
ate any presumption that the proposed unit
of property is permissible for deprecia-
tion purposes. The director will ascertain
whether the taxpayer’s determination of its
unit of property for depreciation purposes
is correct.
(5)Concurrent automatic change.
(a) A taxpayer that wants to make both
this change and a change to a UNICAP
method under section 11.01 or 11.02 of
this APPENDIX (as applicable) for the
same year of change should file a single
Form 3115 for both changes and enter the
designated automatic accounting method
2009–38 I.R.B.377September 21, 2009

change numbers for both changes on the
appropriate line on that Form 3115.
(b) A taxpayer that wants to make both
this change and a change under section
6.25 of this APPENDIX for the same year
of change should file a single Form 3115
for both changes and enter the designated
automatic accounting method change
numbers for both changes on the appropri-
ate line on that Form 3115.
(6)Designated automatic accounting
method change number. The designated
automatic accounting method change
number for a change in method of account-
ing under section 6.24 of this APPENDIX
is “146.”Seesection 6.02(4) of this rev-
enue procedure.
(7)Contact information. For further
information regarding a change under
this section, contact Charles Magee at
202–622–4930 (not a toll-free call).
.11New section 6.25 of the APPEN-
DIX, Dispositions of tangible depreciable
assets (other than a building or its struc-
tural components) (section 168). Section 6
of the APPENDIX of Rev. Proc. 2008–52
is modified by adding a new section 6.25
to read as follows:
.25Dispositions of tangible depreciable
assets (other than a building or its struc-
tural components) (section 168).
(1)Description of change.
(a)Applicability. This change applies
to a taxpayer that wants to change to a
unit of property that is permissible un-
der applicable legal authority for deter-
mining when the taxpayer has disposed
of a section 1245 property or a deprecia-
ble land improvement for depreciation pur-
poses. This change also will affect the de-
termination of gain or loss from the dispo-
sitionofthesection1245propertyorthe
depreciable land improvement.
(b)Inapplicability. This change does
not apply to:
(i) a taxpayer that is required under
§ 263A and the regulations thereunder to
capitalize the costs with respect to which
the taxpayer wants to change its method of
accounting under section 6.25 of this AP-
PENDIX if the taxpayer is not capitalizing
these costs, unless the taxpayer concur-
rently changes its method to capitalize
these costs in conjunction with a change to
a UNICAP method under section 11.01 or
11.02 of this APPENDIX (as applicable);
(ii) any property that is not depreciated
under § 168 under the taxpayer’s present
and proposed methods of accounting;
(iii) any building (including its struc-
tural components) (but see section 6.24 of
this APPENDIX for making this change);
(iv) any leasehold improvement,
whether made by the lessor or the lessee
(unless each leasehold improvement is the
unit of property under the taxpayer’s pro-
posed method of accounting under section
6.25 of this APPENDIX);
(v) any property disposed of by the tax-
payer in a transaction to which a non-
recognition section of the Code applies
(for example, § 1031, transactions subject
to § 168(i)(7));
(vi) any property subject to a general
asset account election under § 168(i)(4)
and the regulations thereunder;
(vii) any property subject to a mass
asset account election under former
§ 168(d)(2)(A); or
(viii) any property subject to the re-
pair allowance under § 1.167(a)–11(d)(2)
(including expenditures incurred after De-
cember 31, 1980, for the repair, mainte-
nance, rehabilitation, or improvement of
property placed in service before January
1, 1981).
(2)Manner of making change.Atax-
payer making this change must attach to its
Form 3115 a statement with the following:
(a) A detailed description of the types
of property to which this change applies;
(b) A detailed description of the unit of
property under the taxpayer’s present and
proposed methods of accounting for deter-
mining when the property is disposed of
by the taxpayer for depreciation purposes
(when depreciation ends);
(c) A detailed description of how the
taxpayer determined the unit of property
under its present method of accounting for
determining when the property is disposed
of by the taxpayer for depreciation pur-
poses and will determine the unit of prop-
erty under its proposed method of account-
ing for determining when the property is
disposed of by the taxpayer for depreci-
ation purposes. If this proposed unit of
property is not determined using only the
functional interdependence standard (see,
e.g.,Armstrong World Industries, Inc. v.
Commissioner, T.C. Memo. 1991–326,
aff’d, 974 F.2d 422 (3
rd
Cir. 1992);Hawai-
ian Independent Refinery, Inc. v. United
States, 697 F.2d 1063, 1069 (Fed. Cir.
1983)), also provide the legal authority
supporting the taxpayer’s proposed unit of
property for determining when the prop-
erty is disposed of by the taxpayer for de-
preciation purposes; and
(d) A statement as to whether the tax-
payer’s proposed unit of property for de-
termining when the property is disposed
of by the taxpayer for depreciation pur-
poses is the same as the taxpayer’s present
unit of property for determining when the
property is placed in service by the tax-
payer (when depreciation begins). If not,
also provide the unit of property for deter-
mining when the property is placed in ser-
vice by the taxpayer and explain why the
taxpayer is using a different unit of prop-
erty for determining when the property is
placed in service.
(3)Additional copy of Form 3115 re-
quired. A taxpayer changing its method of
accounting under section 6.25 of this AP-
PENDIX must, in addition to the timely
duplicate filing requirements in section
6.02(3) of Rev. Proc. 2008–52, send a
copy of its completed Form 3115 (includ-
ing attachments) to the following address
on or before the date the taxpayer files a
copy of the Form 3115 with the national
office: Internal Revenue Service, 1973
North Rulon White Blvd., Mail Stop 4917,
Ogden, UT 84404.
(4)No ruling on unit of property.The
consent granted under this revenue pro-
cedure for this change is not a determi-
nation by the Commissioner that the tax-
payer is using the appropriate unit of prop-
erty for determining when the property is
placed in service or disposed of by the tax-
payer for depreciation purposes and does
not create any presumption that the pro-
posed unit of property is permissible for
depreciation purposes. The director will
ascertain whether the taxpayer’s determi-
nation of its unit of property for deprecia-
tion purposes is correct.
(5)Concurrent automatic change.
(a) A taxpayer that wants to make both
this change and a change to a UNICAP
method under section 11.01 or 11.02 of
this APPENDIX (as applicable) for the
same year of change should file a single
Form 3115 for both changes and enter the
designated automatic accounting method
change numbers for both changes on the
appropriate line on that Form 3115.
(b) A taxpayer that wants to make both
this change and a change under section
September 21, 20093782009–38 I.R.B.

6.24 of this APPENDIX for the same year
of change should file a single Form 3115
for both changes and enter the designated
automatic accounting method change
numbers for both changes on the appropri-
ate line on that Form 3115.
(6)Designated automatic accounting
method change number. The designated
automatic accounting method change
number for a change in method of account-
ing under section 6.25 of this APPENDIX
is “147.”Seesection 6.02(4) of this rev-
enue procedure.
(7)Contact information. For further
information regarding a change under
this section, contact Charles Magee at
202–622–4930 (not a toll-free call).
.12Changes to section 11.01 of the AP-
PENDIX, Certain uniform capitalization
(UNICAP) methods used by resellers and
reseller-producers.
(1)Section 11.01(1)(a) of the APPEN-
DIX, Applicability.
(a)Section 11.01(1)(a)(vi) of the AP-
PENDIX. Section 11.01(1)(a)(vi) of the
APPENDIX is modified to apply to a re-
seller-producer and is also clarified to read
as follows:
(vi) a reseller or reseller-producer that
wants to change to a UNICAP method
(or methods) specifically described in the
regulations and includes any necessary
changes in the identification of costs sub-
ject to § 263A that will be accounted for
using the new method in any taxable year,
other than the first taxable year, that it does
not qualify as a small reseller. However,
this does not include a change for purposes
of recharacterizing “section 471 costs” as
“additional § 263A costs” (orvice versa)
under the simplified resale method; or
(b)New section 11.01(1)(a)(vii) of the
APPENIDX. Section 11.01(1)(a) of the
APPENDIX is modified by adding a new
section 11.01(1)(a)(vii) to read as follows:
(vii) a reseller or reseller-producer that
wants to change from not capitalizing a
cost subject to § 263A to capitalizing that
cost, if the reseller or reseller-producer
is otherwise already using a UNICAP
method (or methods) specifically de-
scribed in the regulations.
(2)Section 11.01(1)(b)(ii) of the AP-
PENDIX. Section 11.01(1)(b)(ii) of the
APPENDIX is clarified to read as follows:
(ii)Historic absorption ratio.This
change does not apply to a taxpayer that
wants to make an historic absorption
ratio election under §§ 1.263A–2(b)(4)
or 1.263A–3(d)(4), or to a taxpayer
that wants to revoke an election to
use the historic absorption ratio with
the simplified resale method (see
§ 1.263A–3(d)(4)(iii)(B)), including a tax-
payer using the simplified resale method
with an historic absorption ratio that wants
to change to a UNICAP method specifi-
cally described in the regulations that does
not include the historic absorption ratio.
However, this change applies to a small
reseller that wants to change from the his-
toric absorption ratio with the simplified
resale method to a permissible non-UN-
ICAP inventory capitalization method
undersection11.01(1)(a)(i)ofthisAP-
PENDIX.
(3)Section 11.01(1)(c) of the APPEN-
DIX. Section 11.01(1)(c) of the APPEN-
DIX of Rev. Proc. 2008–52 is modified
to read as follows:
(c)Scope limitation inapplicable.The
scope limitation of § 4.02(7) of this rev-
enue procedure does not apply to the
changes described in §§ 11.01(1)(a)(i) and
(ii) of the APPENDIX of this revenue
procedure.
(4)Section 11.01(2), Definitions. Sec-
tion 11.01(2)(g) of the APPENDIX of Rev.
Proc. 2008–52 is clarified to read as fol-
lows:
(g) “A UNICAP method specifically
described in the regulations” includes
the 90–10de minimisrule to allocate
a mixed service department’s costs to
resale activities (§ 1.263A–1(g)(4)(ii)),
the 1/3–2/3 rule to allocate labor costs
of personnel to purchasing activities
(§ 1.263A–3(c)(3)(ii)(A)), the 90–10de
minimisrule to allocate a dual-function
storage facility’s coststo property acquired
for resale (§ 1.263A–3(c)(5)(iii)(C)),
the specific identification method
(§ 1.263A–1(f)(2)), the burden rate
method (§ 1.263A–1(f)(3)), the stan-
dard cost method (§ 1.263A–1(f)(3)),
the direct reallocation method
(§ 1.263A–1(g)(4)(iii)(A)), the step-allo-
cation method (§ 1.263A–1(g)(4)(iii)(B)),
the simplified service cost method
(§ 1.263A–1(h)) (with a labor-based
allocation ratio), and the simplified resale
method without the historic absorption
ratio election (§ 1.263A–3(d)), but does
not include any other reasonable allo-
cation method within the meaning of
§ 1.263A–1(f)(4).
.13Changes to section 11.02 of the AP-
PENDIX, Certain uniform capitalization
(UNICAP) methods used by producers and
reseller-producers.
(1)Section 11.02(1)(a) of the APPEN-
DIX. Section 11.02(1)(a) of the APPEN-
DIX is modified by adding a new second
sentence and is also clarified to read as fol-
lows:
(a)Applicability. This change ap-
plies to a producer (as defined in sec-
tion 11.01(2)(d) of this APPENDIX) or
a reseller-producer (as defined in sec-
tion 11.01(2)(e) of this APPENDIX) that
wants to change to a UNICAP method (or
methods) specifically described in the reg-
ulations, including any necessary changes
in the identification of costs subject to
§ 263A that will be accounted for using the
new method. This change also includes a
change from not capitalizing a cost subject
to § 263A to capitalizing that cost for a
producer or a reseller-producer that is oth-
erwise already using a UNICAP method
(or methods) specifically described in
the regulations. However, this change
does not include a change for purposes
of recharacterizing “section 471 costs” as
“additional § 263A costs” (orvice versa)
under the simplified production method.
(2)Section 11.02(1)(b) of the APPEN-
DIX. Section 11.02(1)(b) of the APPEN-
DIX is clarified to read as follows:
(b)Inapplicability. This change does
not apply to a producer or reseller-pro-
ducer that wants to revoke an election
to use the historic absorption ratio with
the simplified production method (see
§ 1.263A–2(b)(4)(iii)(B)), including a
taxpayer using the simplified production
method with an historic absorption ratio
changing to a UNICAP method specifi-
cally described in the regulations that does
not include the historic absorption ratio.
This change also does not apply to a tax-
payer that wants to use either the simpli-
fied service cost method or the simplified
production method for self-constructed
assets under §§ 1.263A–1(h)(2)(i)(D)
and 1.263A–2(b)(2)(i)(D). Also, this
change does not apply to a producer or
reseller-producer that wants to change its
method of accounting for interest capital-
ization.
.14Change to section 14.01 of the AP-
PENDIX, Change in overall method from
the cash method to an accrual method.
2009–38 I.R.B.379September 21, 2009

