rp-20-13.pdf

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26 CFR 601.601: Rules and regulations.
(Also Part 1, §§ 168, 263A, 446, 448; 1.168(i)-4, 1.168(k)-1, 1.168(k)-2, 1.263A-1,
1.263A-4, 1.446-1, 1.448-1T.)

Rev. Proc. 2020-13

SECTION 1. PURPOSE
.01 This revenue procedure provides procedures applicable to a taxpayer in a
farming business regarding the application of § 263A of the Internal Revenue Code
(Code). Prior to the enactment of Public Law 115-97, 131 Stat. 2054 (Dec. 22, 2017),
commonly referred to as the Tax Cuts and Jobs Act (TCJA), a taxpayer in a farming
business could elect under § 263A(d)(3) to have § 263A not apply to certain plants
produced by the taxpayer’s farming business. Section 13102 of the TCJA added new
§ 263A(i) to the Code, which provides that § 263A does not apply to a taxpayer, other
than a tax shelter (as defined in § 448(d)(3) of the Code), for a taxable year in which the
taxpayer qualifies as a small business taxpayer by satisfying the gross receipts test in
§ 448(c) of the Code.
.02 Section 5 of this revenue procedure provides the exclusive procedures for a
taxpayer that elected under § 263A(d)(3) to have § 263A not apply to certain plants
produced by the taxpayer in a farming business if the taxpayer: (1) wants to revoke its

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election under § 263A(d)(3); (2) qualifies as a small business taxpayer within the
meaning of § 263A(i); and (3) wants to apply the exemption from § 263A that is
provided in § 263A(i) beginning with such revocation taxable year.
.03 Section 6 of this revenue procedure provides the exclusive procedures for a
taxpayer in a farming business that uses the exemption from the application of § 263A
provided under § 263A(i) if the taxpayer: (1) no longer qualifies as a small business
taxpayer eligible to use the exemption under § 263A(i); and (2) wants to make an
election under § 263A(d)(3) and the accompanying regulations for certain plants
produced by the taxpayer in a farming business for the first taxable year in which the
taxpayer is ineligible to use the exemption in § 263A(i).
SECTION 2. BACKGROUND
.01 Section 263A generally requires direct costs and an allocable portion of indirect
costs of certain property produced or acquired for resale by a taxpayer to be included in
inventory costs, in the case of property that is inventory in the hands of the taxpayer, or
to be capitalized, in the case of other property.
.02 Section 263A(d)(3) and its accompanying regulations allow certain taxpayers
that are not required to use an accrual method of accounting under § 447 (relating to
certain corporations engaged in farming) or § 448(a)(3) (relating to tax shelters) to make
an election to have § 263A not apply to certain costs related to certain plants produced
in any farming business carried on by such taxpayer. Section 263A(e)(4) and
§ 1.263A-4(a)(4) of the Income Tax Regulations generally define the term “farming
business” as a trade or business involving the cultivation of land or the raising or

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harvesting of any agricultural or horticultural commodity, including: the trade or
business of operating a nursery or sod farm; the raising or harvesting of trees bearing
fruit, nuts, or other crops; the raising of ornamental trees (other than evergreen trees
that are more than 6 years old at the time they are severed from their roots); and the
raising, shearing, feeding, caring for, training, and management of animals. See
§ 1.263A-4 for specific guidance on the application of § 263A and the accompanying
regulations to farming businesses.
.03 If the election under § 263A(d)(3) is made, the taxpayer and any related person
in a farming business are subject to special rules provided in § 263A(e)(1) and (2).
Under these special rules, the plants produced by the taxpayer are treated as § 1245
property, if not otherwise § 1245 property, and any gain resulting from any disposition of
a plant is recaptured to the extent of the total amount of the deductions that, but for the
election, would have been required to be capitalized with respect to the plant. In
addition, the special rules require that the alternative depreciation system (ADS), as
described in § 168(g)(2), be applied to all property used predominantly in any farming
business of the taxpayer or related person and placed in service in any taxable year
during which the election is in effect.
.04 Section 263A(d)(3)(D) and § 1.263A-4(d)(1) provide that an election under
§ 263A(d)(3) not to capitalize costs under § 263A for certain plants produced in the
taxpayer’s farming business is a method of accounting under § 446 and, once made,
may be revoked only with the consent of the Secretary of the Treasury or his delegate.
A taxpayer must file a change in method of accounting request using the non-automatic

