Ezel / IRS Rulings / 200906043

CCA 200906043: Revenue Procedure 2002-28 treatment depended on the business's main receipts

Number
200906043
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
General Rule for Methods of Accounting (Permissible v. Not Permissible)
Topics
Accounting methods and periods
Code sections
§ 446, § 448
Ruling dated
July 10, 2008
Publicly released
February 6, 2009
Source
View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2009, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2009
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

Chief Counsel considered accounting-method rules for a taxpayer below the $5 million and $10 million thresholds discussed in the advice. Being below $5 million avoided the section 448 concern, while being below $10 million meant the taxpayer might qualify under Revenue Procedure 2002-28. Eligibility under that procedure depended on the business activity producing most of its gross receipts. If construction produced most receipts, the taxpayer could not use the procedure; if installation and maintenance predominated, it could. The advice suggested reviewing the activity code reported on the return but warned that taxpayers often choose the wrong code.

Ruling snapshot

  • Question: Could the taxpayer use Revenue Procedure 2002-28 for its accounting method?
  • Outcome: Advice given: eligibility depended on whether most gross receipts came from construction or from installation and maintenance.
  • Key authorities: IRC §§ 446, 448; Rev. Proc. 2002-28 § 4.01(1).

Full text (IRS public release)

ID: CCA-710638-08 Number: 200906043
Release Date: 2/6/2009
Office: ----------------
UILC: 446.00-00

From: -----------------------
Sent: Thursday, July 10, 2008 6:38 AM
To: --------------------
Cc: ----------------------------
Subject: RE: Need help, oh great one ----------

My thoughts.

  1. Since your taxpayer is under $5 million, you avoid the § 448 concerns (if
    it's a C, has a C owner, etc.).
  2. Since your taxpayer is under $10 million, it may fit under RP 2002-28.
  3. Section 4.01(1) of 2002-28 forces you to decide where it gets the most of
    its GR. If it's from construction, the NAICS # is likely 333415 and the taxpayer can't use the RP. If the GR are mostly coming from installation and maintenance, the # seems to be 238220 and the taxpayer fits into the RP. Based on most of the H/AC folks I've come across, the $ is mostly from the duct work. What sometimes is interesting is to see what the taxpayer put on its return. That doesn't solve the issue as a lot of folks pick the wrong code # but it can be entertaining.

My ego has been stroked for today.

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