3115 Application for Change in Accounting Method

Form

3115

(Rev. December 2022)
Department of the Treasury
Internal Revenue Service

Application for Change in Accounting Method

OMB No. 1545-2070
Attachment
Sequence No.

Go to www.irs.gov/Form3115 for instructions and the latest information.

315

Identification number (see instructions)

Name of filer (name of parent corporation if a consolidated group) (see instructions)

Principal business activity code number (see instructions)
Number, street, and room or suite no. If a P.O. box, see the instructions.

Tax year of change begins (MM/DD/YYYY)

City or town, state, and ZIP code

Tax year of change ends (MM/DD/YYYY)
Name of contact person (see instructions)

Name of applicant(s) (if different than filer) and identification number(s) (see instructions)

Contact person’s telephone number

Does the filer want to receive a copy of the change in method of accounting letter ruling or other correspondence
related to this Form 3115 by fax or encrypted email attachment? If “Yes,” see instructions . . . . . . . .
Yes
No
If the applicant is a member of a consolidated group, check this box
. . . . . . . . . . . . . . . . . . . .
If Form 2848, Power of Attorney and Declaration of Representative, is attached (see instructions for when Form 2848 is required),
check this box . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Check the box to indicate the type of applicant.
Check the appropriate box to indicate the type
Individual
of accounting method change being requested.
Cooperative (Sec. 1381)
See instructions.
Partnership
Corporation
Depreciation or Amortization
Controlled foreign corporation (Sec. 957)
S corporation
10/50 corporation (Sec. 904(d)(2)(E))
Insurance co. (Sec. 816(a))
Financial Products and/or Financial Activities of
Financial Institutions
Insurance co. (Sec. 831)
Qualified personal service
corporation (Sec. 448(d)(2))
Other (specify):
Other (specify):
Exempt organization. Enter
Code section:
Caution: To be eligible for approval of the requested change in method of accounting, the taxpayer must provide all information that is
relevant to the taxpayer or to the taxpayer’s requested change in method of accounting. This includes (1) all relevant information requested on
this Form 3115 (including its instructions), and (2) any other relevant information, even if not specifically requested on Form 3115.
The taxpayer must attach all applicable statements requested throughout this form.

Part I

Information for Automatic Change Request

1

Enter the applicable designated automatic accounting method change number (“DCN”) for the requested
automatic change. Enter only one DCN, except as provided for in guidance published by the IRS. If the requested
change has no DCN, check “Other,” and provide both a description of the change and a citation of the IRS
guidance providing the automatic change. See instructions.
a (1) DCN:
(2) DCN:
(3) DCN:
(4) DCN:
(5) DCN:
(6) DCN:
(7) DCN:
(8) DCN:
(9) DCN:
(10) DCN:
(11) DCN:
(12) DCN:
b Other
Description:
2
Do any of the eligibility rules restrict the applicant from filing the requested change using the automatic change
procedures (see instructions)? If “Yes,” attach an explanation . . . . . . . . . . . . . . . . .
Has the filer provided all the information and statements required (a) on this form and (b) by the List of Automatic
3
Changes under which the applicant is requesting a change? See instructions . . . . . . . . . . . .
Note: Complete Part II and Part IV of this form, and, Schedules A through E, if applicable.

Part II
4
5

Information for All Requests

Yes No

Yes No

During the tax year of change, did or will the applicant (a) cease to engage in the trade or business to which the
requested change relates, or (b) terminate its existence? See instructions
. . . . . . . . . . . . .
Is the applicant requesting to change to the principal method in the tax year of change under Regulations section
1.381(c)(4)-1(d)(1) or 1.381(c)(5)-1(d)(1)? . . . . . . . . . . . . . . . . . . . . . . . . .
If “No,” go to line 6a.
If “Yes,” the applicant cannot file a Form 3115 for this change. See instructions.