(1)Change to section 14.01(1)(a) of the
APPENDIX. The second paragraph of sec-
tion 14.01(1)(a) of the APPENDIX is clar-
ified to read as follows:
***
If the year of change is the first taxable
year the taxpayer is required by § 448 to
change from the cash method (the first
§ 448 year) and the taxpayer qualifies
to make this change under the automatic
consent procedures of § 1.448–1(g) and
(h)(2) as well as this revenue procedure,
the taxpayer may make the change un-
der this revenue procedure provided the
taxpayer complies with the provisions of
§ 1.448–1(h)(2) and the requirements of
this revenue procedure. For a hospital, de-
fined in § 1.448–1(g)(2)(ii)(B), that makes
the change for the first § 448 year under
the provisions of this revenue procedure,
see § 1.448–1(g)(2)(ii) for the applicable
§ 481(a) adjustment period. If a taxpayer
does not change from the cash method for
the first § 448 year under the provisions of
this revenue procedure, the taxpayer must
makethechangeundertheprovisionsof
§ 1.448–1(g) and (h)(2).
(2)Change to section 14.01(1)(b) of
the APPENDIX, Inapplicability. Section
14.01(1)(b) is clarified by inserting a new
section 14.01(1)(b)(viii) to read as follows:
(viii) a taxpayer making a change from
a hybrid method of accounting to an over-
all accrual method of accounting. For pur-
poses of section 14.01 of this APPENDIX,
a hybrid method of accounting is a combi-
nation of the cash and accrual methods un-
der which one or more items of income or
expense are reported on the cash method
and one or more items of income or ex-
pense are reported on an accrual method.
(3)Change to section 14.01(2) of the
APPENDIX, Scope limitations inapplica-
ble. Section 14.01(2) of the APPENDIX
is modified to read as follows:
(2)Scope limitation inapplicable.If
the year of change is the first taxable year
the taxpayer is required by § 448 to change
from the cash method(first§448year),
the scope limitation in section 4.02(6) of
this revenue procedure does not apply to
a change in method of accounting request
made under section 14.01 of this APPEN-
DIX. For all other changes in method
of accounting requests made under sec-
tion 14.01 of this APPENDIX, any prior
change to the overall cash method under
the provisions of Rev. Proc. 2001–10,
2001–1 C.B. 272, or Rev. Proc. 2002–28,
2002–1 C.B. 815, is disregarded for pur-
poses of section 4.02(6) of this revenue
procedure.
.15Change to section 14.14 of the AP-
PENDIX, Nonshareholder contributions to
capital under § 118. Section 14.14 of the
APPENDIX of Rev. Proc. 2008–52 is
modified to read as follows:
.14Nonshareholder contributions to
capital under § 118.
(1)Description of change.
(a)Water and sewerage disposal utili-
ties.
(i) This change applies to a regulated
public utility described in § 118(c) that
wants to change its method of account-
ing for payments received from customers
as customer connection fees, which are
not contributions to the capital of the reg-
ulated public utility within the meaning
of § 118(c), from excluding the payments
from gross income as nontaxable contribu-
tions to capital under § 118 to including the
payments in gross income under § 61.See
Rev. Rul. 2008–30, 2008–1 C.B. 1156.
(ii) This change applies to a regulated
public utility described in § 118(c) that
wants to change its method of account-
ing for payments or property received that
are contributions in aid of construction un-
der § 118(c) and § 1.118–2 and that meet
the requirements of §§ 118(c)(1)(B) and
118(c)(1)(C) from including the payments
or the fair market value of the property in
gross income under § 61 to excluding the
payments or the fair market value of the
property from incomeas nontaxable con-
tributions to capital under § 118(a).
(b)Other payments or property re-
ceived. This change applies to a taxpayer
that wants to change its method of account-
ing for payments or property received
(other than the payments received by a
public utility described in § 118(c) that
are addressed in section 14.14(1)(a)(i) of
this APPENDIX) that do not constitute
contributions to the capital of the taxpayer
within the meaning of § 118 and the reg-
ulations thereunder, from excluding the
payments or the fair market value of the
property from gross income as nontaxable
contributions to capital under § 118 to
including the payments or the fair market
value of the property in gross income un-
der § 61.
(2)Additional requirement. In addition
to the other filing requirements of this rev-
enue procedure, a taxpayer that is making a
change described in section 14.14(1)(a)(i)
or (1)(b) must complete Schedule E of
Form 3115 for the depreciable property to
which the change relates.
(3)Designated automatic accounting
method change number. The designated
automatic accounting method change
number for a change under section 14.14
of this APPENDIX is “129.”Seesection
6.02(4) of this revenue procedure.
(4)Contact information. For further
information regarding a change under this
section, contact David H. McDonnell at
202–622–3040 (not a toll-free call).
.16New section 14.15 of the APPEN-
DIX, Debt issuance costs. Section14of
the APPENDIX of Rev. Proc. 2008–52 is
modified by adding a new section 14.15 to
read as follows:
.15Debt issuance costs.
(1)Description of change. This change
applies to a taxpayer that wants to change
its method of accounting for capital-
ized debt issuance costs to comply with
§ 1.446–5, which provides rules for allo-
cating the costs over the term of the debt.
(2)Designated automatic accounting
method change number. The designated
automatic accounting method change
number for a change under section 14.15
of this APPENDIX is “148.” See section
6.02(4) of this revenue procedure.
(3)Contact information. For further
information regarding a change under
this section, contact Sonja Kotlica at
202–622–3950 (not a toll-free number).
.17Change to section 15.07 of the AP-
PENDIX, Advance payments. Sections
15.07(1) and (3) of the APPENDIX of
Rev. Proc. 2008–52 are modified and
section 15.07(2) of the APPENDIX of
Rev. Proc. 2008–52 is clarified to read as
follows:
(1)Description of change. This change
applies to a taxpayer using or changing
to an overall accrual method of account-
ing that receives advance payments, as
defined in Rev. Proc. 2004–34, 2004–1
C.B. 991, and wants to use either the full
inclusion or deferral method, as described
in Rev. Proc. 2004–34.See alsoAn-
nouncement 2004–48, 2004–1 C.B. 998.
This change includes a change by a tax-
payer that changes the way it recognizes
advance payments in revenues in its appli-
cable financial statement (AFS) and wants
to change its method of accounting to use
September 21, 20093802009–38 I.R.B.