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change procedures of Rev. Proc. 2015-13, 2015-5 I.R.B. 419, (or its successor) to
revoke its election under § 263A(d)(3) before applying § 263A to such capitalizable
costs.
.05 Section 13102 of the TCJA added § 263A(i), which provides that § 263A does
not apply to a taxpayer, other than a tax shelter prohibited from using the cash receipts
and disbursements method under § 448(a)(3), for a taxable year in which the taxpayer
meets the gross receipts test of § 448(c). Section 263A(i) applies to taxable years
beginning after December 31, 2017.
.06 The exemption provided in § 263A(i) does not require a taxpayer to apply the
special rules provided in § 263A(e)(1) and (2) relating to the treatment of plants
produced by the taxpayer as § 1245 property or, in the case of the taxpayer or related
person, to use ADS for all property predominantly used in any farming business of the
taxpayer or related person. However, any plant as defined in section 4.06 of this
revenue procedure that is or has been treated as § 1245 property with respect to
taxable years before the year in which the revocation is effective continues to be treated
as § 1245 property. See §§ 263A(e)(1)(A)(ii), 1245(a)(3) and 1.1245-3(c).
.07 Some taxpayers have inquired whether they must file a Form 3115, Application
for Change in Accounting Method, to revoke the election under § 263A(d)(3) and to
apply the exemption under § 263A(i) for the same taxable year. A taxpayer that
revokes its election under § 263A(d)(3) and applies the exemption under § 263A(i) for
the same taxable year is not changing its treatment of plants produced in the taxpayer’s
farming business under § 263A. Consequently, there is not a change in method of

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accounting under § 446(e). However, the consent of the Commissioner of Internal
Revenue (Commissioner) is needed to revoke the election under § 263A(d)(3) pursuant
to §§ 263A(d)(3)(D) and 1.263A-4(d)(1). Section 5 of this revenue procedure provides
the exclusive procedures for obtaining the consent of the Commissioner to revoke the
election under § 263A(d)(3) by a taxpayer in a farming business if the taxpayer:
(1) meets the requirements of § 263A(i); (2) previously elected under § 263A(d)(3) to
have § 263A not apply to certain plants produced by the taxpayer in a farming business;
and (3) wants to apply the exemption from § 263A provided in § 263A(i) for the same
taxable year as the taxable year it revokes its election under § 263A(d)(3).
.08 The Department of the Treasury and the Internal Revenue Service (IRS) also
are aware that a taxpayer in a farming business may become ineligible for the
exemption to capitalization under § 263A(i) because, for example, the taxpayer no
longer satisfies the gross receipts test in § 448(c). Such a taxpayer might want to
make an election under § 263A(d)(3) for the first taxable year the taxpayer is no longer
eligible to apply § 263A(i). Section 6 of this revenue procedure provides the exclusive
procedures for a taxpayer in a farming business if the taxpayer: (1) uses the
exemption to capitalization under § 263A(i) with respect to a farming business; (2) is no
longer eligible to use the exemption under § 263A(i) because the taxpayer no longer
meets the requirements of § 263A(i); and (3) wants to make the election under
§ 263A(d)(3) and the accompanying regulations for the first taxable year the taxpayer is
no longer eligible to apply § 263A(i).
SECTION 3. SCOPE

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This revenue procedure applies to a taxpayer that:
.01 Is an eligible small business taxpayer, as defined in section 4.01 of this
revenue procedure, that wants to revoke its election made under § 263A(d)(3), and in
the same taxable year, apply the exemption under § 263A(i); or
.02 Is a former eligible small business taxpayer, as defined in section 4.02 of this
revenue procedure, that wants to make an election under § 263A(d)(3) in the first
taxable year that the taxpayer no longer qualifies to use the exemption under § 263A(i);
or
.03 Is a related person, as defined in section 4.03 of this revenue procedure, of
either:
(1) An eligible small business taxpayer, as defined in section 4.01 of this
revenue procedure, or
(2) A former eligible small business taxpayer, as defined in section 4.02 of this
revenue procedure.
SECTION 4. DEFINITIONS
.01 Eligible small business taxpayer. An eligible small business taxpayer is a
taxpayer, other than a tax shelter as defined in § 448(d)(3), that meets the § 448(c)
gross receipts test, as defined in section 4.05 of this revenue procedure, and that:
(1) made a valid election under § 263A(d)(3) for plants produced in the
taxpayer’s farming business for a taxable year prior to the taxable year for which the
taxpayer wants to revoke such election; and
(2) properly implemented the election under § 263A(d)(3).