Sign
Here
Preparer

Under penalties of perjury, I declare that I have examined this application, including accompanying schedules and statements, and to the best of my
knowledge and belief, the application contains all the relevant facts relating to the application, and it is true, correct, and complete. Declaration of
preparer (other than applicant) is based on all information of which preparer has any knowledge.
Signature of filer (and spouse, if joint return)
Print/Type preparer’s name

Date

Name and title (print or type)
Preparer’s signature

Date

(other than
filer/applicant) Firm’s name
For Privacy Act and Paperwork Reduction Act Notice, see the instructions.

Cat. No. 19280E

Form 3115 (Rev. 12-2022)

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Form 3115 (Rev. 12-2022)

Part II
6a

Information for All Requests (continued)

Yes No

Does the applicant (or any present or former consolidated group in which the applicant was a member during the
applicable tax year(s)) have any federal income tax return(s) under examination (see instructions)? . . . . .
If “No,” go to line 7a.

b Is the method of accounting the applicant is requesting to change an issue under consideration (with respect to
either the applicant or any present or former consolidated group in which the applicant was a member during the
applicable tax year(s))? See instructions . . . . . . . . . . . . . . . . . . . . . . . . .
c Enter the name and telephone number of the examining agent and the tax year(s) under examination.
Name
Telephone number
Tax year(s)
d Has a copy of this Form 3115 been provided to the examining agent identified on line 6c? . . . . . . . .
7a Does audit protection apply to the applicant’s requested change in method of accounting? See instructions . .
If “No,” attach an explanation.
b If “Yes,” check the applicable box and attach the required statement.
Not under exam
3-month window
120 day: Date examination ended
Method not before director
Negative adjustment
CAP: Date member joined group
Audit protection at end of exam
Other
8a Does the applicant (or any present or former consolidated group in which the applicant was a member during the
applicable tax year(s)) have any federal income tax return(s) before Appeals and/or a federal court? . . . . .
If “No,” go to line 9.
b Is the method of accounting the applicant is requesting to change an issue under consideration by Appeals and/or
a federal court (for either the applicant or any present or former consolidated group in which the applicant was a
member for the tax year(s) the applicant was a member)? See instructions . . . . . . . . . . . . .
If “Yes,” attach an explanation.
counsel for the government,
Appeals officer and/or
c If “Yes,” enter the name of the (check the box)
telephone number, and the tax year(s) before Appeals and/or a federal court.
Name
Telephone number
Tax year(s)
d Has a copy of this Form 3115 been provided to the Appeals officer and/or counsel for the government identified
on line 8c? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9

If the applicant answered “Yes” to line 6a and/or 8a with respect to any present or former consolidated group,
attach a statement that provides each parent corporation’s (a) name, (b) identification number, (c) address, and (d)
tax year(s) during which the applicant was a member that is under examination, before an Appeals office,
and/or before a federal court.

10

If for federal income tax purposes, the applicant is either an entity (including a limited liability company) treated as
a partnership or an S corporation, is it requesting a change from a method of accounting that is an issue under
consideration in an examination, before Appeals, or before a federal court, with respect to a federal income tax
return of a partner, member, or shareholder of that entity? . . . . . . . . . . . . . . . . . . .

11a

Has the applicant, its predecessor, or a related party requested or made (under either an automatic or
non-automatic change procedure) a change in method of accounting within any of the 5 tax years ending with the
tax year of change? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
If “No,” go to line 12.
b If “Yes,” for each trade or business, attach a description of each requested change in method of accounting
(including the tax year of change) and state whether the applicant received consent.

c

12

13

If any application was withdrawn, not perfected, or denied, or if a Consent Agreement granting a change was not
signed and returned to the IRS, or the change was not made or not made in the requested year of change, attach
an explanation.
Does the applicant, its predecessor, or a related party currently have pending any request (including any
concurrently filed request) for a private letter ruling, change in method of accounting, or technical advice? . . .
If “Yes,” for each request attach a statement providing (a) the name(s) of the taxpayer, (b) identification number(s),
(c) the type of request (private letter ruling, change in method of accounting, or technical advice), and (d) the
specific issue(s) in the request(s).
Is the applicant requesting to change its overall method of accounting? . . . . . . . . . . . . . .
If “Yes,” complete Schedule A on page 4 of the form.
Form 3115 (Rev. 12-2022)