its new AFS in determining the extent to
which advance payments are included in
gross income under Rev. Proc. 2004–34.
For example, a taxpayer that changes its
AFS from one deferral method to a dif-
ferent deferral method must change its
method of accountingunder this revenue
procedure (if otherwise eligible) to use
that different deferral method for tax pur-
poses under Rev. Proc. 2004–34.
(2)Manner of making change. In lieu of
providing the information and documenta-
tion required by line 1 of Schedule B of
the Dec. 2003 version of Form 3115, a
taxpayer changing to the deferral method
must: (i) state whether the taxpayer uses
an applicable financial statement and, if
so, identify the type; (ii) describe the ba-
sis used for deferral (that is, the method
the taxpayer uses in its applicable financial
statement or how the taxpayer determines
amounts earned, as applicable); and (iii) if
the taxpayer makes an allocation to which
section 5.02(4)(c) of Rev. Proc. 2004–34
applies, include a statement that the allo-
cation method is based on payments the
taxpayer regularly receives for an item or
items it regularly provides separately.See
Rev. Proc. 2004–34 and Announcement
2004–48.
(3)Concurrent automatic change to an
overall accrual method. A taxpayer that
wants to make both a change to the de-
ferral method under section 15.07 of this
APPENDIX and a change to an overall
accrual method under section 14.01 of this
APPENDIX for the same year of change
must file a single Form 3115 for both
changes and enter the designated auto-
matic accounting method change numbers
for both changes on the appropriate line
on that Form 3115.
.18Change to section 15.10 of the AP-
PENDIX, Retainages. Section 15.10(1)(a)
of the APPENDIX of Rev. Proc. 2008–52
is modified to read as follows:
(a)Applicability. This change applies
to an accrual method taxpayer that wants to
change its method ofaccounting for treat-
ing retainages to a method consistent with
the holding in Rev. Rul. 69–314, 1969–1
C.B. 139. A taxpayer changing its method
of accounting for retainages under section
15.10 of this APPENDIX must treat all re-
tainages (receivables and payables) in the
same manner.
.19Change to section 19.01(1) of the
APPENDIX, Self-insured employee medi-
cal benefits. Section 19.01(1)(a)(i) of the
APPENDIX of Rev. Proc. 2008–52 is am-
plified and clarified to read as follows:
(i)Applicability. This change ap-
plies to an accrual method taxpayer that
wants to change its method of accounting
for self-insured liabilities (including any
amounts not covered by insurance, such as
a “deductible” amount under an insurance
policy) relating to employee medical ex-
penses (including liabilities resulting from
medical services provided to retirees and
to employees who have filed claims under
a workers’ compensation act) that are not
paid from a welfare benefit fund within
the meaning of § 419(e) to a method as
follows:
***
.20Change to section 19.01(2) of the
APPENDIX, Bonuses. Section 19.01(2)(a)
of the APPENDIX of Rev. Proc. 2008–52
is amplified and clarified to read as fol-
lows:
(a)Description of change.
(i)Applicability. This change applies
to an accrual method taxpayer that wants
to change its method of accounting to treat
bonuses as incurred in the taxable year
in which all events have occurred that
establish the fact of the liability to pay a
bonus and the amount of the liability can
be determined with reasonable accuracy
(see§ 1.446–1(c)(1)(ii)). Specifically, a
taxpayer may change its method of ac-
counting under section 19.01(2) of this
APPENDIX to one of the following meth-
ods:
(A)Ifalltheeventsthatestablishthe
fact of the liability to pay a bonus have
occurred by the end of the taxable year in
which the related services are provided, the
taxpayer will treat the bonus liability as
incurred in that taxable year.SeeRev. Rul.
55–446, 1955–2 C.B. 531, as modified by
Rev. Rul. 61–127, 1961–2 C.B. 36.
(B) If all the events that establish the
fact of the liability to pay a bonus occur in
the taxable year subsequent to the taxable
year in which the related services are pro-
vided, the taxpayer will treat the bonus li-
ability as incurred in such subsequent tax-
able year.
(ii)Inapplicability. This change does
not apply:
(A) if the bonus is not received by the
employee by the 15
th
day of the 3
rd
calen-
dar month after the end of the taxable year
in which the related services are provided;
or
(B) to a taxpayer that is required under
§ 263A and the regulations thereunder to
capitalize the costs with respect to which
the taxpayer wants to change its method of
accounting under section 19.01(2) of this
APPENDIX if the taxpayer is not capital-
izing these costs, unless the taxpayer con-
currently changes its method to capitalize
these costs in conjunction with a change to
a UNICAP method under section 11.01 or
11.02 of this APPENDIX (as applicable).
.21Change to section 19.01(3) of
the APPENDIX, Vacation pay. Section
19.01(3)(a) of the APPENDIX of Rev.
Proc. 2008–52 is amplified and clarified
to read as follows:
(a)Description of change.
(i)Applicability. This change applies
to an accrual method taxpayer that wants
to change its method of accounting to treat
vacation pay as incurred in the taxable year
in which all events have occurred that es-
tablish the fact of the liability to pay va-
cation pay and the amount of the liabil-
ity can be determined with reasonable ac-
curacy (see§ 1.446–1(c)(1)(ii)). Specifi-
cally, a taxpayer may change its method of
accounting under section 19.01(3) of this
APPENDIX to one of the following meth-
ods:
(A)Ifalltheeventsthatestablishthe
fact of the liability to pay vacation pay
have occurred by the end of the taxable
year in which the related services are pro-
vided, the taxpayer will treat the vaca-
tion pay liability as incurred in that tax-
able year. A taxpayer may change to this
method of accounting only if the vacation
pay vests in that taxable year.
(B) If all the events that establish the
fact of the liability to pay vacation pay
occur in the taxable year subsequent to the
taxable year in which the related services
are provided, the taxpayer will treat the
vacation pay liability as incurred in such
subsequent taxable year.
(ii)Inapplicability. This change does
not apply:
(A) if the vacation pay is not received
by the employee by the 15
th
day of the 3
rd
calendar month after the end of the taxable
year in which the related services are pro-
vided; or
(B) to a taxpayer that is required under
§ 263A and the regulations thereunder to
capitalize the costs with respect to which
2009–38 I.R.B.381September 21, 2009

the taxpayer wants to change its method of
accounting under section 19.01(3) of this
APPENDIX if the taxpayer is not capital-
izing these costs, unless the taxpayer con-
currently changes its method to capitalize
these costs in conjunction with a change to
a UNICAP method under section 11.01 or
11.02 of this APPENDIX (as applicable).
.22Changes to section 19.03 of the AP-
PENDIX, Timing of incurring liabilities
under a workers’ compensation act, tort,
breach of contract, or violation of law.
(1)Section 19.03(1)(a) of the APPEN-
DIX. Section 19.03(1)(a) of the APPEN-
DIX of Rev. Proc. 2008–52 is amplified
and clarified to read as follows:
(a)Applicability. This change applies
to an accrual method taxpayer that wants to
change its method of accounting for self-
insured liabilities (including any amounts
not covered by insurance, such as a “de-
ductible” amount under an insurance pol-
icy) arising under any workers’ compen-
sation act or out of any tort, breach of con-
tract, or violation of law, to treating the lia-
bility for the workers’ compensation, tort,
breach of contract, or violation of law as
being incurred in the taxable year in which
all the events have occurred that estab-
lish the fact of the liability, the amount of
the liability can be determined with rea-
sonable accuracy, and payment is made to
the person to which the liability is owed.
See§ 461 and § 1.461–4(g)(1) and (2).
If the taxpayer has self-insured liabilities
resulting from medical services provided
to employees who have filed claims under
a workers compensation act, the taxpayer
may change its method of accounting for
those liabilities under section 19.01(1) of
this APPENDIX.
(2)Section 19.03(3) of the APPENDIX.
Section 19.03(3) of the APPENDIX of
Rev. Proc. 2008–52 is amplified and clar-
ified to read as follows:
(3)Concurrent automatic changes.A
taxpayer that wants to make both this
change and change to either a method
provided in section 19.01(1) of this AP-
PENDIX for self-insured employee medi-
cal expenses or a UNICAP method under
section 11.01 or 11.02 of this APPEN-
DIX (as applicable) for the same year of
change should file a single Form 3115 and
enter the designated automatic accounting
method change number for each change
on the appropriate line on that Form 3115.
.23New section 19.08 of the APPEN-
DIX, Ratable accrual of real property
taxes. Section 19 of the APPENDIX of
Rev. Proc. 2008–52 is modified by adding
a new section 19.08to read as follows:
.08Ratable accrual of real property
taxes.
(1)Description of change. This change
applies to an accrual method taxpayer that
wants to change its method of accounting
for real property taxes to the method de-
scribed in § 461(c) and § 1.461–1(c)(1)
(ratable accrual election). This change ap-
plies to real property taxes that relate to a
definite period of time. This change does
not apply to a taxpayer’s first taxable year
in which the taxpayer incurs real property
taxes, in which case the change is made us-
ing the provisions of § 1.461–1(c)(3)(i).
(2)Manner of making change and
designated automatic accounting method
change number.
(a) This change is made on a cut-off
basis and applies only to real property
taxes accrued on or after the beginning
of the year of change. Any real prop-
erty taxes accrued prior to the year of
change are accounted for under the tax-
payer’s former method of accounting.See
§ 1.461–1(c)(6),Examples (2) - (5).See
also section 2.06 of this revenue procedure
for more information regarding a cut-off
basis. Accordingly, a § 481(a) adjustment
is neither permitted nor required.
(b)Inaccordancewith
§ 1.446–1(e)(3)(ii), the requirement of
§ 1.446–1(e)(3)(i) to file an application
on Form 3115 is waived and a statement
in lieu of the Form 3115 is authorized for
this change. The taxpayer’s request (Form
3115 or statement) to make the change
under this section of the APPENDIX must
include all of the following:
(i) the designated automatic accounting
method change number for this change,
which is “149”;
(ii) the taxpayer’s name and employer
identification (or social security number in
the case of an individual);
(iii) the year of change (both the begin-
ning and ending dates); and
(iv) the information described in
§ 1.461–1(c)(3)(ii)(a)through(f).
(c) The consent granted under this
revenue procedure satisfies the con-
sent required under § 461(c)(2)(B) and
§ 1.461–1(c)(3)(ii).
(3)Contact information. For further
information regarding a change under
this section, contact Daniel Cassano at
202–622–7900 (not a toll-free call).
.24Change to section 20 of the APPEN-
DIX, Rent.
(1)Heading of section 20.01 of the AP-
PENDIX. The heading of section 20.01 of
the APPENDIX of Rev. Proc. 2008–52 is
modified to read as follows:
.01Change from an improper method
of inclusion of rental income or expense
to inclusion in accordance with the rent
allocation.
(2)Section 20.01(1)(a) of the APPEN-
DIX. Section 20.01(1)(a) of the APPEN-
DIX of Rev. Proc. 2008–52 is mod-
ified by deleting section 20.01(1)(a)(ii),
and renumbering section 20.01(1)(a)(iii)
as section 20.01(1)(a)(ii).
(3)Section 20.01(3) of the APPENDIX.
Section 20.01(3) of the APPENDIX of
Rev. Proc. 2008–52 is clarified to read as
follows:
(3)Audit protection limited. Audit
protection under section 7 of this revenue
procedure does not apply to this change
for any § 467 rental agreement determined
by the Commissioner to be a disquali-
fied leaseback or long-term agreement
described in § 1.467–3(b).
.25Change to section 21.01 of the
APPENDIX, Cash discounts. Section
21.01(3) of the APPENDIX of Rev. Proc.
2008–52 is clarified to read as follows:
(3)Computation of § 481(a) adjustment
forchangestogrossinvoicemethod.In
the case of a taxpayer changing from the
net invoice method to the gross invoice
method, a positive adjustment is required
to prevent omissions arising from the fact
that the net invoice method did not re-
port income upon timely payment for some
or all of the goods that remain in inven-
tory, and a negative adjustment is required
to prevent duplications arising from the
fact that the net invoice method included
the invoice price, adjusted for the cash
discounts, of some or all goods in cost
of goods sold and the discount will be
earned by payment in a subsequent tax-
able year. The net § 481(a) adjustment can
be computed by deducting the “Available
Discount” at the beginning of the year of
change from the “Applicable Discount” at
the beginning of the year of change. The
Available Discount is equal to the differ-
ence between the accounts payable bal-
September 21, 20093822009–38 I.R.B.

