26 U.S. Code § 481 - Adjustments required by changes in method of accounting
In the case of any change described in subsection (a), the taxpayer may, in such manner and subject to such conditions as the Secretary may by regulations prescribe, take the adjustments required by subsection (a)(2) into account in computing the tax imposed by this chapter for the taxable year or years permitted under such regulations.
In the case of an eligible terminated S corporation, any adjustment required by subsection (a)(2) which is attributable to such corporation’s revocation described in paragraph (2)(A)(ii) shall be taken into account ratably during the 6-taxable year period beginning with the year of change.
The date of the enactment of the Tax Cuts and Jobs Act, referred to in subsec. (d)(2)(A)(i), probably means the date of enactment of title I of Pub. L. 115–97, which was approved Dec. 22, 2017. Prior versions of the bill that was enacted into law as Pub. L. 115–97 included such Short Title, but it was not enacted as part of title I of Pub. L. 115–97.
2017—Subsec. (d). Pub. L. 115–97 added subsec. (d).
2014—Subsec. (b)(3)(C). Pub. L. 113–295 struck out subpar. (C) which read as follows: “In applying section 7807(b)(1), the provisions of chapter 1 (other than subchapter E, relating to self-employment income) and chapter 2 of the Internal Revenue Code of 1939 shall be treated as the corresponding provisions of the Internal Revenue Code of 1939.”
1980—Subsec. (d). Pub. L. 96–471 struck out subsec. (d) which provided that this section was not to apply to a change to which section 453 of this title, relating to change to installment method, applied.
1976—Subsecs. (b)(1), (2). Pub. L. 94–455, § 1901(a)(70)(B), struck out “, other than the amount of such adjustments to which paragraph (4) or (5) applies,” after “required by subsection (a)(2)”.
Subsec. (b)(4), (5), (6). Pub. L. 94–455, § 1901(a)(70)(A), struck out par. (4) which related to special rule for pre-1954 general adjustments, par. (5) which related to special rule for pre-1954 adjustments in case of certain decedents, and par. (6) which related to the application of the special rule for pre-1954 general adjustments.
Subsec. (c). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.
1969—Subsec. (b)(3)(A). Pub. L. 91–172 substituted “loss carryback or carryover” for “loss carryover”.
1958—Subsec. (a)(2). Pub. L. 85–866, § 29(a)(1), inserted “unless the adjustment is attributable to a change in the method of accounting initiated by the taxpayer”, after “does not apply”.
Subsec. (b)(1). Pub. L. 85–866, § 29(b)(1)–(3), inserted “, other than the amount of such adjustments to which paragraph (4) or (5) applies,” after “subsection (a)(2)” and substituted “the aggregate increase in the taxes” for “the aggregate of the taxes” and “which would result if one-third of such increase in taxable income” for “which would result if one-third of such increase”.
Subsec. (b)(2). Pub. L. 85–866, § 29(b)(1), (4), inserted “other than the amount of such adjustments to which paragraph (4) or (5) applies,” after “subsection (a)(2)”, wherever appearing and “(or under the corresponding provisions of prior revenue laws)” after “the net increase in the taxes under this Chapter”.
Subsec. (b)(3)(A). Pub. L. 85–866, § 29(b)(5), substituted “paragraph (1) or (2)” for “paragraph (2)”, wherever appearing.
Subsec. (b)(4) to (6). Pub. L. 85–866, § 29(a)(2), added pars. (4) to (6).
Amendment by Pub. L. 91–172 applicable with respect to net capital losses sustained in taxable years beginning after Dec. 31, 1969, see section 512(g) of Pub. L. 91–172, set out as a note under section 1212 of this title.
Pub. L. 86–459, May 13, 1960, 74 Stat. 124, authorized any person who computed taxable income under the accrual method of accounting for his most recent taxable year ending on or before June 22, 1959, and who treated dealer reserve income for such taxable year as accruable for a subsequent taxable year, to elect before Sept. 1, 1960, to have section 481 of this title apply to the treatment for income tax purposes of dealer reserve income.
Pub. L. 85–866, title I, § 29(e), Sept. 2, 1958, 72 Stat. 1629, authorized an election by certain taxpayers, who, for any taxable years beginning after Dec. 31, 1953, and ending after Aug. 16, 1954, and before Sept. 2, 1958, computed their taxable incomes using different accounting methods in succeeding taxable years, to return to their first method of accounting, where the election was made within six months after Sept. 2, 1958. Claims for refunds of overpayments of tax resulting from the election were to be filed within one year after the date of the election. Such an election was to be considered a consent to an assessment of a deficiency resulting from the election, where the assessment is made within one year after the date of the election.
Written determinations for this section
These documents, sometimes referred to as "Private Letter Rulings", are taken from the IRS Written Determinations page; the IRS also publishes a fuller explanation of what they are and what they mean. The collection is updated (at our end) daily. It appears that the IRS updates their listing every Friday.
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- Definition of Real Estate Investment Trust : 2017-04-21
- Transfer by Corporation in Title 11 Case Type G : 2017-04-21
- Clearly v. Not Clearly Reflecting Income : 2015-11-20
- Option to Buy or Sell : 2015-11-20
- Sale v. Option : 2015-11-20
- Change of Methods Permissible v. Not Permissible : 2015-05-22
- Insurance Company Taxable Income : 2015-01-16
- Hedging transactions : 2014-10-17
- Correction of Method or Error : 2014-10-17
- Involuntary : 2014-10-17
- Change in Method of Accounting for Depreciation : 2014-09-05
- Improvements by Lessee : 2014-09-05
- Tax-Exempt Use Property : 2014-09-05
- Change of Methods Permissible v. Not Permissible : 2014-06-27
- Recapture on Reaching Producing Stage : 2013-12-13
- Involuntary : 2012-08-03
- Change From LIFO : 2009-08-28
- Change from LIFO Method : 2009-08-28
- Acceleration of Adjustment : 2009-08-28
- Change of Methods Inventory : 2009-08-28
- Clearly v. Not Clearly Reflecting Income : 2004-06-04
- Cash : 2004-06-04
- Required by Commissioner : 2004-06-04
- Need for Inventories : 2004-06-04
- Accrual : 2004-06-04
- Intercompany Transactions : 2002-03-01
- Constructive Receipt : 2000-09-22
- Method of Accounting : 2000-06-02
- Loss Disallowance Rule : 2000-02-18
- Establishment of Reserves : 2000-01-21
- Method of Accounting : 1999-11-05
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