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Form 3115 (Rev. 12-2022)

Part II

Information for All Requests (continued)

Yes No

14

If the applicant is either (i) not changing its overall method of accounting, or (ii) changing its overall method of
accounting and changing to a special method of accounting for one or more items, attach a detailed and
complete description for each of the following (see instructions):
a The item(s) being changed.
b The applicant’s present method for the item(s) being changed.
c The applicant’s proposed method for the item(s) being changed.
d The applicant’s present overall method of accounting (cash, accrual, or hybrid).
15a Attach a detailed and complete description of the applicant’s trade(s) or business(es). See section 446(d).
b If the applicant has more than one trade or business, as defined in Regulations section 1.446-1(d), describe
(i) whether each trade or business is accounted for separately; (ii) the goods and services provided by each trade
or business and any other types of activities engaged in that generate gross income; (iii) the overall method of
accounting for each trade or business; and (iv) which trade or business is requesting to change its accounting
method as part of this application or a separate application.
Note: If you are requesting an automatic method change, see the instructions to see if you are required to complete
lines 16a–16c.
16a

Attach a full explanation of the legal basis supporting the proposed method for the item being changed. Include a
detailed and complete description of the facts that explains how the law specifically applies to the applicant’s
situation and that demonstrates that the applicant is authorized to use the proposed method.
b Include all authority (statutes, regulations, published rulings, court cases, etc.) supporting the proposed method.
c Include either a discussion of the contrary authorities or a statement that no contrary authority exists.
17
Will the proposed method of accounting be used for the applicant’s books and records and financial statements?
For insurance companies, see the instructions
. . . . . . . . . . . . . . . . . . . . . .
If “No,” attach an explanation.
18
Does the applicant request a conference with the IRS National Office if the IRS National Office proposes an
adverse response? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19a

If the applicant is changing to either the overall cash method, an overall accrual method, or is changing its method
of accounting for any property subject to section 263A, any long-term contract subject to section 460 (see 19b), or
inventories subject to section 471 or 474, enter the applicant’s gross receipts for the 3 tax years preceding the tax
year of change.
1st preceding
2nd preceding
3rd preceding
yr.
yr.
yr.
year ended: mo.
year ended: mo.
year ended:
mo.
$
$
$

b If the applicant is changing its method of accounting for any long-term contract subject to section 460, in addition
to completing 19a, enter the applicant’s gross receipts for the 4th tax year preceding the tax year of change:
$
yr.
4th preceding year ended: mo.

Part III

Information for Non-Automatic Change Request

Yes No

20

Is the applicant’s requested change described in any revenue procedure, revenue ruling, notice, regulation, or
other published guidance as an automatic change request? . . . . . . . . . . . . . . . . . .
If “Yes,” attach an explanation describing why the applicant is submitting its request under the non-automatic
change procedures.
21
Attach a copy of all documents related to the proposed change (see instructions).
22
Attach a statement of the applicant’s reasons for the proposed change.
23
If the applicant is a member of a consolidated group for the year of change, do all other members of the
consolidated group use the proposed method of accounting for the item being changed? . . . . . . . .
If “No,” attach an explanation.
24a Enter the amount of user fee attached to this application (see instructions) . . . . . $
b If the applicant qualifies for a reduced user fee, attach the required information or certification (see instructions).
Form 3115 (Rev. 12-2022)

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Form 3115 (Rev. 12-2022)

Part IV

Section 481(a) Adjustment

Yes No

25

Does published guidance require the applicant (or permit the applicant and the applicant is electing) to implement
the requested change in method of accounting on a cut-off basis? . . . . . . . . . . . . . . . .
If “Yes,” attach an explanation and do not complete lines 26, 27, 28, and 29 below.

