The IRS and Treasury have released long-awaited proposed regulations implementing Sections 451(b) and 451(c), added by the 2017 tax reform act, and Rev. Proc. 2019-37, which provides procedures for a taxpayer to change its method of accounting to comply with the new rules. The Insight below discusses the Section 451(c) proposed regulations and Rev. Proc. 2019-37.
The proposed regulations provide needed clarification of the Section 451(c) rules, which apply for tax years beginning in 2018. Adopting many of the rules from Rev. Proc. 2004-34 and allowing taxpayers to continue using that method of accounting until final regulations are effective avoid the need to make multiple accounting method changes and reduce administrative burden. However, until the proposed regulations are finalized and effective, taxpayers should carefully evaluate whether they want to follow Rev. Proc. 2004-34 or the proposed regulations.
PwC professionals discussed the Section 451(c) proposed regulations and Rev. Proc. 2019-37 in a Tax Readiness series webcast on Tuesday, October 1, 2019.