9100 relief for a late bonus-depreciation opt-out and § 174 method-change Form 3115

Plain-English summary

A corporate group meant to make two tax choices on its return: an election
under § 168(k)(7) to opt out of bonus (additional first-year) depreciation for
all qualified property, and an accounting-method change on Form 3115 to comply
with § 174 (which now requires research and experimental costs to be
capitalized and amortized rather than deducted). Both choices had to ride on a
timely filed return. Because of turnover in the company's tax department, no
Form 7004 extension was filed, so the return, though filed before the intended
extended due date, was actually late, which made both elections late too. The
group asked the IRS for "9100 relief" under Treas. Reg. §§ 301.9100-1 and
301.9100-3. The IRS found the group acted reasonably and in good faith and that
relief would not prejudice the government, so it treated both the § 168(k)(7)
election and the Form 3115 as timely made. The IRS was careful to say it did
not extend the deadline for filing the return itself.

Ruling snapshot

• Question: May the group get an extension of time to make a late § 168(k)(7) election and to file a late Form 3115 for a § 174 method change?
• Outcome: Approved (both treated as timely made)
• Key authorities: IRC § 168(k)(7); IRC § 174; Treas. Reg. § 1.168(k)-2(f); Treas. Reg. §§ 301.9100-1 and 301.9100-3; Rev. Proc. 2015-13; Rev. Proc. 2024-23 (as modified by 2024-34)

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 202624003
Release Date: 6/12/2026
Index Number: 9100.00-00

Third Party Communication: None
Date of Communication: Not Applicable

Person To Contact:

Telephone Number:

Refer Reply To:
CC:ITA:B07
PLR-116144-25
Date: March 17, 2026

Re: Request for Extension of Time to Make Certain Regulatory Elections and File a
Request to Change Method of Accounting

Legend

Parent = ----------------------------------------------------
S1 = ------------------------------------------------------
S2 = ----------------------------------------------
S3 = ---------------------------------------------------------------
S4 = ---------------------------------------------------------------------------
S5 = ----------------------------------------------------
S6 = ---------------------------------------------------
X = ------------------------------------------------------------------------------------
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Taxable Year = ------------------------------------------------------
Tax Department = -------------------------------------------
Year1 = -------
Firm = ----------------------
Date1 = -------------------
Date2 = -----------------------
Date3 = -----------------------

Dear ---------------:

   This letter responds to a letter dated August 29, 2025, and supplemental correspondence, submitted by Parent's authorized representatives on behalf of Parent and its affiliated entities, S1, S2, S3, S4, S5, and S6 (collectively referred to as "Taxpayer"). In that letter, Parent requests an extension of time pursuant to §§ 301.9100-1 and 301.9100-3 of the Procedure and Administration Regulations to (1) make an election under § 168(k)(7) not to deduct the additional first year depreciation under § 168(k) for all qualified property placed in service by Taxpayer during the Taxable Year and (2) file the original Form 3115, Application for Change in Accounting Method, as required under section 6.03(1)(a)(i)(A) of Rev. Proc. 2015-13, 2015-5 I.R.B 419, 432, for the Taxable Year (collectively, regulatory elections for the Taxable Year). This letter ruling is being issued electronically, as permissible under section 7.02(5) of Rev. Proc. 2025-5, 2025-1 I.R.B. 1, 34.

   All references in this letter ruling to § 168(k) and § 174 are treated as a reference to § 168(k) and § 174, as applicable, as in effect after amendment by Public Law 115-97, 131 Stat. 2054 (Dec. 22, 2017), commonly known as the Tax Cuts and Jobs Act (TCJA), and prior to amendment by Public Law 119-21, 139 Stat. 72 (July 4, 2025), commonly known as the One, Big, Beautiful Bill Act (OBBBA). Further, all references to section 1.168(k)-2 of the Income Tax Regulations are treated as a reference to the final regulations under § 1.168(k)-2 published in the Federal Register on November 10, 2020 (85 FR 71734).

                                      FACTS

   Parent represents that the facts are as follows:

  Parent, the common parent of an affiliated group of corporations that includes Taxpayer, files a consolidated federal income tax return on a Form 1120, U.S. Corporation Income Tax Return, on a calendar-year basis. Parent's overall method of accounting is an accrual method. Taxpayer is in the business of X.

   For the Taxable Year, Parent desired to (1) make the election under § 168(k)(7) not to deduct additional first year depreciation under §168(k) for all classes of qualified property described in § 1.168(k)-2(f)(ii) that were placed in service during the Taxable Year (§ 168(k)(7) election); and (2) change its method of accounting for specified research or experimental (SRE) expenditures to comply with § 174 and the interim guidance provided under section 4 of Notice 2023-63, 2023-39 I.R.B. 919, beginning the Taxable Year (year of change), under section 7.01 (DCN#265) of Rev. Proc. 2024-23, 2024-23 I.R.B. 1336, 1377, as modified by Rev. Proc. 2024-34, 2024-38 I.R.B. 604.