26

Enter the section 481(a) adjustment. Indicate whether the adjustment is an increase (+) or a decrease (-) in
income. $
Attach a summary of the computation and an explanation of the methodology
used to determine the section 481(a) adjustment. If it is based on more than one component, show the
computation for each component. If the applicant waived any deductions with respect to the method of
accounting pursuant to Regulations section 1.59A-3(c)(6)(i), include a summary of the waived deductions. If more
than one applicant is applying for the method change on the application, attach a list of the (a) name, (b)
identification number, and (c) the amount of the section 481(a) adjustment attributable to each applicant.
Is the applicant required to take into account in the year of change any remaining portion of a section 481(a)
adjustment from a prior change (see instructions)? If “Yes,” enter the amount. $
. . . . .
Is the applicant making an election to take the entire amount of the adjustment into account in the tax year of change?
If “Yes,” check the box for the applicable elective provision used to make the election (see instructions).
$50,000 de minimis election
Eligible acquisition transaction election
Is any part of the section 481(a) adjustment attributable to transactions between members of an affiliated group, a
consolidated group, a controlled group, or other related parties? . . . . . . . . . . . . . . . .
If “Yes,” attach an explanation.

27
28

29

Schedule A—Change in Overall Method of Accounting (If Schedule A applies, Part I below must be completed.)
Part I
1

Change in Overall Method (see instructions)

Check the appropriate boxes below to indicate the applicant’s present and proposed methods of accounting.
Present method:
Cash
Accrual
Hybrid (attach description)
Proposed method:
Cash
Accrual
Hybrid (attach description)
Enter the following amounts as of the close of the tax year preceding the year of change. If none, state “None.” Also, attach a
statement providing a breakdown of the amounts entered on lines 2a through 2g.

2

Amount

$
a Income accrued but not received (such as accounts receivable) . . . . . . . . . . . . . .
b Income received or reported before it was earned (such as advanced payments). Attach a description of
the income and the legal basis for the proposed method . . . . . . . . . . . . . . . .
c Expenses accrued but not paid (such as accounts payable) . . . . . . . . . . . . . . .
d Prepaid expenses previously deducted . . . . . . . . . . . . . . . . . . . . . .
e Supplies on hand previously deducted and/or not previously reported . . . . . . . . . . . .
f Inventory on hand previously deducted and/or not previously reported. Complete Schedule D, Part II .
g Other amounts (specify). Attach a description of the item and the legal basis for its inclusion in the
calculation of the section 481(a) adjustment.
h

Net section 481(a) adjustment (Combine lines 2a–2g.) Indicate whether the adjustment is an increase (+)
or decrease (-) in income. Also enter the net amount of this section 481(a) adjustment amount on Part IV,
$
line 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Yes

No

3

Is the applicant also requesting the recurring item exception under section 461(h)(3)? .

4

Attach copies of the profit and loss statement (Schedule F (Form 1040) for farmers) and the balance sheet, if applicable, as of
the close of the tax year preceding the year of change. Also attach a statement specifying the accounting method used when
preparing the balance sheet. If books of account are not kept, attach a copy of the business schedules submitted with the
federal income tax return or other return (such as tax-exempt organization returns) for that period. If the amounts in Part I, lines
2a through 2g, do not agree with the amounts shown on the balance sheet, attach a statement explaining the differences.

5

Is the applicant making a change to the overall cash method or to a method in which a taxpayer uses an
accrual method for purchases and sales of inventory and uses the cash method for computing all other
items of income and expense (see instructions)? . . . . . . . . . . . . . . . . . . .

Part II

.

.

.

.

.

.

Yes

No

Change to the Cash Method for Non-Automatic Change Request (see instructions)

Applicants requesting a change to the cash method must attach the following information:
1
A description of inventory items (items whose production, purchase, or sale is an income-producing factor) and materials and
supplies used in carrying out the business.
2
An explanation as to whether the applicant is required to use an accrual method under any section of the Code or regulations.
Form 3115 (Rev. 12-2022)

Form 3115 (Rev. 12-2022)

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Schedule B—Changes Related to the Deferral Method for Advance Payments, Cost Offset Methods, and/or the
Applicable Financial Statement Income Inclusion Rule (see instructions)
1
2
3

If the applicant is requesting to change to the deferral method for advance payments under Regulations section
1.451-8(c) or (d), as described in the instructions, attach the information specified in the instructions.
If the applicant is requesting to change to or within a cost offset method under Regulations section 1.451-3(c) and/or Regulations
section 1.451-8(e), as described in the instructions, attach the information specified in the instructions.
If the applicant is requesting to change to or within a method to conform to the applicable financial statement (AFS) income
inclusion rule under section 451(b) and Regulations section 1.451-3, as described in the instructions, attach a detailed
description of the proposed method including the information specified in the instructions.

