Rev. Proc. 62-21 Amend. 2

In response to numerous inquiries, the Internal Revenue Service has modified the answer to Question 35 of a series of Questions and Answers relating to Depreciation Guidelines and Rules. See Revenue Procedure 62-21, C.B. 1962-2, 418, at 472, and Publication No. 456 (9-62). The modification provides for complying with the notice requirements of section 1.167(d)-1 of the Income Tax Regulations by attachment of a statement to a timely filed income tax return.

Question 35 and its answer, as modified, read as follows:

35. Question:

Section 167(d) and the regulations thereunder provide that the taxpayer and the district director may enter into an agreement as to the useful life of any property, and that the agreement shall be binding until such time as new circumstances come into existence. After the publication of the depreciation reform, will taxpayers be permitted to modify these agreements?

Answer:

The adoption of the depreciation reform itself will be considered as a new factor which justifies a taxpayer in modifying any agreement previously made. Thus, if the taxpayer wishes to modify an agreement previously made, he should notify the district director in accordance with the regulations under section 167(d). However, any taxpayer who has entered into a section 167(d) agreement before the publication of Revenue Procedure 62-21 ² may terminate the agreement within the transition period of three years provided by Revenue Procedure 62-21 by attaching to his income tax return filed within the time prescribed by law, including extensions of time, a clear statement to the effect that he is terminating his section 167(d) agreement and wishes to have his depreciation deductions examined under Revenue Procedure 62-21. The filing of such statement is construed as complying with the notice requirements contained in section 1.167(d)-1 of the Income Tax Regulations.

¹ Based on Technical Information Release 475, dated May 14, 1963.

² July 12, 1962, Revenue Procedure 62-21 was part of Publication No. 456 as released on that date.