ance under the grossinvoice method and
the net invoice method. The Applicable
Discount is equal to the difference between
the beginning inventory value under the
gross invoice method and the net invoice
method.
Example. Taxpayer’s accounts payable balance
at the beginning of the year of change was $980
under the net invoice method and $1,000 under the
gross invoice method. Taxpayer’s inventory value
was $2,955 under the net invoice method and $3,000
under the gross invoice method. The Applicable
Discount is $45 ($3,000 - $2,955) and the Available
Discount is $20 ($1,000 - $980). Thus, Taxpayer’s
net § 481(a) adjustment is a positive $25 ($45 - $20).
.26Change to section 21.05 of the AP-
PENDIX, Impermissible methods of identi-
fication and valuation. Section 21.05(1) of
the APPENDIX of Rev. Proc. 2008–52 is
modified to add a new section 21.05(1)(c)
to read as follows:
(c) changing from a method that is not
in accordance with § 1.471–2(c) for deter-
mining the value of “subnormal” goods.
.27Change to section 21.11 of the AP-
PENDIX, Permissible methods of identifi-
cation and valuation. Section 21.11(1) of
the APPENDIX of Rev. Proc. 2008–52 is
clarified to read as follows:
(1)Description of change.
(a)Applicability. This change applies
to a taxpayer that wants to change from
one permissible method of identifying and
valuing inventories to another permissible
method of identifying and valuing inven-
tories. For example, a taxpayer using first-
in, first-out (FIFO) as its inventory-iden-
tification method may change its inven-
tory-valuation method from cost to cost or
market, whichever is lower (LCM). (Note,
however, a real estate developer may not
value land at LCM because land is not
inventoriable property under § 1.471–1.
Also, a taxpayer who meets the defini-
tion of a “dealer in securities” under both
§ 1.471–5 and § 475 is required to account
for securities, as defined in § 475, under
§ 475 and may not use the rules described
in § 1.471–5 for those securities.) Further-
more, a taxpayer may change to a permissi-
ble method of valuing “subnormal” goods
under § 1.471–2(c).
However, this change does not apply to
any change described in another section
of the APPENDIX of this revenue proce-
dure or in other guidance published in the
IRB, or to any changes within the last-in,
first-out (LIFO) inventory method. For ex-
ample, this change does not apply to a tax-
payer that wants to change to a rolling-av-
erage method (seesection 21.14 of this
APPENDIX).
(b)Permissible method defined.For
purposes of this change, a permissible
method is an inventory method (identifi-
cation or valuation, or both) specifically
permitted by the Code, the regulations,
a decision of the United States Supreme
Court, a revenue ruling, a revenue proce-
dure, or other guidance published in the
IRB for inventories. However, an oth-
erwise permissible inventory method is
not permissible under this section of the
APPENDIX of this revenue procedure
for a specific taxpayer if that taxpayer is
prohibited from using that method or if
that taxpayer is required to use a different
method.
.28New section 22.01(6) of the AP-
PENDIX, Change from the LIFO inventory
method. Sections 22.01(6) and 22.01(7) of
the APPENDIX of Rev. Proc. 2008–52
are renumbered 22.01(7) and 22.01(8), re-
spectively. Section 22.01 of the APPEN-
DIX is clarified by adding a new section
22.01(6) to read as follows:
(6)Pool split and partial termination.
If a taxpayer must remove goods from a
pool because those goods are not within
the scope of that pool (for example,re-
moving resale goods from a manufacturing
pool), and if the taxpayer wants to change
from the LIFO inventory method for those
removed goods, the taxpayer may split the
pool pursuant to section 22.10 of this AP-
PENDIX and then may change from the
LIFO method pursuant to section 22.01 of
this APPENDIX.Seesection 22.10(2) of
this APPENDIX. The taxpayer must file a
separate Form 3115 for each such change.
.29Changes to section 22.07 of the
APPENDIX, Changes within the inventory
price index computation (IPIC) method.
(1)Changes to section 22.07(1).
(a)Change to section 22.07(1)(f). Sec-
tion 22.07(1)(f) of the APPENDIX is mod-
ified to read as follows:
(f) change the assignment of one or
more inventory items to BLS categories
under either Table 3 (Consumer Price In-
dex for All Urban Consumers (CPI-U):
U.S. City average, detailed expenditure
categories) of the monthly CPI Detailed
Report or Table 6 (Producer price indexes
and percent changes for commodity group-
ings and individual items, not seasonally
adjusted) of the monthly PPI Detailed
Report. See § 1.472–8(e)(3)(iii)(C) for
principles concerning the assignment of
inventory items to BLS categories under
the IPIC method. As part of this change,
a taxpayer may separate a reassigned item
from an inappropriate pool and combine
the reassigned item with items in an ap-
propriate pool. See § 1.472–8(g)(2) for
principles concerning the manner of com-
bining and separating dollar-value pools;
(b)New section 22.07(1)(h). Section
22.07(1) of the APPENDIX of Rev. Proc.
2008–52 is modified by adding a new
section 22.07(1)(h) at the end of section
22.07(1) to read as follows:
(h) change from using preliminary
BLS price indexes to using final BLS
price indexes to compute an inven-
tory price index, orvice versa.See
§ 1.472–8(e)(3)(iii)(D)(2) for principles
concerning the selection of BLS price in-
dexes under the IPIC method.
(2)New section 22.07(2). Sections
22.07(2), 22.07(3) and 22.07(4) of the
APPENDIX of Rev. Proc. 2008–52
are renumbered 22.07(3), 22.07(4) and
22.07(5), respectively. Section 22.07 of
the APPENDIX is modified by adding a
new section 22.07(2) to read as follows:
(2)Certain scope limitation inapplica-
ble. The scope limitation in section 4.02(7)
of this revenue procedure does not ap-
ply to the changes described in sections
22.07(1)(d) and (g) of this APPENDIX.
.30Changes to section 22.10 of the AP-
PENDIX, Changes to dollar-value pools of
manufacturers.
(1)Change to section 22.10(1)(b). Sec-
tion 22.10(1)(b) of the APPENDIX of Rev.
Proc. 2008–52 is clarified to read as fol-
lows:
(b) wants to change from using multiple
pools described in § 1.472–8(b)(3) to us-
ing natural business unit (NBU) pools de-
scribed in § 1.472–8(b)(1), orvice versa;
or
(2)Change to section 22.10(2)
. Section
22.10(2) of the APPENDIX of Rev. Proc.
2008–52 is clarified to read as follows:
(2)Manner of making change.This
change is made on a cut-off basis and
applies only to the computation of end-
ing inventories after the beginning of the
year of change. See section 2.06 of this
revenue procedure for more information
regarding a cut-off basis. Accordingly, a
§ 481(a) adjustment is neither permitted
nor required. A taxpayer that changes
2009–38 I.R.B.383September 21, 2009