Schedule C—Changes Within the LIFO Inventory Method (see instructions)
Part I

General LIFO Information

Complete this section if the requested change involves changes within the LIFO inventory method. Also, attach a copy of all
Forms 970, Application To Use LIFO Inventory Method, filed to adopt or expand the use of the LIFO method.
1

Attach a description of the applicant’s present and proposed LIFO methods and submethods for each of the following
items:
a Valuing inventory (for example, unit method or dollar-value method).
b Pooling (for example, by line or type or class of goods, natural business unit, multiple pools, raw material content, simplified
dollar-value method, inventory price index computation (IPIC) pools, vehicle-pool method, etc.).
c Pricing dollar-value pools (for example, double-extension, index, link-chain, link-chain index, IPIC method, etc.).
d Determining the current-year cost of goods in the ending inventory (such as, most recent acquisitions, earliest acquisitions during
the current year, average cost of current-year acquisitions, rolling-average cost, or other permitted method).
2
If any present method or submethod used by the applicant is not the same as indicated on Form(s) 970 filed to adopt or
expand the use of the method, attach an explanation.
3
If the proposed change is not requested for all the LIFO inventory, attach a statement specifying the inventory to which the
change is and is not applicable.
4
If the proposed change is not requested for all of the LIFO pools, attach a statement specifying the LIFO pool(s) to which the
change is applicable.
5
Attach a statement addressing whether the applicant values any of its LIFO inventory on a method other than cost. For
example, if the applicant values some of its LIFO inventory at retail and the remainder at cost, identify which inventory items
are valued under each method.
6
If changing to the IPIC method, attach a completed Form 970.

Part II

Change in Pooling Inventories

1

If the applicant is proposing to change its pooling method or the number of pools, attach a description of the contents of, and
state the base year for, each dollar-value pool the applicant presently uses and proposes to use.
2
If the applicant is proposing to use natural business unit (NBU) pools or requesting to change the number of NBU pools,
attach the following information (to the extent not already provided) in sufficient detail to show that each proposed NBU was
determined under Regulations sections 1.472-8(b)(1) and (2):
a A description of the types of products produced by the applicant. If possible, attach a brochure.
b A description of the types of processes and raw materials used to produce the products in each proposed pool.
c If all of the products to be included in the proposed NBU pool(s) are not produced at one facility, state the reasons for the
separate facilities, the location of each facility, and a description of the products each facility produces.
d A description of the natural business divisions adopted by the taxpayer. State whether separate cost centers are maintained
and if separate profit and loss statements are prepared.
e A statement addressing whether the applicant has inventories of items purchased and held for resale that are not further
processed by the applicant, including whether such items, if any, will be included in any proposed NBU pool.
f A statement addressing whether all items including raw materials, goods-in-process, and finished goods entering into the
entire inventory investment for each proposed NBU pool are presently valued under the LIFO method. Describe any items that
are not presently valued under the LIFO method that are to be included in each proposed pool.
g A statement addressing whether, within the proposed NBU pool(s), there are items both sold to unrelated parties and
transferred to a different unit of the applicant to be used as a component part of another product prior to final processing.
3
If the applicant is engaged in manufacturing and is proposing to use the multiple pooling method or raw material content
pools, attach information to show that each proposed pool will consist of a group of items that are substantially similar. See
Regulations section 1.472-8(b)(3).
4

If the applicant is engaged in the wholesaling or retailing of goods and is requesting to change the number of pools used,
attach information to show that each of the proposed pools is based on customary business classifications of the applicant’s
trade or business. See Regulations section 1.472-8(c).
Form 3115 (Rev. 12-2022)

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Form 3115 (Rev. 12-2022)