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.02 Former eligible small business taxpayer. A former eligible small business
taxpayer is a taxpayer whose method of accounting is not to capitalize costs under
§ 263A based on the exemption provided in § 263A(i), and for the taxable year:
(1) becomes ineligible to use the exemption under § 263A(i); and
(2) is eligible to and wants to elect under § 263A(d)(3) not to capitalize costs
under § 263A for certain plants produced in the taxpayer’s farming business.
.03 Related person. A related person is as defined in § 1.263A-4(d)(4)(iii).
.04 Farming business. A farming business is as defined in § 263A(e)(4) and
§ 1.263A-4(a)(4).
.05 Gross receipts test. The gross receipts test is as defined § 448(c).
.06 Plant. A plant is as defined in § 1.263A-4(a)(4)(A).
SECTION 5. PROCEDURES FOR ELIGIBLE SMALL BUSINESS TAXPAYERS TO
REVOKE THE ELECTION MADE UNDER § 263A(d)(3) AND TO APPLY § 263A(i)
.01 In general. An eligible small business taxpayer has the consent of the
Commissioner to revoke its election made under § 263A(d)(3) and § 1.263A-4(d)(3)
(§ 263A(d)(3) election) and apply the exemption under § 263A(i) for the same taxable
year if the taxpayer complies with the procedures provided in this section 5. See
section 5.03 of this revenue procedure for the effect of the revocation of the
§ 263A(d)(3) election on the depreciation of property used in a farming business of the
eligible small business taxpayer or related person. A valid § 263A election revoked
pursuant to this revenue procedure remains in effect with respect to taxable years
before the year in which the revocation is effective. An eligible small business taxpayer

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that revokes its own § 263A(d)(3) election but also is a related person to a taxpayer that
made a § 263A(d)(3) election that has not also been revoked must continue to apply
§ 1.263A-4(d)(4)(ii) for taxable years that the unrevoked § 263A(d)(3) election is in
effect.
.02 Time and manner of revocation.
(1) In general. Except as provided in section 5.02(2) of this revenue procedure,
an eligible small business taxpayer revokes its § 263A(d)(3) election under this section
5 on its original federal income tax return, including extensions, for the taxable year for
which the taxpayer wants to revoke its § 263A(d)(3) election (revocation year), by:
(a) Continuing not to capitalize costs of plants produced in its farming
business under § 263A;
(b) Applying section 5.03 of this revenue procedure for determining
depreciation of property predominantly used in a farming business of the eligible small
business taxpayer or related person; and
(c) Continuing to treat plants that are or have been treated as § 1245
property for prior taxable years as § 1245 property. See §§ 263A(e)(1)(A)(ii),
1245(a)(3) and 1.1245-3(c).
(2) Making a revocation of § 263A(d)(3) election for a taxable year beginning in
2018. If an eligible small business taxpayer timely filed its federal income tax return for
its taxable year beginning in 2018 (2018 taxable year), wants to revoke its § 263A(d)(3)
election for the 2018 taxable year, and did not revoke the § 263A(d)(3) election within
the time and in the manner provided in section 5.02(1) of this revenue procedure, the

