rp-18-49.pdf

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26 CFR 601.204: Changes in accounting periods and method of accounting.
(Also: Part I, Sections 446, 451; 1.451-1).

Rev. Proc. 2018-49

SECTION 1. PURPOSE
This revenue procedure modifies Rev. Proc. 2018-29, 2018-22 I.R.B. 634, and
Rev. Proc. 2018-31, 2018-22 I.R.B. 637, to allow a taxpayer that early adopted (Early
Adopter) a method of recognizing revenues described in the new financial accounting
standards issued by the Financial Accounting Standards Board (FASB) and
International Accounting Standards Board (IASB) (New Standards) to change its
method of accounting for the recognition of income for federal income tax purposes to a
method of recognizing revenues described in the New Standards under section 16.11 of
Rev. Proc. 2018-31. Early adoption of the New Standards was allowed for reporting
periods beginning after December 15, 2016.
SECTION 2. BACKGROUND
.01 On May 28, 2014, FASB and IASB jointly announced new financial accounting
standards for revenue recognition, titled “Revenue from Contracts with Customers

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(Topic 606)”. See FASB Update No. 2014-09 and IASB International Financial
Reporting Standard (IFRS) 15.
.02 Publicly-traded entities, certain not-for-profit entities, and certain employee
benefit plans are required to adopt the New Standards for annual reporting periods
beginning after December 15, 2017. All other entities are required to adopt the New
Standards for annual reporting periods beginning after December 15, 2018. However,
early adoption was allowed for reporting periods beginning after December 15, 2016.
See FASB Update No. 2015-14, “Revenue from Contracts with Customers (Topic 606),
Deferral of the Effective Date.”
.03 Rev. Proc. 2015-13, 2015-5 I.R.B. 419, as clarified and modified by Rev. Proc.
2015-33, 2015-24 I.R.B. 1067, and as modified by Rev. Proc. 2016-1, 2016-1 I.R.B. 1,
and Rev. Proc. 2017-59, 2017-48 I.R.B. 543, provides the general procedures by which
a taxpayer may obtain automatic consent of the Commissioner to a change in method of
accounting described in the List of Automatic Changes. Rev. Proc. 2018-31 provides
the List of Automatic Changes.
.04 Rev. Proc. 2018-29, as published in the Internal Revenue Bulletin on May 29,
2018, modified Rev. Proc. 2018-31 to provide the procedures for taxpayers that want to
change their methods of accounting for the recognition of income for federal income tax
purposes to a method of accounting that they use to recognize revenues under the New
Standards. After Rev. Proc. 2018-29 was released, questions were received about
whether Rev. Proc. 2018-29 applies to Early Adopters. This revenue procedure
modifies the effective date in section 5.01 of Rev. Proc. 2018-29, and certain

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paragraphs of section 16.11 of Rev. Proc. 2018-31 to provide that this automatic
method change applies to Early Adopters.
SECTION 3. MODIFICATIONS TO REV. PROC. 2018-29 AND REV. PROC. 2018-31
.01 Modifications to Rev. Proc. 2018-29. Section 5.01 of Rev. Proc. 2018-29 is
modified to read as follows:
.01 In general. Except as otherwise provided under this section, this revenue
procedure is effective on May 10, 2018, and applies to taxable years ending on or
before May 10, 2021.
.02 Modifications to Rev. Proc. 2018-31. Rev. Proc. 2018-29 modified Rev. Proc.
2018-31 to add new section 16.11 to the List of Automatic Changes. This revenue
procedure also modifies Rev. Proc. 2018-31 to be consistent with the modification made
to Rev. Proc. 2018-29.
(1) Section 16.11(4) is modified to read as follows:
(4) Time for making change. The change under this section 16.11 may only be
made for a taxable year ending on or before May 10, 2021.
(2) Section 16.11(6) is modified to read as follows:
(6) Certain eligibility rule inapplicable. The eligibility rule in section 5.01(1)(f) of
Rev. Proc. 2015-13 does not apply to this change for a taxable year ending on or before
May 10, 2021.
SECTION 4. EFFECT ON OTHER DOCUMENTS
This revenue procedure modifies Rev. Proc. 2018-29 and Rev. Proc. 2018-31.
SECTION 5. EFFECTIVE DATE
This revenue procedure is effective on May 10, 2018.

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SECTION 6. DRAFTING INFORMATION
The principal author of this revenue procedure is Justin R. Grill of the Office of
Associate Chief Counsel (Income Tax & Accounting). For further information regarding
this revenue procedure, contact Mr. Grill at (202) 317-7003 (not a toll free number).