Schedule D—Change in the Treatment of Long-Term Contracts Under Section 460, Inventories, or Other
Section 263A Assets (see instructions)
Part I
Change in Reporting Income From Long-Term Contracts (Also complete Part III on pages 7 and 8.)
1

To the extent not already provided, attach a description of the applicant’s present and proposed methods for reporting income
and expenses from long-term contracts. Also, attach a representative actual contract (without any deletions) for the requested
change. If the applicant is a construction contractor, attach a detailed description of its construction activities.
2a Are the applicant’s contracts long-term contracts as defined in section 460(f)(1) (see instructions)? . .
Yes
No
Yes
No
b If “Yes,” do all the contracts qualify for the exception under section 460(e) (see instructions)? . . . .
If line 2b is “No,” attach an explanation.
c Is the applicant requesting to use the percentage-of-completion method using cost-to-cost under
Regulations section 1.460-4(b)? . . . . . . . . . . . . . . . . . . . . . . . .
Yes
No
d If line 2c is “Yes,” in computing the completion factor of a contract, will the applicant use the simplified
cost-to-cost method described in Regulations section 1.460-5(c)? . . . . . . . . . . . . .
Yes
No
e If line 2c is “No,” is the applicant requesting to use the exempt-contract percentage-of-completion
Yes
No
method under Regulations section 1.460-4(c)(2)? . . . . . . . . . . . . . . . . . . .
If line 2e is “Yes,” attach an explanation of what method the applicant will use to determine a contract’s
completion factor.
If line 2e is “No,” attach an explanation of what method the applicant is using and the authority for its use.
3a Does the applicant have long-term manufacturing contracts as defined in section 460(f)(2)? . . . . .
Yes
No
b If “Yes,” attach a description of the applicant’s manufacturing activities, including any required installation
of manufactured goods.
4a Does the applicant enter into cost-plus long-term contracts? . . . . . . . . . . . . . . .
Yes
No
b Does the applicant enter into federal long-term contracts?
. . . . . . . . . . . . . . .
Yes
No
Part II
Change in Valuing Inventories Including Cost Allocation Changes (Also complete Part III on pages 7 and 8.)
1
Attach a description of the inventory goods being changed.
2
Attach a description of the inventory goods (if any) NOT being changed.
Yes
No
3a Is the applicant subject to section 263A? If “No,” go to line 4a . . . . . . . . . . . . . .
b Is the applicant’s present inventory valuation method in compliance with section 263A (see instructions)?
If “No,” attach a detailed explanation . . . . . . . . . . . . . . . . . . . . . . .
Yes
No
Inventory Method Not

Inventory Method Being Changed

Being Changed
Check the appropriate boxes in the chart.
Present
method
Proposed
method
Present method
Identification methods:
Specific identification . . . . . . . . . . . . . . . .
FIFO . . . . . . . . . . . . . . . . . . . . .
LIFO . . . . . . . . . . . . . . . . . . . . .
Other (attach explanation) . . . . . . . . . . . . . .
Valuation methods:
Cost . . . . . . . . . . . . . . . . . . . . .
Cost or market, whichever is lower . . . . . . . . . . .
Retail cost . . . . . . . . . . . . . . . . . . .
Retail, lower of cost or market . . . . . . . . . . . . .
Other (attach explanation) . . . . . . . . . . . . . .
b Enter the value at the end of the tax year preceding the year of change. $
$
5
If the applicant is changing from the LIFO inventory method to a non-LIFO method, attach the following information (see
instructions).
a Copies of Form(s) 970 filed to adopt or expand the use of the method.
b Only for applicants requesting a non-automatic change. A statement describing whether the applicant is changing to the
method required by Regulations section 1.472-6(a) or (b), or whether the applicant is proposing a different method.
c Only for applicants requesting an automatic change. The statement required by section 23.01(5) of Rev. Proc. 2022-14 (or
its successor).

4a

6

Is the applicant presently using the AFS cost offset method as described in Regulations section
1.451-3(c) and/or the advance payment cost offset method described in Regulations section 1.451-8(e),
or is the applicant changing to such methods for the same year of change as the requested change in
inventory method? If “Yes,” see the instructions for rules regarding concurrent changes . . . . . .