its method of pooling pursuant to section
22.10 of this APPENDIX must combine or
separate pools as required by § 1.472–8(g).
If a taxpayer splits a pool into two or
more permissible pools pursuant to section
22.10 of this APPENDIX, which must
be implemented on a cut-off basis, the
taxpayer then may file a separate Form
3115 to change from the LIFO inventory
method for one or more of the resulting
pools pursuant to section 22.01 of this
APPENDIX, which must be implemented
with a § 481(a) adjustment.
.31Change to section 28.01 of the
APPENDIX, Transactions involving com-
puter programs. Section 28.01 of the
APPENDIX of Rev. Proc. 2008–52 is
modified to delete the current text as ob-
solete, and to substitute the following:
.01Reserved.
.32Change in contact name informa-
tion.
(1)Section 11.01 of the APPENDIX,
Certain uniform capitalization (UNICAP)
methods used by resellers and reseller-pro-
ducers. Section 11.01(7) of the APPEN-
DIX of Rev. Proc. 2008–52 is modified to
read as follows:
(7)Contact information. For further
information regarding a change under this
section, contact Kari Fisher or W. Thomas
McElroy, Jr. at 202–622–4970 (not a toll-
free call).
(2)Section 11.02 of the APPENDIX,
Certain uniform capitalization (UNICAP)
methods used by producers and reseller-
producers. Section 11.02(5) of the AP-
PENDIX of Rev. Proc. 2008–52 is modi-
fied to read as follows:
(5)Contact information. For further
information regarding a change under this
section, contact Kari Fisher or W. Thomas
McElroy, Jr. at 202–622–4970 (not a toll-
free call).
(3)Section 11.03 of the APPENDIX,
Change to no longer capitalize research
and experimental expenditures under
§ 263A. Section 11.03(5) of the APPEN-
DIX of Rev. Proc. 2008–52 is modified to
read as follows:
(5)Contact information. For further
information regarding a change under this
section, contact Kari Fisher or W. Thomas
McElroy, Jr. at 202–622–4970 (not a toll-
free call).
(4)Section 14.01 of the APPENDIX,
Change in overall method from the cash
method to an accrual method. Section
14.01(8) of the APPENDIX of Rev. Proc.
2008–52 is modified to read as follows:
(8)Contact information.Forfur-
ther information regarding a change un-
der this section, contact Kari Fisher at
202–622–4970 (not a toll-free call).
(5)Section 14.03 of the APPEN-
DIX, Taxpayers changing to overall cash
method. Section 14.03(7) of the APPEN-
DIX of Rev. Proc. 2008–52 is modified to
read as follows:
(7)Contact information. For further
information regarding a change under this
section, contact W. Thomas McElroy, Jr. at
202–622–4970 (not a toll-free call).
(6)Section 14.07 of the APPENDIX,
Deduction of incentive payments to health
care providers. Section 14.07(4) of the
APPENDIX of Rev. Proc. 2008–52 is
modified to read as follows:
(4)Contact information. For further
information regarding a change under
this section, contact Kay Hossofsky at
202–622–3970 (not a toll-free call).
(7)Section 14.12 of the APPENDIX,
Change to overall cash/hybrid method for
certain banks. Section 14.12(7) of the AP-
PENDIX of Rev. Proc. 2008–52 is modi-
fied to read as follows:
(7)Contact information. For further
information regarding a change under
this section, contact David B. Silber at
202–622–3930 (not a toll-free call).
(8)Section 15.05 of the APPENDIX,
Credit card annual fees. Section 15.05(4)
of the APPENDIX of Rev. Proc. 2008–52
is modified to read as follows:
(4)Contact information.Forfur-
ther information regarding a change un-
der this section, contact Jon Silver at
202–622–3930 (not a toll-free call).
(9)Section 15.06 of the APPENDIX,
Credit card late fees. Section 15.06(5) of
the APPENDIX of Rev. Proc. 2008–52 is
modified to read as follows:
(5)Contact information.Forfur-
ther information regarding a change un-
der this section, contact Jon Silver at
202–622–3930 (not a toll-free call).
(10)Section 15.08, Credit card cash ad-
vance fees. Section 15.08(5) of the AP-
PENDIX of Rev. Proc. 2008–52 is modi-
fied to read as follows:
(5)
Contact information.Forfur-
ther information regarding a change un-
der this section, contact Jon Silver at
202–622–3930 (not a toll-free call).
(11)Change to section 24.01, Chang-
ingfromthe§585reservemethodtothe
§ 166 specific charge-off method. Section
24.01(6) of the APPENDIX of Rev. Proc.
2008–52 is modified to read as follows:
(6)Contact information.Forfur-
ther information regarding a change un-
der this section, contact David B. Sil-
ber at 202–622–3930 or Laura Fields at
202–622–3050 (not a toll-free call).
(12)Section 25.01, Safe harbor method
of accounting for premium acquisition ex-
penses. Section 25.01(4) of the APPEN-
DIX of Rev. Proc. 2008–52 is modified to
read as follows:
(4)Contact information. For further
information regarding a change under
this section, contact Kay Hossofsky at
202–622–3970 (not a toll-free call).
(13)Change to section 26.01 of the AP-
PENDIX, Composite method for discount-
ing unpaid losses. Section 26.01(3) of the
APPENDIX of Rev. Proc. 2008–52 is
modified to read as follows:
(3)Contact information. For further
information regarding a change under
this section, contact Kay Hossofsky at
202–622–3970 (not a toll-free call).
(14)Change to section 27.01 of the AP-
PENDIX, REMIC inducement fees. Sec-
tion 27.01(4) of the APPENDIX of Rev.
Proc. 2008–52 is modified to read as fol-
lows:
(4)Contact information. For further in-
formation regarding a change under this
section, contact John W. Rogers, III at
202–622–4695 (not a toll-free call).
(15)Change to section 29.01 of the AP-
PENDIX, Change in functional currency.
Section 29.01(4) of the APPENDIX of
Rev. Proc. 2008–52 is modified to read as
follows:
(4)Contact information. For further
information regarding a change under this
section, contact Sheila Ramaswamy at
202–622–3870 (not a toll-free call).
(16)APPENDIX Contact List.TheAP-
PENDIX Contact List is modified for the
following sections to read as follows:
September 21, 20093842009–38 I.R.B.

APPENDIX
Section
Number
Designated
Automatic
Accounting
Change NumberContact Name
Telephone
NumberOffice
3.05
143Justin G. Meeks
202–622–5020
IT&A
3.06144Mon Lam
202–622–4950
IT&A
6.23
145
Ruba Nasrallah202–622–4930IT&A
6.24146Charles Magee202–622–4930IT&A
6.25
147Charles Magee202–622–4930IT&A
11.0122Kari Fisher202–622–4970IT&A
W. Thomas McElroy, Jr.202–622–4970IT&A
11.0223Kari Fisher202–622–4970IT&A
W. Thomas McElroy, Jr.202–622–4970IT&A
11.0324Kari Fisher202–622–4970IT&A
W. Thomas McElroy, Jr.202–622–4970IT&A
14.01122, 123Kari Fisher202–622–4970IT&A
14.0332, 33W. Thomas McElroy, Jr.202–622–4970IT&A
14.0790Kay Hossofsky202–622–3970FI&P
14.12127David B. Silber202–622–3930FI&P
14.14129David H. McDonnell202–622–3040P&SI
14.15
148Sonja Kotlica
202–622–3950
FI&P
15.05
80, 81Jon Silver202–622–3930FI&P
15.06
82Jon Silver202–622–3930FI&P
15.08
94Jon Silver202–622–3930FI&P
19.08149Daniel Cassano202–622–7900IT&A
24.0166David B. Silber202–622–3930FI&P
Laura Fields
202–622–3050
P&SI
25.01
67Kay Hossofsky202–622–3970FI&P
26.0168Kay Hossofsky202–622–3970FI&P
27.0179John W. Rogers, III
202–622–4695
FI&P
29.0170Sheila Ramaswamy202–622–3870INTL
The APPENDIX Contact List is also
modified to delete APPENDIX Section
Number 28.01.
SE
CTION 3. CHANGES TO REV.
PR
OC. 97–27
.01 Section 3.07 of Rev. Proc. 97–27
is modified by adding new section 3.07(3)
and is clarified by adding a new section
3.07(4) to read as follows:
(3)Taxpayer before Joint Committee on
Taxation. If an examination of a taxpayer
involves a refund or credit in excess of the
statutory sum that is subject to review by
the Joint Committee on Taxation pursuant
to § 6405, then, for purposes of this rev-
enue procedure, the taxpayer is under ex-
amination while the taxpayer has a refund
or credit under review by the Joint Com-
mittee on Taxation and continues to be un-
der examination until Joint Committee on
Taxation review procedures and any nec-
essary follow-up are complete.SeeRev.
Proc. 2005–32, 2005–1 C.B. 1206.
Further, for purposes of section 6.01(5)
(issue pending), an issue is pending for a
taxable year under examination if the Ser-
vice has given the taxpayer written noti-
fication indicating an adjustment is being
made or will be proposed with respect to
the taxpayer’s method of accounting. The
notification by the Service may result from
an inquiry by the Joint Committee on Taxa-
tion. This notification normally will occur
after the Service or the Joint Committee
on Taxation has gathered information suf-
ficient to determine that an adjustment is
appropriate and justified, although the ex-
act amount of the adjustment may not yet
be determined.
(4)Taxpayer in Compliance Assurance
Process. For purposes of this revenue
procedure, a taxpayer participating in the
Compliance Assurance Process (CAP) is
considered to be underexamination as of
the date the taxpayer executes the Memo-
randum of Understanding for the CAP.
.02Certain Foreign Corporations.
With respect to a foreign corporation that
is not required to file a federal income tax
return, sections 3.07 (definition of under
examination), 3.08 (definition of issue
under consideration), 4.02(2) (scope, in-
applicability when under examination),
6 (under examination, or before an ap-
peals office, or a federal court), 7 (section
481(a) adjustment period), and 8.08 (sig-
nature requirements) of Rev. Proc. 97–27,
as amplified and modified by Rev. Proc.
2002–19, are clarified and modified in the
same manner as the comparable provi-
sions of sections 3.08, 3.09, 4.02(1), 5.06,
6.02(3)(b) (applies to the Form 3115 filed
under Rev. Proc. 97–27), 6.02(3)(c)(ii),
6.02(5), 6.02(10), 6.02(11), 6.03, 6.04 and
6.05 of Rev. Proc. 2008–52, as modified
by sections, 2.02(2) (relating to certain for-
eign corporations), 2.03, 2.04 and 2.05(2)
of this revenue procedure.
.03Change “district director” to “di-
rector.”
(1) Section 3 of Rev. Proc. 97–27 is
modified by adding a new section 3.10 to
read as follows:
.10Director. The term “director” has
the same meaning as this term has in Rev.
Proc. 2009–1, 2009–1 I.R.B. 1 (or any
successor).
2009–38 I.R.B.385September 21, 2009

