Change in accounting method Form 3115 to Cash Method DCN 233

[bwcland]

Our S-Corp business started as accrual method of accounting thinking that we would be having inventory, which we do not.  We are looking to change to Cash Method of accounting by completing IRS Form 3115 application for change in accounting method to the DCN 233. 

The reason for the change is the business does not have inventory. 

Form 3115 Part II question 7a "Does audit protection apply to the applicant's requested change in method of accounting?"   If No attach an explanation.   

The i3115 pg 7 instructions for Line 7a note you should answer "Yes" even if you do not receive audit protection when the change is granted but might receive it at the end of the exam. 

I'm confused by the question 7a, does anyone have insight or some tips on this question?

Thank you!  

[Anonymous_ · Accepted solution]

Question 7 asks if audit protection applies to the change in method of accounting. If it does, the applicant must check the appropriate box to indicate why it receives audit protection. This change incorporates the new audit protection rules in Section 8 of Rev. Proc. 2015-13. In certain circumstances, an additional statement or explanation will need to be attached.

See https://www.irs.gov/pub/irs-drop/rp-15-13.pdf (page 62)