Yes

No

Form 3115 (Rev. 12-2022)

Page 7
Method of Cost Allocation (Complete this part if the requested change involves either property subject to
section 263A or long-term contracts as described in section 460.) See instructions.

Form 3115 (Rev. 12-2022)

Part III

Section A—Allocation and Capitalization Methods
Attach a description (including sample computations) of the present and proposed method(s) the applicant uses to capitalize direct
and indirect costs properly allocable to real or tangible personal property produced and property acquired for resale, or to allocate
direct and indirect costs required to be allocated to long-term contracts. Include a description of the method(s) used for allocating
indirect costs to intermediate cost objectives such as departments or activities prior to the allocation of such costs to long-term
contracts, real or tangible personal property produced, and property acquired for resale. The description must include the following:
1
2

3

The method of allocating direct and indirect costs (for example, specific identification, burden rate, standard cost, or other
reasonable allocation method).
The method of allocating mixed service costs (for example, direct reallocation, step-allocation, simplified service cost using the
labor-based allocation ratio, simplified service cost using the production cost allocation ratio, or other reasonable allocation
method).
Except for long-term contract accounting methods, the method of capitalizing additional section 263A costs (for example,
simplified production with or without the historic absorption ratio election, modified simplified production with or without the
historic absorption ratio election, simplified resale with or without the historic absorption ratio election including permissible
variations, the U.S. ratio, or other reasonable allocation method).

Section B—Direct and Indirect Costs Required To Be Allocated
Check the appropriate boxes showing the costs that are or will be fully included, to the extent required, in the cost of real or tangible
personal property produced or property acquired for resale under section 263A or allocated to long-term contracts under section 460.
Mark “N/A” in a box if those costs are not incurred by the applicant. If a box is not checked, it is assumed that those costs are not
fully included to the extent required. Attach an explanation for boxes that are not checked.
Present method

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19
20
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26
27
28

Proposed method

Direct material . . . . . . . . . . . . . . . . . . . . . . . . .
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . .
Indirect labor
. . . . . . . . . . . . . . . . . . . . . . . . .
Officers’ compensation (not including selling activities) . . . . . . . . . . . .
Pension and other related costs . . . . . . . . . . . . . . . . . . .
Employee benefits . . . . . . . . . . . . . . . . . . . . . . . .
Indirect materials and supplies . . . . . . . . . . . . . . . . . . . .
Purchasing costs . . . . . . . . . . . . . . . . . . . . . . . .
Handling, processing, assembly, and repackaging costs . . . . . . . . . . .
Offsite storage and warehousing costs . . . . . . . . . . . . . . . . .
Depreciation, amortization, and cost recovery allowance for equipment and facilities
placed in service and not temporarily idle . . . . . . . . . . . . . . . .
Depletion . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes other than state, local, and foreign income taxes . . . . . . . . . . . .
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . .
Utilities
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Maintenance and repairs that relate to a production, resale, or long-term contract activity
Engineering and design costs (not including section 174 research and experimental
expenses)
. . . . . . . . . . . . . . . . . . . . . . . . . .
Rework labor, scrap, and spoilage
. . . . . . . . . . . . . . . . . .
Tools and equipment . . . . . . . . . . . . . . . . . . . . . . .
Quality control and inspection . . . . . . . . . . . . . . . . . . . .
Bidding expenses incurred in the solicitation of contracts awarded to the applicant . .
Licensing and franchise costs . . . . . . . . . . . . . . . . . . . .
Capitalizable service costs (including mixed service costs)
. . . . . . . . . .
Administrative costs (not including any costs of selling or any return on capital) . . . .
Research and experimental expenses attributable to long-term contracts . . . . . .
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other costs (Attach a list of these costs.) . . . . . . . . . . . . . . . .
Form 3115 (Rev. 12-2022)

Page 8

Form 3115 (Rev. 12-2022)

Part III

Method of Cost Allocation (continued) See instructions.