(2) Rev. Proc. 97–27 is clarified by re-
placing the term “district director” wher-
ever it appears with the term “director.”
SECTION 4. EFFECT ON OTHER
DOCUMENTS
.01 Rev. Proc. 2008–52 is amplified,
clarified, and modified.
.02 Rev. Proc. 97–27 is clarified and
modified.
.03 Rev. Proc. 2005–63, 2005–2 C.B.
491, is modified to provide that taxpayers
within the scope of Rev. Proc. 2008–52,
that desire to make the change in method
of accounting described in § 1.461–1(c)
must follow the procedures in Rev. Proc.
2008–52 instead of the procedures in the
regulations and Rev. Proc. 2005–63.
SECTION 5. EFFECTIVE DATE
.01In general.
(a)Rev. Proc. 2008–52. Except as
provided in section 5.02 of this revenue
procedure, this revenue procedure is effec-
tive for applications filed under Rev. Proc.
2008–52 on or after August 27, 2009, for a
year of change ending on or after Decem-
ber 31, 2008.
(b)Rev. Proc. 97–27. This revenue
procedure is effective for Forms 3115 filed
under Rev. Proc. 97–27, as amplified
andmodifiedbyRev. Proc. 2002–19,
as amplified and clarified by Rev. Proc.
2002–54, and as modified by Rev. Proc.
2007–67, filed on or after August 27, 2009,
for a year of change ending on or after
August 27, 2009.
.02Transition rules.
(1)No application filed by August 27,
2009. For a year of change ending on
or after December 31, 2008, and on or
before July 31, 2009, a taxpayer may
choose not to apply the following sections
of this revenue procedure: 2.07; 2.08;
2.09; 2.10; 2.11; 2.12(1)(a); 2.12(1)(b);
2.12(3); 2.12(4); 2.13(1); 2.14(3); 2.16;
2.17 (section 15.07(1) of the APPENDIX
of Rev. Proc. 2008–52, without regard
to section 15.07(3) of the APPENDIX, as
modified by this revenue procedure); 2.18;
2.19; 2.20; 2.21; 2.22; 2.23; 2.24; 2.26;
2.29(1)(a); 2.29(1)(b); 2.29(2).
For a taxpayer filing an application
under Rev. Proc. 2008–52, as amplified,
clarified, and modified by this revenue
procedure, and choosing not to apply sec-
tions 2.12(3), 2.17 (section 15.07(1) of
the APPENDIX of Rev. Proc. 2008–52,
without applying section 15.07(3) of the
APPENDIX, as modified by this revenue
procedure), and 2.18 of this revenue pro-
cedure (transition application), the timely
duplicate filing requirement of section
6.02(3)(a) of Rev. Proc. 2008–52 is mod-
ified to require the copy of the application
to be submitted to the national office on
or before September 15, 2009. A taxpayer
filing such a transition application under
this section 5.02(1) must otherwise be
eligible to make the change under Rev.
Proc. 2008–52, as amplified, clarified,
and modified by this revenue procedure,
and should write on the top of page 1 of
the national office copy of the application
“FILED UNDER SECTION 5.02(1) OF
REV. PROC. 2009–39.”
(2)Form 3115 filed under Rev. Proc.
97–27. If before August 27, 2009, a
taxpayer within the scope of Rev. Proc.
97–27 timely filed a Form 3115 under
Rev. Proc. 97–27 for a year of change
ending on or after December 31, 2008,
requesting consent for a change in method
of accounting described in the APPEN-
DIX of Rev. Proc. 2008–52, as amplified,
clarified, and modified by this revenue
procedure, and the Form 3115 is pending
with the national office on August 27,
2009, the taxpayer may choose to con-
vert the Form 3115 to make the change
under Rev. Proc. 2008–52, as amplified,
clarified, and modified by this revenue
procedure, but without regard to the mod-
ifications to the non-APPENDIX sections
of Rev. Proc. 2008–52 in sections 2.02
(adding new sections 3.08(4) and 3.08(5)
of Rev. Proc. 2008–52), 2.03 (adding new
section 3.09 of Rev. Proc. 2008–52), 2.04
(modifying section 4.02(1) of Rev. Proc.
2008–52), and 2.05(2) (modifying sec-
tions 6.02(11), 6.03, 6.04 and 6.05 of Rev.
Proc. 2008–52) of this revenue proce-
dure (these modifications apply to certain
foreign corporations), if the taxpayer is
otherwise eligible under the APPENDIX
of Rev. Proc. 2008–52, as amplified,
clarified, and modified by this revenue
procedure. The taxpayer must notify the
national office of its intent to convert the
Form 3115 under this section 5.02(2) prior
to the later of October 26, 2009, or the
issuance of a letter ruling granting or deny-
ing consent for the change filed under Rev.
Proc. 97–27. If the taxpayer timely noti-
fies the national office that it will convert
the Form 3115 under this section 5.02(2),
the national office will return the Form
3115 to the taxpayer to make the necessary
modifications to comply with the applica-
ble provisions of Rev. Proc. 2008–52, as
amplified, clarified,andmodifiedbythis
revenue procedure, and will refund the
user fee submitted with the Form 3115.
A taxpayer may convert a Form 3115
that is returned to the taxpayer under this
section 5.02(2) to an application under
Rev. Proc. 2008–52, as amplified, clari-
fied, and modified by this revenue proce-
dure, if the taxpayer resubmits the Form
3115 with the necessary modifications,
along with a copy of the national office
letter sent with the returned Form 3115,
to the national office within 30 calendar
days after the date of the Service’s letter
returning the Form 3115 to the taxpayer.
For purposes of the timely duplicate filing
requirement in section 6.02(3) of Rev.
Proc. 2008–52, the national office copy of
theForm3115willbeconsideredfiledas
of the date the taxpayer originally filed the
Form 3115 under Rev. Proc. 97–27.
A Form 3115 filed under Rev. Proc.
97–27 that is pending with the national
office on August 27, 2009, will be dis-
regarded for purposes of the prior 5 year
change rules in sections 4.02(6) and (7) of
Rev. Proc. 2008–52, in the following cir-
cumstances:
(a) the taxpayer converts the Form 3115
under this section 5.02(2); or
(b) the taxpayer withdraws the Form
3115 and files an application under Rev.
Proc. 2008–52, as amplified, clarified, and
modified by this revenue procedure, for the
same change in method of accounting for
a year of change ending on or before De-
cember 31, 2009.
(3)Option to amend an application
filed under Rev. Proc. 2008–52 before
August 27, 2009. If before August 27,
2009, a taxpayer properly filed an appli-
cation under Rev. Proc. 2008–52 for a
year of change that is the taxpayer’s first
taxable year ending on or after December
31, 2008, the taxpayer may choose to file
an amended application for that year of
change under Rev. Proc. 2008–52, as
amplified, clarified,andmodifiedbythis
revenue procedure (amended application)
if, within 6 months from the due date of
the federal income tax return for the year
of change (excluding any extension), the
September 21, 20093862009–38 I.R.B.

taxpayer (i) files an original or amended
return using the new method of account-
ing pursuant to Rev. Proc. 2008–52,
as amplified, clarified, and modified by
this revenue procedure; (ii) attaches the
original amended application filed under
this revenue procedure to its original or
amended return for the year of change; (iii)
writes on the top of page 1 of the national
office copy of the amended application
“FILED UNDER SECTION 5.02(3) OF
REV. PROC. 2009–39”; and (iv) sends
the national office copy of the amended
application to the following address no
later than the date the original amended
application is filed with the original or
amended return: Internal Revenue Ser-
vice, P.O. Box 14095, Benjamin Franklin
Station, Washington, DC 20044, Atten-
tion: CC:ITA:B8.
A Form 3115 filed under Rev. Proc
2008–52 prior to August 27, 2009, for a
taxable year ending on or after December
31, 2008, that is amended under this sec-
tion 5.02(3) will be disregarded for pur-
poses of the prior 5 year change rules in
sections 4.02(6) and (7) of Rev. Proc.
2008–52.
SECTION 6. PAPERWORK
REDUCTION ACT
The collection of information con-
tained in this revenue procedure has been
reviewed and approved by the Office
of Management and Budget in accor-
dance with the Paperwork Reduction Act
(44 U.S.C. 3507) under control numbers
1545–1551 and 1545–1541. Responses to
this collection of information are neces-
sary and will be used to determine whether
the taxpayer properly changed to a permit-
ted method of accounting. The estimated
annual frequency of responses is on oc-
casion. An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information un-
less the collection of information displays
a valid OMB control number.
The collections of information in this
revenue procedure are in sections 2.02,
2.05, 2.08, 2.09, 2.10, 2.11, 2.23, 3.01,
and 3.02. The likely respondents are the
following: individuals, farms, business or
other for-profit institutions, nonprofit in-
stitutions, and small businesses or organi-
zations.
Sections 2.02, 2.05, 2.08, 2.09, 2.10,
2.11 and 2.23 will increase the estimated
number of responses and burden hours
for the control number 1545–1551. The
estimated annual burden per respon-
dent/recordkeeper for control number
1545–1551 varies from 1/6 hour to 8 1/2
hours, depending on individual circum-
stances, with an estimated average of 1
1/4 hours. The estimated number of re-
spondents is 14,060. The estimated total
annual reporting and/or recordkeeping
burden for control number 1545–1551 is
15,206 hours.
Sections 2.09, 3.01 and 3.02 will in-
crease the estimated number of responses
and burden hours for the control number
1545–1541. The estimated annual burden
for control number 1545–1541 per respon-
dent/recordkeeper varies from 1/6 hour to
5 hours, depending on individual circum-
stances, with an estimated average of 3 1/4
hours. The estimated number of respon-
dents is 3,070. The estimated total annual
reporting and/or recordkeeping burden for
control number 1545–1541 is 9,743 hours.
DRAFTING INFORMATION
The principal author of this revenue
procedure is Karla M. Meola of the
Office of Chief Counsel (Income Tax
& Accounting). For further information
concerning this revenue procedure, please
contact Ms. Meola at (202) 622–4930.
2009–38 I.R.B.387September 21, 2009