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taxpayer may revoke its § 263A(d)(3) election by using one of the options described in
this section 5.02(2):
(a) Amended return or AAR. The taxpayer may file an amended federal
income tax return, or in the case of a partnership subject to the centralized partnership
audit regime enacted as part of the Bipartisan Budget Act of 2015, an administrative
adjustment request (AAR), for the 2018 taxable year before the taxpayer files its federal
income tax return for the first taxable year beginning after the 2018 taxable year. This
amended return or AAR must include the adjustment to taxable income for the
revocation of the § 263A(d)(3) election in the manner provided in section 5.02(1) of this
revenue procedure and any collateral adjustments to taxable income or to tax liability.
Such collateral adjustments also must be made on federal income tax returns or AARs
for any affected succeeding taxable years, if applicable. If an eligible small business
taxpayer uses the option under this section 5.02(2)(a), then all related persons affected
by the taxpayer’s revocation of the § 263A(d)(3) election must also use this option to
reflect the taxpayer’s revocation; or
(b) Form 3115. The taxpayer may file a Form 3115 with the eligible small
business taxpayer’s timely filed federal income tax return for the first, second, or third
taxable year beginning after the 2018 taxable year. Only during this limited period of
time will the late revocation of the § 263A(d)(3) election under this section 5.02(2)(b) be
treated as a change in method of accounting with a § 481(a) adjustment. No part of
the § 481(a) adjustment shall be based on amounts that were, or which should have
been, taken into account in computing taxable income for taxable years prior to the

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2018 taxable year. The § 481(a) adjustment takes into account only the adjustments
resulting from the change in the applicable depreciation method, the applicable recovery
period, and/or the applicable convention under the ADS to the applicable depreciation
method, the applicable recovery period, and/or the applicable convention under the
general depreciation system of § 168(a) (GDS) for all property used predominantly in
any farming business of the eligible small business taxpayer. The time and manner of
making this late revocation are described in the procedures for automatic method
changes described in Rev. Proc. 2015-13 and section 7 of this revenue procedure. If
an eligible small business taxpayer uses the option under this section 5.02(2)(b), then
all related persons affected by the taxpayer’s revocation of the § 263A(d)(3) election
must also use this option to reflect the taxpayer’s revocation.
.03 Changing depreciation of property to the GDS.
(1) In general. Beginning with the revocation year, an eligible small business
taxpayer that revokes its § 263A(d)(3) election under this section 5, or a related person,
is not required under § 263A(e)(2) and § 1.263A-4(d)(4)(ii) to depreciate all property
used predominantly in any farming business of the taxpayer, or related person, in
accordance with the ADS, unless such property is otherwise required to be depreciated
in accordance with the ADS (for example, § 168(g)(1)(G) applies to such property).
The preceding sentence applies to such property placed in service by the eligible small
business taxpayer or related person in taxable years beginning before the revocation
year (existing property) and to such property placed in service by the eligible small
business taxpayer or related person in the revocation year and subsequent taxable

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years (newly-acquired property). If an eligible small business taxpayer revokes its own
§ 263A(d)(3) election but also is a related person to a taxpayer that made a
§ 263A(d)(3) election that has not been revoked, the eligible small business taxpayer
must continue to apply § 263A(e)(2) and § 1.263A-4(d)(4)(ii) for taxable years that such
§ 263A(d)(3) election is in effect.
(2) Existing property. For all property used predominantly in any farming
business of the eligible small business taxpayer or related person that was placed in
service in a taxable year prior to the revocation year and that is not otherwise required
to be depreciated in accordance with the ADS, a change in use occurs for such property
under § 168(i)(5) and § 1.168(i)-4(d) for the revocation year as a result of its revocation
of the § 263A(d)(3) election. Accordingly, depreciation for such property beginning for
the revocation year is determined in accordance with § 1.168(i)-4(d). However,
pursuant to § 1.168(i)-4(d)(3)(C)(ii), the eligible small business taxpayer or related
person may elect to determine the depreciation for such property as though the change
in use had not occurred. See § 1.168(i)-4(d)(3)(C)(ii) for the time and manner of
making this election for the revocation year. Pursuant to § 1.168(i)-4(f), a change in
computing depreciation for the revocation year for such property is not a change in
method of accounting under § 446(e). The additional first year depreciation deduction
under § 168(k) is not allowable for any such existing property. See
§§ 1.168(k)-1(f)(6)(iv)(B) and 1.168(k)-2(g)(6)(iv)(B).
(3) Newly-acquired property. For all property used predominantly in any
farming business of the eligible small business taxpayer or related person that was

