Rev. Proc. 75-34

Section 1. Purpose

The purpose of this Revenue Procedure is to extend the time for filing Form 3115 (Application for Change in Accounting Method) by taxpayers who are changing to the full absorption method of inventory costing and electing the transition procedures under section 1.471-11(e)(1)(ii) of the Income Tax Regulations, in view of the proposed procedures that may be followed by the Internal Revenue Service in processing such applications as set forth in a proposed Revenue Procedure contained in Announcement 75-42, 1975-19 I.R.B. 138, and issued as Technical Information Release 1365, dated April 17, 1975, as amended by Technical Information Release 1375, dated May 5, 1975.

Sec. 2. Background

.01 Section 1.471-11(e)(1)(ii) of the regulations provides a special election during the two-year transition period where a taxpayer may elect on Form 3115 to change to the full absorption method of inventory costing. Such election shall be made during the first 180 days of any taxable year beginning on or after September 19, 1973, and before September 19, 1975.

.02 Announcement 75-42 announced a proposed Revenue Procedure wherein the Service invited comments relative to certain representations that may be required from taxpayers changing to the full absorption method of inventory costing. Pending final action by the Service with respect to the proposed Revenue Procedure, certain taxpayers cannot determine whether they must change their present inventory costing method, and if they must change, they cannot be certain as to the extent of the change.

.03 Section 1.9100-1(a) of the regulations provides, in part, that the Commissioner in his discretion may, upon good cause shown, grant a reasonable extension of the time fixed by the regulations for the making of an election or application for relief in respect of tax under subtitle A of the Code provided--

(1) The time for making such election or application is not expressly prescribed by law;

(2) Request for the extension is filed with the Commissioner before the time fixed by the regulations for making such election or application, or within such time thereafter as the Commissioner may consider reasonable under the circumstances; and

(3) It is shown to the satisfaction of the Commissioner that the granting of the extension will not jeopardize the interests of the Government.

.04 In view of the uncertainties created by the proposed Revenue Procedure with respect to taxpayers who may or may not elect to change to the full absorption method of inventory costing under section 1.471-11(e)(1)(ii) of the regulations depending on final action by the Service with respect to the proposed Revenue Procedure, the Commissioner has determined that good cause exists to grant a reasonable extension of time for making the election under section 1.471-11(e)(1)(ii). Further, the time for making such election is not expressly prescribed by law, nor will the extension jeopardize the interests of the Government.

Sec. 3. Procedure

Under the authority of section 1.9100-1(a) of the regulations the time for making the election to change to the full absorption method of inventory costing and to use the transition procedures set forth in section 1.471-11(e)(1)(ii) is extended until 60 days after the Service publishes its decision with respect to the proposed Revenue Procedure announced in Announcement 75-42, or as provided in section 1.471-11(e)(1)(ii), whichever is later.

Sec. 4. Inquiries

Inquiries in regard to this Revenue Procedure should refer to its number and be addressed to the Commissioner of Internal Revenue, Attention T:C:C, 1111 Constitution Avenue, N.W., Washington, D.C. 20224.

¹ Also released as TIR-1389, dated June 25, 1975.