Rev. Rul. 81-290

The purpose of this revenue ruling is to modify the answer to Question 3 of Rev. Rul. 74-351, 1974-2 C.B. 144, which deals with the treatment of blocked foreign income.

Question 3 of Rev. Rul. 74-351 reads as follows:

Question 3. When should the taxpayer make an election mentioned above?

The answer to Question 3 is modified to read as follows:

Answer. (a) Election in year in which blocked foreign income first occurs.

If an election is made by the taxpayer to use the deferred income method of accounting for the first taxable year in which the taxpayer has blocked foreign income, the taxpayer is to follow the procedures set forth in the answer to Question 2 of Rev. Rul. 74-351. The Commissioner's consent is not required to make such an election.

(b) Election to change from the deferred income method of accounting described in Rev. Rul. 74-351.

Taxpayers who have elected to adopt the deferred income method of accounting for blocked foreign income and desire to change to a nondeferred method of accounting for such income in a subsequent taxable year are required to file Form 3115, Application for Change in Accounting Method, to secure the consent of the Commissioner pursuant to the provisions of section 1.446-1(e) of the Income Tax Regulations.

(c) Election where blocked foreign income has been reported under a nondeferred income method of accounting for federal income tax purposes.

Taxpayers who have been reporting blocked foreign income under a nondeferred method of accounting and who desire to change to the deferred income method of accounting described in Rev. Rul. 74-351, are required to file Form 3115 to secure the consent of the Commissioner pursuant to the provisions of section 1.446-1(e) of the regulations.

PROSPECTIVE APPLICATION

Pursuant to the authority of section 7805(b) of the Internal Revenue Code, the answer stated in 3(c) will not be applied to taxable years beginning on or before December 14, 1981.

EFFECT ON OTHER DOCUMENTS

Rev. Rul. 74-351 is modified.