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placed in service in the revocation year and subsequent taxable years and that is not
otherwise required to be depreciated in accordance with the ADS, the eligible small
business taxpayer or related person determines the depreciation in accordance with the
GDS. Because such newly-acquired property is not required to be depreciated under
the ADS, the property may be qualified property for purposes of the additional first year
depreciation deduction under § 168(k), if all requirements under § 168(k) and
§ 1.168(k)-1 or § 1.168(k)-2, as applicable, are satisfied.
(4) Failure to change to GDS.
(a) Existing property. If an eligible small business taxpayer or related
person does not depreciate any existing property that is described in section 5.03(1) of
this revenue procedure and that is not otherwise required to be depreciated in
accordance with the ADS, under the GDS for the revocation year and the subsequent
taxable year, then that taxpayer or related person has adopted an impermissible
method of accounting for that item of MACRS property, as defined in § 1.168(b)-1(a)(2).
A change from that impermissible method of accounting to the applicable depreciation
method, the applicable recovery period, and/or the applicable convention under the
GDS is a change in method of accounting under § 446(e). See
§ 1.446-1(e)(2)(ii)(d)(2)(i). The taxpayer requests to make such a method change by
filing Form 3115 in accordance with the automatic change procedures or non-automatic
change procedures, as applicable, in Rev. Proc. 2015-13 (or any successor). If the
taxpayer is eligible to make this method change under the automatic change
procedures, the method change is described in section 6.05 of Rev. Proc. 2019-43,

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2019-48 I.R.B. 1107 (or any successor). The § 481(a) adjustment as of the first day of
the year of change is calculated as though the change in use occurred for the item of
MACRS property in the revocation year.
(b) Newly-acquired property. If an eligible small business taxpayer or
related person does not depreciate any newly-acquired property that is described in
section 5.03(1) of this revenue procedure and that is not otherwise required to be
depreciated under the ADS (including property described in § 168(g)(1)(E)), under the
GDS for the property placed-in-service year and the subsequent taxable year, then that
taxpayer or related person has adopted an impermissible method of accounting for that
item of MACRS property. A change from that impermissible method of accounting to
the applicable depreciation method, the applicable recovery period, and/or the
applicable convention under the GDS for the item of MACRS property is a change in
method of accounting under § 446(e). See § 1.446-1(e)(2)(ii)(d)(2)(i). The taxpayer
requests to make such a method change by filing Form 3115 in accordance with the
automatic change procedures or non-automatic change procedures, as applicable, in
Rev. Proc. 2015-13 (or any successor). If the taxpayer is eligible to make this method
change under the automatic change procedures, the method change is described in
section 6.01 of Rev. Proc. 2019-43 (or any successor).
SECTION 6. PROCEDURES FOR FORMER ELIGIBLE SMALL BUSINESS
TAXPAYERS TO CHANGE FROM APPLYING § 263A(i) TO MAKING A § 263A(d)(3)
ELECTION
.01 In general. A former eligible small business taxpayer may make a

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§ 263A(d)(3) election for plants produced in its farming business in the first taxable year
the former small business taxpayer no longer qualifies to use the exemption under
§ 263A(i), if the taxpayer complies with the procedures provided in this section 6. A
§ 263A(d)(3) election made under this section 6 is in effect for the taxable year the
§ 263A(d)(3) election is made (election year), and for any subsequent taxable year that
the taxpayer has a valid § 263A(d)(3) election in effect. A former eligible small
business taxpayer that follows the procedures under this section 6 to make the
§ 263A(d)(3) election for the first taxable year the taxpayer no longer qualifies as a
small business taxpayer under § 263A(i) is not treated as making a change in method of
accounting under § 446(e).
.02 Time and manner of making the § 263A(d)(3) election. A former eligible small
business taxpayer makes its § 263A(d)(3) election under this section 6 on its original
federal tax return, including extensions, for the first taxable year for which the taxpayer
no longer qualifies to use the exemption under § 263A(i), by:
(1) Following the manner of making the § 263A(d)(3) election provided in
§ 1.263A-4(d)(3); and
(2) Continuing not to capitalize costs of plants produced in its farming business
under § 263A.
.03 Depreciation of property.
(1) Newly-acquired property. A former eligible small business taxpayer that
makes a § 263A(d)(3) election under this section 6 is required under § 1.263A-4(d)(4)(ii)
to apply the ADS to depreciate all property used predominantly in any farming business