Part IV. Items o
fGeneralInterest
Corrections to Rev. Proc.
2009–39
Announcement 2009–67
PURPOSE
The Internal Revenue Service publicly
released Rev. Proc. 2009–39 on August
27, 2009, in advance of its publication in
the Internal Revenue Bulletin on Septem-
ber 21, 2009. Rev. Proc. 2009–39 am-
plified, clarified, and modified Rev. Proc.
2008–52, 2008–36 I.R.B. 587, which pro-
vides procedures under which taxpayers
may obtain automatic consent of the Com-
missioner to change certain methods of ac-
counting. Rev. Proc. 2009–39 also mod-
ified and clarified Rev. Proc. 97–27,
1997–1 C.B. 680, as amplified and mod-
ified by Rev. Proc. 2002–19, 2002–1 C.B.
696, as amplified and clarified by Rev.
Proc. 2002–54, 2002–2 C.B. 432, and as
modified by Rev. Proc. 2007–67, 2007–2
C.B. 1072, which provides procedures for
obtaining the advance consent of the Com-
missioner of Internal Revenue to change a
method of accounting.
Rev. Proc. 2009–39 modified the pro-
cedures for a taxpayer that wants to make
a change in method of accounting under
Rev. Proc. 2008–52 or Rev. Proc. 97–27
while that taxpayer has a refund or credit
under review by the Joint Committee on
Taxation. This announcement corrects cer-
tain procedures described in Rev. Proc.
2009–39 for a taxpayer that has a refund
or credit under review by the Joint Com-
mittee on Taxation. Rev. Proc. 2009–39,
as published in Internal Revenue Bulletin
2009–38, reflects the corrections described
in this announcement.
CORRECTIONS
(1) In section 2.02(2) of Rev. Proc.
2009–39, section 3.08 (Under examina-
tion) of Rev. Proc. 2008–52 was modi-
fied to insert new section 3.08(5) regard-
ing a taxpayer before the Joint Committee
on Taxation. Section 2.02(2) of Rev. Proc.
2009–39 is correctedto delete the second
paragraph of new section 3.08(5) of Rev.
Proc. 2008–52, as modified by Rev. Proc.
2009–39.
(2) In section 2.05(2) of Rev. Proc.
2009–39, sections 6.03(2) (90-day win-
dow), 6.03(3) (120-day window), and
6.03(4) (director consent) of Rev. Proc.
2008–52 were modified to insert pro-
cedures for a taxpayer before the Joint
Committee on Taxation. Section 2.05(2)
of Rev. Proc. 2009–39 is corrected to
delete the last sentence in the following
sections of Rev. Proc. 2008–52, as mod-
ified by Rev. Proc. 2009–39: sections
6.03(2)(a); 6.03(3)(a); and 6.03(4)(a).
(3) In section 2.05(2) of Rev. Proc.
2009–39, section 6.03(5) (Changes lack-
ing audit protection) was modified to insert
procedures for a taxpayer before the Joint
Committee on Taxation. Section 2.05(2)
of Rev. Proc. 2009–39 is modified to have
section 6.03(5)(b) of Rev. Proc. 2008–52,
as modified by Rev. Proc. 2009–39, read
as follows:
(b) A taxpayer changing a method of ac-
counting under this section 6.03(5) (or if
section 6.02(3)(b) of this revenue proce-
dure applies, the designated shareholder)
must provide a copy of the application to
the examining agent(s) for any examina-
tion that is in process at the same time it
files the copy of the application with the
national office. The application must con-
tain the name(s) and telephone number(s)
of the examining agent(s).
(4) In section 2.05(2) of Rev. Proc.
2009–39, section 6.03(6) (Issue pend-
ing) was modified to insert procedures
for a taxpayer before the Joint Commit-
tee on Taxation. Section 2.05(2) of Rev.
Proc. 2009–39 is modified to have sec-
tion 6.03(6)(b) of Rev. Proc. 2008–52, as
modified by Rev. Proc. 2009–39, read as
follows:
(b) A taxpayer that requests to change
a method of accounting under this sec-
tion 6.03(6) (or if section 6.02(3)(b) of this
revenue procedure applies, the designated
shareholder) must provide a copy of the
application to the examining agent(s) at the
same time it files a copy of the application
with the national office. The application
must contain the name(s) and telephone
number(s) of the examining agent(s).
(5) In section 3.01 of Rev. Proc.
2009–39, Rev. Proc. 97–27 was modi-
fied to insert new section 3.07(3) of Rev.
Proc. 97–27 regarding a taxpayer before
the Joint Committee on Taxation. Section
3.01 of Rev. Proc. 2009–39 is corrected
to delete the following sentences in new
section 3.07(3) of Rev. Proc. 97–27: the
first sentence of the second paragraph; and
the fourth and fifth sentences of the third
paragraph.
EFFECT ON OTHER DOCUMENTS
Rev. Proc. 2009–39 is modified.
The principal author of this announce-
ment is Karla M. Meola of the Office
of Associate Chief Counsel (Income Tax
& Accounting). For further information
regarding this announcement, contact
Karla M. Meola at (202) 622–4930 (not a
toll-free call).
Announcement of Disciplinary Sanctions From the Office
of Professional Responsibility
Announcement 2009-68
TheOfficeofProfessionalResponsi-
bility (OPR) announcesrecent disciplinary
sanctions involving attorneys, certified
public accountants, enrolled agents, en-
rolled actuaries, enrolled retirement plan
agents, and appraisers. These individuals
are subject to the regulations governing
practice before the Internal Revenue Ser-
vice (IRS), which are set out in Title 31,
Code of Federal Regulations, Part 10, and
which are published in pamphlet form as
Treasury Department Circular No. 230.
September 21, 20093882009–38 I.R.B.

The regulations prescribe the duties and
restrictions relating to such practice and
prescribe the disciplinary sanctions for
violating the regulations.
The disciplinary sanctions to be im-
posed for violation of the regulations are:
Disbarred from practice before the
IRS—An individual who is disbarred is
not eligible to represent taxpayers before
the IRS.
Suspended from practice before the
IRS—An individual who is suspended is
not eligible to represent taxpayers before
the IRS during the term of the suspension.
Censured in practice before the
IRS—Censure is a public reprimand. Un-
like disbarment or suspension, censure
does not affect an individual’s eligibility
to represent taxpayers before the IRS, but
OPR may subject the individual’s future
representations to conditions designed to
promote high standards of conduct.
Monetary penalty—A monetary
penalty may be imposed on an individual
who engages in conduct subject to sanc-
tion or on an employer, firm, or entity
if the individual was acting on its behalf
and if it knew, or reasonably should have
known, of the individual’s conduct.
Disqualification of appraiser—An
appraiser who is disqualified is barred
from presenting evidence or testimony in
any administrative proceeding before the
Department of the Treasury or the IRS.
Under the regulations, attorneys, cer-
tified public accountants, enrolled agents,
enrolled actuaries, and enrolled retirement
plan agents may not assist, or accept assis-
tance from, individuals who are suspended
or disbarred with respect to matters consti-
tuting practice (i.e., representation) before
the IRS, and they may not aid or abet sus-
pended or disbarred individuals to practice
before the IRS.
Disciplinary sanctions are described in
these terms:
Disbarred by decision after hearing,
Suspended by decision after hearing,
Censured by decision after hearing,
Monetary penalty imposed after hear-
ing, and Disqualified after hearing—An
administrative law judge (ALJ) conducted
an evidentiary hearing upon OPR’s com-
plaint alleging violation of the regulations
and issued a decision imposing one of
these sanctions. After 30 days from the
issuance of the decision, in the absence of
an appeal, the ALJ’s decision became the
final agency decision.
Disbarred by default decision, Sus-
pended by default decision, Censured by
default decision, Monetary penalty im-
posed by default decision, and Disqual-
ified by default decision—An ALJ, after
findingthatnoanswertoOPR’scomplaint
had been filed, granted OPR’s motion for a
default judgment and issued a decision im-
posing one of these sanctions.
Disbarment by decision on appeal,
Suspended by decision on appeal, Cen-
sured by decision on appeal, Monetary
penalty imposed by decision on ap-
peal, and Disqualified by decision on
appeal—The decision of the ALJ was
appealed to the agency appeal authority,
acting as the delegate of the Secretary
of the Treasury, and the appeal authority
issued a decision imposing one of these
sanctions.
Disbarred by consent, Suspended by
consent, Censured by consent, Mone-
tary penalty imposed by consent, and
Disqualified by consent—In lieu of a
disciplinary proceeding being instituted
or continued, an individual offered a con-
sent to one of these sanctions and OPR
accepted the offer. Typically, an offer
of consent will provide for: suspension
for an indefinite term; conditions that the
individual must observe during the sus-
pension; and the individual’s opportunity,
after a stated number of months, to file
with OPR a petition for reinstatement af-
firming compliance with the terms of the
consent and affirming current eligibility
to practice (i.e., an active professional
license or active enrollment status). An
enrolled agent or an enrolled retirement
plan agent may also offer to resign in order
to avoid a disciplinary proceeding.
Suspended by decision in expedited
proceeding, Suspended by default de-
cision in expedited proceeding, Sus-
pended by consent in expedited pro-
ceeding—OPR instituted an expedited
proceeding for suspension (based on cer-
tain limited grounds, including loss of a
professional license and criminal convic-
tions).
OPR has authority to disclose the
grounds for disciplinary sanctions in these
situations: (1) an ALJ or the Secretary’s
delegate on appeal has issued a decision
on or after September 26, 2007, which was
theeffectivedateofamendmentstothe
regulations that permit making such deci-
sions publicly available; (2) the individual
has settled a disciplinary case by signing
OPR’s “consent to sanction” form, which
requires consenting individuals to admit to
one or more violations of the regulations
and to consent to the disclosure of the in-
dividual’s own return information related
to the admitted violations (for example,
failure to file Federal income tax returns);
or (3) OPR has issued a decision in an
expedited proceeding for suspension.
Announcements of disciplinary sanc-
tions appear in the Internal Revenue Bul-
letin at the earliest practicable date. The
sanctions announced below are alphabet-
ized first by the names of states and sec-
ond by the last names of individuals. Un-
less otherwise indicated, section numbers
(e.g., § 10.51) refer to the regulations.
2009–38 I.R.B.389September 21, 2009