Section C—Other Costs Not Required To Be Allocated (Complete Section C only if the applicant is requesting to change its
method for these costs.)
Present method

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11

Marketing, selling, advertising, and distribution expenses . . . . . . . . .
Research and experimental expenses not included in Section B, line 26 . . . .
Bidding expenses not included in Section B, line 22
. . . . . . . . . .
General and administrative costs not included in Section B . . . . . . . .
Income taxes . . . . . . . . . . . . . . . . . . . . . . .
Cost of strikes . . . . . . . . . . . . . . . . . . . . . . .
Warranty and product liability costs . . . . . . . . . . . . . . . .
Section 179 costs . . . . . . . . . . . . . . . . . . . . . .
On-site storage . . . . . . . . . . . . . . . . . . . . . . .
Depreciation, amortization, and cost recovery allowance not included in Section B,
line 11
. . . . . . . . . . . . . . . . . . . . . . . . .
Other costs (Attach a list of these costs.) . . . . . . . . . . . . . .

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Proposed method

Schedule E—Change in Depreciation or Amortization (see instructions)
Applicants requesting approval to change their method of accounting for depreciation or amortization complete this section.
Applicants must provide this information for each item or class of property for which a change is requested.
Note: See the Summary of the List of Automatic Accounting Method Changes in the instructions for information regarding automatic
changes under sections 56, 167, 168, or 197, or former sections 168, 1400I, or 1400L. Do not file Form 3115 with respect to certain late
elections and election revocations. See instructions.
1
Is depreciation for the property determined under Regulations section 1.167(a)-11 (CLADR)? . . . .
Yes
No
If “Yes,” the only changes permitted are under Regulations section 1.167(a)-11(c)(1)(iii).
2
Is any of the depreciation or amortization required to be capitalized under any Code section, such as
section 263A? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Yes
No
If “Yes,” enter the applicable section
3
Has a depreciation, amortization, expense, or disposition election been made for the property, such as
the election under sections 168(f)(1), 168(i)(4), 179, 179C, or Regulations section 1.168(i)-8(d)? . . . .
Yes
No
If “Yes,” state the election made
4a Attach a statement describing the property subject to the change. Include the property’s description, type, placed-in-service
year, and use in the applicant’s trade or business or income-producing activity. Also include the type and amount of any
federal tax credit claimed or grant received, along with any necessary adjustments to basis required under the Internal
Revenue Code, with respect to the property.
b If the property is residential rental property, did the applicant live in the property before renting it?
c Is the property public utility property? . . . . . . . . . . . . . . . . . . . .
5

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7
a

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Yes
Yes

No
No

To the extent not already provided in the applicant’s description of its present method, attach a statement explaining how the
property is treated under the applicant’s present method (for example, depreciable property, inventory property, supplies under
Regulations section 1.162-3, nondepreciable section 263(a) property, property deductible as a current expense, etc.).
If the property is not currently treated as depreciable or amortizable property, attach a statement of the facts supporting the
proposed change to depreciate or amortize the property.
If the property is currently treated and/or will be treated as depreciable or amortizable property, provide the following
information for both the present (if applicable) and proposed methods:
The Code section under which the property is or will be depreciated or amortized (for example, section 168(g)).

b The applicable asset class from Rev. Proc. 87-56, 1987-2 C.B. 674, for each asset depreciated under section 168 (MACRS) or
under former section 1400L; the applicable asset class from Rev. Proc. 83-35, 1983-1 C.B. 745, for each asset depreciated
under former section 168 (ACRS); an explanation why no asset class is identified for each asset for which an asset class has
not been identified by the applicant.
c The facts to support the asset class for the proposed method.
d The depreciation or amortization method of the property, including the applicable Code section (for example, 200% declining
balance method under section 168(b)(1)).
e The useful life, recovery period, or amortization period of the property.
f The applicable convention of the property.
g Whether the additional first-year special depreciation allowance (for example, as provided by section 168(k), 168(l), 168(m),
or former section 168(n), 1400L(b), or 1400N(d)) was or will be claimed for the property. If not, also provide an explanation as to
why no special depreciation allowance was or will be claimed.
h Whether the property was or will be in a single asset account, a multiple asset account, or a general asset account.
Form 3115 (Rev. 12-2022)