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of the taxpayer and placed in service by the taxpayer in the election year and in any
subsequent taxable year during which the § 263A(d)(3) election is in effect. A related
person of such former eligible small business taxpayer also is required under
§ 1.263A-4(d)(4)(ii) to apply the ADS to depreciate all property used predominantly in
any farming business of the related person
and placed in service by the related person
in the election year and in any subsequent taxable year during which the § 263A(d)(3)
election is in effect for the former eligible small business taxpayer, even if the related
person qualifies for the exemption under § 263A(i). The additional first year
depreciation deduction under § 168(k) is not allowable for any property described in this
section 6.03(1). See §§ 1.168(k)-1(b)(2)(ii)(A)(2), 1.168(k)-1(b)(2)(ii)(B)(1), and
1.168(k)-2(b)(2)(ii)(B).
(2) Existing property. A former eligible small business taxpayer that makes a
§ 263A(d)(3) election under this section 6, or related person, is not required under
§ 1.263A-4(d)(4)(ii) to apply the ADS to depreciate all property used predominantly in
any farming business of the taxpayer or related person
and placed in service by the
taxpayer or related person in a taxable year prior to the election year.
(3) Failure to use the ADS for newly-acquired property.
(a) Former eligible small business taxpayer. If a former eligible small
business taxpayer that makes a § 263A(d)(3) election under this section 6 does not
determine its depreciation under the ADS for any property described in section 6.03(1)
of this revenue procedure for its placed-in-service year and the subsequent taxable
year, then that taxpayer has not made a valid § 263A(d)(3) election under

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§ 1.263A-4(d)(3)(i) and this section 6. To make such election valid, the taxpayer must
obtain the consent of the Commissioner by filing a Form 3115 in accordance with the
non-automatic change procedures in Rev. Proc. 2015-13 (or any successor). See
§ 1.263A-4(d)(3)(ii).
(b) Related person. If a related person of a former eligible small business
taxpayer that makes the § 263A(d)(3) election under this section 6 does not determine
its depreciation under the ADS for any property described in section 6.03(1) of this
revenue procedure, then the related person has adopted an impermissible method of
accounting for that item of MACRS property. A change from that impermissible method
of accounting to the applicable depreciation method, recovery period, applicable
convention under the ADS for the item of MACRS property is a change in method of
accounting under § 446(e). See § 1.446-1(e)(2)(ii)(d)(2)(i). A related person that
wants to change its method of accounting from that impermissible method of accounting
must make the method change by filing Form 3115 in accordance with the automatic
change procedures or non-automatic change procedures, as applicable, in
Rev. Proc. 2015-13 (or any successor). If the related person is eligible to make this
method change under the automatic change procedures, the method change is
described in section 6.01 of Rev. Proc. 2019-43 (or any successor). Section 6.03(3)(a)
of this revenue procedure, and not this section 6.03(3)(b), applies to a related person if
the related person itself is a former eligible small business taxpayer and makes the
§ 263A(d)(3) election under this section 6.
SECTION 7. CHANGE IN METHOD OF ACCOUNTING

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.01 In general. The making of a late revocation of the eligible small business
taxpayer’s § 263A(d)(3) election for the 2018 taxable year, under section 5.02(2)(b) of
this revenue procedure, is treated for a limited period of time as a change in method of
accounting to which §§ 446(e) and 481, and the corresponding regulations, apply. An
eligible small business taxpayer that wants to revoke its § 263A(d)(3) election for the
2018 taxable year, as described in section 5.02(2)(b) of this revenue procedure, must
use the automatic change procedures in Rev. Proc. 2015-13 or its successor.
.02 Automatic change. Rev. Proc. 2019-43 is modified to add new section 12.19
to read as follows:
.19 Late revocation of elections under § 263A(d)(3).
(1) Description of change.
(a) Applicability. This change applies to an eligible small business taxpayer
within the scope of Rev. Proc. 2020-13, 2020-11 I.R.B. [INSERT PAGE #], that wants to
make a late revocation of the election under § 263A(d)(3) provided in section 5.02(2)(b)
of Rev. Proc. 2020-13.
(b) Inapplicability. The IRS will treat the late revocation of an election under
§ 263A(d)(3) that is provided in section 5.02(2)(b) of Rev. Proc. 2020-13 as a change in
method of accounting with a § 481(a) adjustment only for the taxable years specified in
section 12.19(2) of this revenue procedure. This treatment does not apply to a
taxpayer that makes a late revocation under § 263A(d)(3) provided in section 5.02(2)(b)
of Rev. Proc. 2020-13 before or after the time specified in section 12.19(2) of this
revenue procedure, and any such late revocation is not a change in method of