   The due date (excluding any extension) for Parent's consolidated federal income tax return for the Taxable Year was Date1. Consistent with filings made in prior taxable years, Parent intended to timely file a Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns, to request an automatic extension of time to file its consolidated federal income tax return for the Taxable Year by Date2.

   Historically, Tax Department has been responsible for preparing and submitting Parent's various federal and state filings, including the Form 7004. In Year1, Parent engaged Firm to assist with its income tax filings. Despite the engagement, Parent retained responsibility for filing the Form 7004, including filing the Form 7004 for the Taxable Year. During the Taxable Year, Tax Department transitioned to a completely new team of personnel. However, due to the turnover in Tax Department, a misunderstanding occurred concerning Tax Department's responsibility to file the Form 7004 for the Taxable Year. As a result, no Form 7004 was filed for the Taxable Year and the due date for Parent's consolidated federal income tax return was not extended to Date2.

    Unaware that the Form 7004 had not been timely filed, Parent filed its Form 1120 for the Taxable Year on Date3, which is prior to Date2, attaching the necessary election statement under § 168(k)(7) and the Form 3115 for the § 174 method change, as required. The Form 1120 treated the applicable items on the return as if the § 168(k)(7) election and the Form 3115 for the SRE expenditures were effective. Additionally, the required duplicate copy of the Form 3115 was filed with the Ogden office on Date 3, prior to Date2.

   After Date2, Firm discovered that Taxpayer's Form 7004 had not been filed for the Taxable Year. As a result, Parent did not timely file its Form 1120. For that reason, the original Form 3115 and the § 168(k)(7) election statement were not attached to a timely filed federal income tax return for the Taxable Year.

                              RULING REQUESTED

  Accordingly, Parent requests an extension of time pursuant to §§ 301.9100-1 and 301.9100-3 of the Procedure and Administration Regulations to (1) make the § 168(k)(7) election for all qualified property placed in service during the Taxable Year and (2) file the Form 3115 to change Parent's method of accounting for SRE expenditures under § 174 pursuant to section 7.01 of Rev. Proc. 2024-23, as modified by Rev. Proc. 2024-34, for the Taxable Year.

                              LAW AND ANALYSIS

   Section 167(a) allows a taxpayer to deduct as depreciation a reasonable allowance for the exhaustion, wear and tear of property used in a trade or business, or property held in the production of income. For tangible depreciable property placed in service after 1986, the depreciation deduction allowable under § 167 is generally determined under § 168.

   Section 168(k)(1) allows, for the taxable year that qualified property is placed in service, an additional first year depreciation deduction equal to the applicable percentage of the adjusted basis of that qualified property.

   Section 168(k)(6) provides the applicable percentages for qualified property acquired by a taxpayer after September 27, 2017, and placed in service before January 1, 2028. Each applicable percentage depends on the date that such qualified property is placed in service by the taxpayer.

  Section 168(k)(7) provides that a taxpayer may make an election not to deduct the additional first year depreciation for any class of property that is qualified property placed in service during the taxable year (the § 168(k)(7) election).

   Section 1.168(k)-2(f)(1)(i) provides that the § 168(k)(7) election not to deduct additional first year deduction applies to all qualified property that is in the same class of property and placed in service in the same taxable year. Section 1.168(k)-2(f)(1)(ii) defines "class of property" for purposes of the § 168(k)(7) election as meaning each class of property described in § 1.168(k)-2(f)(1)(ii)(A)-(G).

   Section 1.168(k)-2(f)(1)(iii)(A) provides that the § 168(k)(7) election must be made by the due date (including extensions) of the federal tax return for the taxable year in which the property is placed in service by the taxpayer.

   Section 1.168(k)-2(f)(1)(iii)(B) provides that the § 168(k)(7) election must be made in the manner prescribed on Form 4562, "Depreciation and Amortization," and its instructions. The instructions to Form 4562 for the Taxable Year provide that the § 168(k)(7) election is made by attaching a statement to the taxpayer's timely filed tax return indicating that the taxpayer is electing not to deduct the additional first year depreciation and the class of property for which the taxpayer is making the election.

