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Audit Protection TAM 200749014 12/07/2007, IRC §446

Audit Protection TAM 200749014 12/07/2007, IRC §446. Presented By: Mabelle Panlilio May 7, 2008. Issue . Did Corporation A and its subsidiaries obtain “audit protection” by filing Form 3115 when requesting to change their methods of accounting to comply with Reg. §1.263(a)-5 ?. Facts .

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Audit Protection TAM 200749014 12/07/2007, IRC §446

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  1. Audit ProtectionTAM 200749014 12/07/2007, IRC §446 Presented By: Mabelle Panlilio May 7, 2008 TAM 200749014

  2. Issue Did Corporation A and its subsidiaries obtain “audit protection” by filing Form 3115 when requesting to change their methods of accounting to comply with Reg. §1.263(a)-5 ? TAM 200749014

  3. Facts • Corporation A – BOD approved a plan or reorganization in Year 0 • July Year 4 – IRS issues Form 5701, Notice of Proposed Adjustment • September Year 4 – Taxpayers file Form 3115 TAM 200749014

  4. Background • IRC §446 • Reg. §1.263(a)-5 • Rev. Proc. 2002-9 • Rev. Proc. 2004-23 TAM 200749014

  5. Findings • Ok to file a request to change accounting methods, even after you receive a notice from the IRS • Audit protection provisions of Rev. Proc. 2002-9 do not apply to pending issues before Form 3115 is filed TAM 200749014

  6. Conclusion Taxpayer did not obtain audit protection as a result of filing their Form 3115 TAM 200749014

  7. Why is this important?? • If you’re using an incorrect method of accounting it’s better for you to make that change before the IRS makes the change for you. TAM 200749014

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