City & StateNameProfessionalDisciplinary SanctionEffective Date(s)
Designation
California
San FranciscoMiller, Gregory R.CPASuspended by consent
for admitted violations
of §§ 10.22 & 10.51
(improperly advised
a client regarding the
reporting of deferred
compensation)
Indefinite from
September 22,
2008
Delaware
WilmingtonDavis, Michael R.AttorneySuspended by decision
in expedited proceeding
under § 10.82 (suspension
of attorney license
Indefinite from
August 24, 2009
Florida
HallandaleAronsky, Richard A.AttorneySuspended by default
decision in expedited
proceeding under § 10.82
(attorney disbarment)
Indefinite from
August 24, 2009
TampaCrase, Katherine D.AttorneySuspended by default
decision in expedited
proceeding under
§ 10.82 (conviction
under 18 U.S.C. § 171,
conspiracy to commit
mail fraud, and 18 U.S.C.
§ 1341 and 2, mail fraud)
Indefinite from
August 24, 2009
Key BiscayneWeisenfeld, Joseph J.AttorneySuspended by default
decision in expedited
proceeding under § 10.82
(attorney disbarment)
Indefinite from
August 24, 2009
September 21, 20093902009–38 I.R.B.

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the ef-
fect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is be-
ingextendedtoapplytoavariationofthe
fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that the
same principle also applies to B, the earlier
ruling is amplified. (Compare withmodi-
fied,below).
Clarifiedis used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion.
It is not used where a position in a prior
ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
withamplifiedandclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
beingstatedinanewruling.
Supersededdescribes a situation where
the new ruling does nothing more than re-
state the substance and situation of a previ-
ously published ruling (or rulings). Thus,
the term is used to republish under the
1986 Code and regulations the same po-
sition published under the 1939 Code and
regulations. The term is also used when
it is desired to republish in a single rul-
ing a series of situations, names, etc., that
were previously published over a period of
time in separate rulings. If the new rul-
ing does more than restate the substance
of a prior ruling, a combination of terms
is used. For example,modifiedandsu-
persededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is self
contained. In this case, the previously pub-
lished ruling is first modified and then, as
modified, is superseded.
Supplementedis used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names in
subsequent rulings. After the original rul-
ing has been supplemented several times, a
new ruling may be published that includes
the list in the original ruling and the ad-
ditions, and supersedes all prior rulings in
the series.
Suspendedis used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of cases
in litigation, or the outcome of a Service
study.
Abbreviations
The fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
DC—Dummy Corporation.
DE—Donee.
Del. Order
—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
2009–38 I.R.B.iSeptember 21, 2009

Numerical Finding List
1
Bulletins 2009–27 through 2009–38
Announcements:
2009-56, 2009-28 I.R.B.145
2009-57, 2009-29 I.R.B.158
2009-58, 2009-29 I.R.B.158
2009-59, 2009-29 I.R.B.158
2009-60, 2009-30 I.R.B.166
2009-61, 2009-33 I.R.B.246
2009-62, 2009-33 I.R.B.247
2009-63, 2009-33 I.R.B.248
2009-64, 2009-36 I.R.B.319
2009-65, 2009-36 I.R.B.319
2009-66, 2009-37 I.R.B.364
2009-67, 2009-38 I.R.B.388
2009-68, 2009-38 I.R.B.388
Notices:
2009-51, 2009-28 I.R.B.128
2009-55, 2009-31 I.R.B.170
2009-57, 2009-29 I.R.B.147
2009-58, 2009-30 I.R.B.163
2009-59, 2009-31 I.R.B.170
2009-60, 2009-32 I.R.B.181
2009-61, 2009-32 I.R.B.181
2009-62, 2009-35 I.R.B.260
2009-63, 2009-34 I.R.B.252
2009-64, 2009-36 I.R.B.307
2009-69, 2009-35 I.R.B.261
2009-70, 2009-34 I.R.B.255
2009-71, 2009-35 I.R.B.262
2009-72, 2009-37 I.R.B.325
2009-73, 2009-38 I.R.B.369
2009-74, 2009-38 I.R.B.370
Proposed Regulations:
REG-152166-05, 2009-32 I.R.B.183
REG-112994-06, 2009-28 I.R.B.144
REG-113289-08, 2009-33 I.R.B.244
REG-130200-08, 2009-31 I.R.B.174
Revenue Procedures:
2009-30, 2009-27 I.R.B.27
2009-31, 2009-27 I.R.B.107
2009-32, 2009-28 I.R.B.142
2009-33, 2009-29 I.R.B.150
2009-34, 2009-34 I.R.B.258
2009-35, 2009-35 I.R.B.265
2009-36, 2009-35 I.R.B.304
2009-37, 2009-36 I.R.B.309
2009-38, 2009-37 I.R.B.362
2009-39, 2009-38 I.R.B.371
Revenue Rulings:
2009-18, 2009-27 I.R.B.1
2009-19, 2009-28 I.R.B.111
2009-20, 2009-28 I.R.B.112
2009-21, 2009-30 I.R.B.162
2009-22, 2009-31 I.R.B.167
2009-23, 2009-32 I.R.B.177
2009-24, 2009-36 I.R.B.306
2009-25, 2009-38 I.R.B.365
2009-26, 2009-38 I.R.B.366
2009-29, 2009-37 I.R.B.322
Treasury Decisions:
9452, 2009-27 I.R.B.1
9453, 2009-28 I.R.B.114
9454, 2009-32 I.R.B.178
9455, 2009-33 I.R.B.239
9456, 2009-33 I.R.B.188
1
A cumulative list of all revenue rulings, revenueprocedures, Treasury decisions, etc., publishedin Internal Revenue Bulletins 2009–1 through 2009–26 is in Internal Revenue Bulletin
2009–26, dated June 29, 2009.
September 21, 2009ii2009–38 I.R.B.

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2009–27 through 2009–38
Announcements:
2006-93
Superseded by
Ann. 2009-62, 2009-33 I.R.B.247
Notices:
2004-67
Supplemented and superseded by
Notice 2009-59, 2009-31 I.R.B.170
2006-70
Obsoleted by
T.D. 9453, 2009-28 I.R.B.114
2006-109
Superseded in part by
Rev. Proc. 2009-32, 2009-28 I.R.B.142
2008-43
Obsoleted by
REG-113289-08, 2009-33 I.R.B.244
2009-28
Clarified by
Notice 2009-69, 2009-35 I.R.B.261
Revenue Procedures:
97-27
Clarified and modified by
Rev. Proc. 2009-39, 2009-38 I.R.B.371
97-49
Modified and superseded by
Rev. Proc. 2009-31, 2009-27 I.R.B.107
2005-63
Modified by
Rev. Proc. 2009-39, 2009-38 I.R.B.371
2007-44
Modified by
Rev. Proc. 2009-36, 2009-35 I.R.B.304
2008-38
Superseded by
Rev. Proc. 2009-30, 2009-27 I.R.B.27
2008-44
Superseded by
Rev. Proc. 2009-35, 2009-35 I.R.B.265
2008-52
Amplified, clarified, and modified by
Rev. Proc. 2009-39, 2009-38 I.R.B.371
2008-65
Modified by
Rev. Proc. 2009-33, 2009-29 I.R.B.150
Revenue Procedures— Continued:
2009-16
Modified by
Rev. Proc. 2009-33, 2009-29 I.R.B.150
2009-39
Modified by
Ann. 2009-67, 2009-38 I.R.B.388
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2009–1 through 2009–26 is in Internal Revenue Bulletin 2009–26, dated June 29, 2009.
2009–38 I.R.B.iiiSeptember 21, 2009

September 21, 20092009–38 I.R.B.

2009–38 I.R.B.September 21, 2009

September 21, 20092009–38 I.R.B.

INTERNAL REVENUE BULLETIN
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Check the publications and/or subscription(s) desired on the reverse, complete the order blank, enclose the proper remittance,
detach entire page, and mail to the Superintendent of Documents, P.O. Box 371954, Pittsburgh PA, 15250–7954. Please allow two to
six weeks, plus mailing time, for delivery.
WE WELCOME COMMENTS ABOUT THE INTERNAL
REVENUE BULLETIN
If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it, we
would be pleased to hear from you. You can email us your suggestions or comments through the IRS Internet Home Page (www.irs.gov)
or write to the IRS Bulletin Unit, SE:W:CAR:MP:T:T:SP, Washington, DC 20224.
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