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accounting.
(2) Time for making the change. The change under this section 12.19 must be
made for the taxpayer’s first, second, or third taxable year beginning after the taxpayer’s
first taxable year beginning in 2018 (2018 taxable year).
(3) Certain eligibility rules inapplicable. The eligibility rules in section 5.01(1)(d)
and (f) of Rev. Proc. 2015-13, 2015-5 I.R.B, do not apply to this change for the
taxpayer’s first, second, or third taxable year succeeding the 2018 taxable year.
(4) Concurrent automatic change. A taxpayer making this change for more
than one property used predominantly in any farming business of the taxpayer under
section 5.02(2)(b) of Rev. Proc. 2020-13 for the same year of change should file a
single Form 3115 for all such farming property. The single Form 3115 must provide a
single net § 481(a) adjustment for all such changes.
(5) Designated automatic accounting method change number. The designated
automatic accounting method change number for a change to the method of accounting
under this section 12.19 is “243.”
(6) Contact information. For further information regarding a change under this
section, contact Anna Gleysteen at (202) 317-7007 (not a toll-free call).
SECTION 8. EFFECTIVE DATE
.01 In general. This revenue procedure is effective on February 21,2020.
.02 Transition rule. If on or before February 21, 2020, a taxpayer properly filed a
Form 3115 under the non-automatic change procedures in Rev. Proc. 2015-13
requesting the Commissioner’s consent to revoke its § 263A(d)(3) election, and the

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Form 3115 is pending with the national office on February 21, 2020, the taxpayer may
choose to revoke its § 263A(d)(3) election using the procedures provided in this
revenue procedure, if the taxpayer is otherwise eligible to use this revenue procedure.
The taxpayer must notify the national office contact person for the Form 3115 (if
unknown, see section 9.08(6) of Rev. Proc. 2020-1, 2020-1 I.R.B. 1, 51 (or any
successor)) of the taxpayer’s intent to make the § 263A(d)(3) revocation under this
revenue procedure before the later of (a) March 22, 2020, or (b) the issuance of a letter
ruling granting or denying consent for the revocation. The notification should indicate
that the taxpayer chooses to apply the revocation procedures contained in this revenue
procedure. If the taxpayer timely notifies the national office that it chooses to convert
the Form 3115 to the procedures contained in this revenue procedure, the national
office will send a letter to the taxpayer acknowledging its request and will return the user
fee submitted with the Form 3115.
SECTION 9. EFFECT ON OTHER DOCUMENTS
Rev. Proc. 2019-43 is modified to include the accounting method change provided
in section 7.02 of this revenue procedure in section 12 of Rev. Proc. 2019-43.
SECTION 10. PAPERWORK REDUCTION ACT
This revenue procedure does not impose any additional information collection
requirements in the form of reporting, recordkeeping requirements or third-party
disclosure requirements. However, because this revenue procedure provides a
method change option for taxpayers to revoke their § 263A(d)(3) election for the 2018
taxable year in section 5.02(2)(b) of this revenue procedure, the consent of the

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Commissioner under § 446(e) is required before the taxpayer or related person can use
the exemption in § 263A(i). The IRS expects that these taxpayers will request this
consent by filing Form 3115, Application for Change in Accounting Method. This
revenue procedure alternatively provides an option for taxpayers to revoke their
§ 263A(d)(3) election for the 2018 taxable year in section 5.02(2)(a) of this revenue
procedure by filing an amended return. For purposes of the Paperwork Reduction Act,
the reporting burden associated with any collection of information using the method of
accounting option in sections 5.02(2)(a) and (b) of this revenue procedure will be
reflected in OMB control number 1545-0074 for individual income tax returns; OMB
control number 1545-0123 for business taxpayers; or OMB control number 1545-2070
for other taxpayers in the case of a Form 3115.
SECTION 11. DRAFTING INFORMATION
The principal author of this revenue procedure is Anna Gleysteen of the Office of
Associate Chief Counsel (Income Tax and Accounting). For further information
regarding this revenue procedure, contact Ms. Gleysteen or Evan Hewitt at (202)
317-7007 (not a toll-free call).