CCA 200018028: Landfill depreciation method request withdrawn

Plain-English summary

Several taxpayers withdrew a Form 3115 seeking to change how they depreciated landfill development costs under a units of production method. The proposed method used actual incurred costs and built out landfill capacity instead of estimated future costs and total potential capacity. The taxpayers gave no reason for the withdrawal. The Chief Counsel memorandum tells the district director that the application was withdrawn and notes concern about using built out rather than total potential capacity. It does not approve or deny the requested accounting change.

Ruling snapshot

• Question: What happened to the application to change the landfill depreciation method?
• Outcome: Withdrawn by the taxpayers; no substantive ruling issued.
• Key authorities: IRC § 481(a); Rev. Proc. 2000-1, § 8.07(2)(a).

Full text (IRS public release)

DEPARTMENT OF THE TREASURY
I N T E R N AL R E V E N U E S E R V I C E WASHINGTON, D.C. 20224
February 2, 2000

Number: 200018028
Release Date: 5/5/2000
UIL: 167.05-08
CC:DOM:P&SI:6:
446.04-17
CAM-101106-99

MEMORANDUM FOR:DISTRICT DIRECTOR, DISTRICT ATTN: CHIEF, EXAMINATION DIVISION

FROM: SENIOR TECHNICIAN REVIEWER, BRANCH 6
CC:DOM:P&SI:6

SUBJECT: WITHDRAWAL OF APPLICATION FOR CHANGE IN
ACCOUNTING METHOD

In accordance with section 8.07(2)(a) of Rev. Proc. 2000-1, 2000-1 I.R.B. 4, 33, this memorandum advises you that taxpayers within your district have withdrawn a Form 3115, Application for Change in Accounting Method. This document is not to be cited as precedent.

LEGEND:

A =

B =

C =

D =

E =

F =

G =

H =

I =

-2-

J =

K =

L =

M =

This memorandum advises you that a Form 3115 submitted on behalf of A through J (hereafter, collectively referred to as “Taxpayers”) is withdrawn. Taxpayers did not give any reason for the withdrawal.

Taxpayers filed the Form 3115 to change the method of computing depreciation for landfill development costs under the unit-of-production method from a method which uses future estimated costs and total potential capacity of the landfill to a method that uses actual costs incurred and actual built-out capacity of the landfill, beginning with the taxable year beginning K. If granted consent to make this method change, it would have resulted in a total net negative § 481(a) adjustment (decrease in taxable income) of $L.

Additionally, Taxpayers represented that prior to the tax year ended M, Taxpayers consistently utilized the requested method for determining its depreciation expense for its landfills. Subsequently, Taxpayers switched to its current method for determining depreciation expense. Taxpayers did not request or receive permission to make this method change. Taxpayers are attempting to change back to their original method.

At the time of the withdrawal, we had formed concerns regarding use of the actual built-out capacity of the landfill as opposed to the total potential capacity of the landfill in Taxpayers’ proposed method of computing depreciation for their landfill development costs.

If you have any questions on this matter, do not hesitate to call

KATHLEEN REED