   Section § 174(a)(1) provides generally that, except as provided in § 174(a)(2), no deduction shall be allowed for SRE expenditures. Section 174(a)(2) provides that SRE expenditures shall be charged to capital account and amortized ratably over the 5-year period (15-year period in the case of any SRE expenditures which are attributable to foreign research (within the meaning of § 41(d)(4)(F)) beginning with the midpoint of the taxable year in which the SRE expenditures are paid or incurred. Section 174(b) defines the term "specified research or experimental expenditures."

   TCJA § 13206(e) provides that § 174 applies to amounts paid or incurred in taxable years beginning after December 31, 2021.

 Section 4 of Notice 2023-63 provides interim guidance that clarifies whether expenditures are SRE expenditures within the meaning of § 174(b).

   Rev. Proc. 2015-13 provides the general procedures by which a taxpayer may obtain consent to make changes in method of accounting, including automatic changes. Pursuant to section 9 of Rev. Proc. 2015-13, a taxpayer that complies with the applicable provisions of Rev. Proc. 2015-13 and the List of Automatic Changes, and implements the change in method of accounting on its federal income tax return for the requested year of change to which the original Form 3115 is attached pursuant to section 6.03 of Rev. Proc. 2015-13, has obtained the consent of the Commissioner of Internal Revenue to change its method of accounting under § 446(e) and the regulations thereunder.

   For Forms 3115 filed on or after April 30, 2024, for a year of change ending on or after September 30, 2023, Rev. Proc. 2024-23 provides the list of Automatic Changes to which the automatic change procedures in Rev. Proc. 2015-13 apply. Section 7.01 of Rev. Proc. 2024-23 provides procedures for taxpayers to make automatic changes in method of accounting for the treatment of SRE expenditures under § 174, including changes to rely on interim guidance provided in section 4 of Notice 2023-63. Rev. Proc. 2024-34 modified section 7.01 of Rev. Proc. 2024-23, effective for Forms 3115 filed on or after August 29, 2024.

   Section 6.03(1)(a)(i) of Rev. Proc. 2015-13 provides that a taxpayer requesting to change a method of accounting under the automatic change procedures of Rev. Proc. 2015-13 must complete and file a Form 3115 in duplicate. The original Form 3115 must be attached to the taxpayer's timely filed (including any extensions) original federal income tax return for the requested year of change. Additionally, a signed copy of the original Form 3115 must be filed with the Ogden office no earlier than the first day of the requested year of change and no later than when the original Form 3115 is filed with the federal income tax return for the requested year of change.

  Section 301.9100-1 provides that the Commissioner has discretion to grant a reasonable extension of time under the rules set forth in §§ 301.9100-2 and 301.9100-3 to make a regulatory election.

   Section 301.9100-1(b) provides that the term "regulatory election" includes an election whose due date is prescribed by a regulation published in the Federal Register.

   Sections 301.9100-1 through 301.9100-3 provide the standards the Commissioner will use to determine whether to grant an extension of time to make an election. Section 301.9100-2 provides automatic extensions of time for making certain elections. Section 301.9100-3 provides an extension of time for making elections that do not meet the requirements of § 301.9100-2.

    Section 301.9100-3(a) provides that requests for relief under § 301.9100-3 will be granted when the taxpayer provides evidence to establish to the satisfaction of the Commissioner that the taxpayer acted reasonably and in good faith, and that granting relief will not prejudice the interests of the Government.

   Section 301.9100-3(c)(2) imposes special rules for accounting method regulatory elections. This paragraph provides, in relevant part, that the interests of the Government are deemed to be prejudiced except in unusual and compelling circumstances when the accounting method regulatory election for which relief is requested is subject to the procedure described in § 1.446-1(e)(3)(i) or the relief requires an adjustment under § 481(a) (or would require an adjustment under § 481(a) if the taxpayer changed to the accounting method for which relief is requested in a taxable year subsequent to the taxable year the election should have been made).

                                 CONCLUSION

   Based solely on the facts and representations submitted, we conclude that the requirements of §§ 301.9100-1 and 301.9100-3 have been satisfied. Accordingly, Parent is granted an extension of time to make the regulatory elections for the taxable year. In this regard, we will consider the regulatory elections for the taxable year made by Taxpayer on Parent's Form 1120 for the Taxable Year filed on Date3, to be made timely.

   Except as specifically set forth above, no opinion is expressed or implied concerning the federal tax consequences of the facts described above under any other provisions of the Code or regulations. Specifically, no opinion is expressed or implied concerning whether (1) any item of depreciable property placed in service by Taxpayer during the Taxable Year is eligible for the additional first year depreciation under § 168(k); (2) the classification of any item of depreciable property under § 168, § 167, or Rev. Proc. 87-56, 1987-2 C.B. 674, is correct; (3) the change in method of accounting Parent requested to make may be made under the automatic change procedures of Rev. Proc. 2015-13; (4) