SECTION 15. METHODS OF ACCOUNTING ( 446) .01 Change in overall method from the cash method to an accrual method. (1) Description of change. (a) Applicability. This change applies to a taxpayer that wants to change its overall method of accounting from the cash receipts and disbursements method (cash method) (as defined in section 15.01(2)(a) of this revenue procedure) to an accrual method (as defined in section 15.01(2)(b) of this revenue procedure). A change under this section 15.01 applies to (1) a taxpayer required to make this change by 448, any other section of the Code or regulations, or in other guidance published in the Internal Revenue Bulletin (IRB), as well as (2) a taxpayer that wants to make this change but is not required to do so by 448, any other section of the Code or 184 regulations, or in other guidance published in the IRB. A taxpayer changing to an overall accrual method because it is prohibited from using the overall cash method under 448 may use this section 15.01 regardless of whether the year of change is the first taxable year that the taxpayer is required by 448 to change from the cash method (the first 448 year), or is a taxable year other than the taxpayers first 448 year. Additionally, a taxpayer qualifies to change its overall method of accounting from the cash method to an accrual method using this section 15.01 even if the taxpayer is also making one or more of the following changes in method of accounting for the same year of change: (i) adopting the recurring item exception (as defined in section 15.01(2)(c) of this revenue procedure) for one or more types of recurring items (see 1.461-5(d)); (ii) adopting or changing to a permissible inventory method of accounting and is either adopting this inventory method or qualifies to change to this inventory method using the automatic change procedures of Rev. Proc. 2015-13, 2015- 5 I.R.B. 419, and a section of this revenue procedure, or the change can be made automatically under any section of the Code or regulations, or other guidance published in the IRB (see Rev. Rul. 90-38, 1990-1 C.B. 57 (regarding when a taxpayer may adopt a method of accounting)); (iii) adopting or changing to a permissible 263A method of accounting and is either adopting this 263A method or qualifies to change to this 263A method using the automatic change procedures of Rev. Proc. 2015-13 and a section of this revenue procedure, or the change can be made automatically under any 185 section of the Code or regulations, or other guidance published in the IRB (see Rev. Rul. 90-38 (regarding when a taxpayer may adopt a method of accounting)); or (iv) adopting or changing to any other special method of accounting (as defined in section 15.01(2)(d) of this revenue procedure) and is either adopting this special method or qualifies to change to this special method using the automatic change procedures of Rev. Proc. 2015-13 and a section of this revenue procedure, or the change can be made automatically under any section of the Code or regulations, or other guidance published in the IRB (see Rev. Rul. 90-38 (regarding when a taxpayer may adopt a method of accounting)); Also, a taxpayer qualifies to use this section 15.01 when that taxpayer, in the taxable year immediately preceding the year of change, has used a permissible inventory method for that year, and, if that taxpayer was subject to 263A for that year, has also used a permissible 263A method for that year, and the method(s) continue to be used for the year of change. (b) Inapplicability. This change does not apply to: (i) a taxpayer that is making a change from a hybrid method of accounting (as defined in section 15.01(2)(e) of this revenue procedure); (ii) a taxpayer that is changing its method of accounting for one or more items of income or expense, but not its overall method of accounting. See section 15.09 of this revenue procedure for a description of accounting method changes from the cash method to an accrual method for specific items that are to be made using the automatic change procedures of Rev. Proc. 2015-13 and that section 15.09; (iii) a taxpayer that is required by the Code, regulations, or other guidance published in the IRB to use a special method (for example, an inventory 186 method, a 263A method, or a long-term contract method) in the year of change and fails to adopt or change to that method; (iv) a taxpayer that has included in its 481(a) adjustment any amount of deferred compensation that is described under 457A(d)(3) that is attributable to services performed before January 1, 2009; (v) a taxpayer that is engaged in two or more trades or businesses, unless that taxpayer makes this change for each trade or business so that the identical accrual method is used for each trade or business beginning with the year of change; (vi) a taxpayer that is required by 447 to change to an accrual method when the year of change is the first taxable year that taxpayer is required by 447 to change to that method; (vii) a cooperative organization described in 501(c)(12), 521, or 1381; or (viii) an individual taxpayer, except for activities conducted as a sole proprietorship.

5. Refer to Revenue Procedure 2017-30, Section 15.01: Methods of accounting ($ 446) on page 183. a) To which tax accounting method change is this section applicable? b) Refer to Section 15.01 (3)(a) and (c) on pages 187-188. Describe the two things that a taxpayer must do in order to account for the change in the tax accounting method that is described by this section. 6. Refer to Revenue Procedure 2015-13, Section 7: Terms and conditions of change on page 44. Read Sections 7.01 - 7.03 on pages 44 though 46. a) What is the adjustment period for a favorable (i.e. negative, in that the adjustment reduces taxable income, Section 481(a) adjustment? b) What is the adjustment period for an unfavorable (i.e. positive, in that the adjustment increases taxable income) Section 481(a) adjustment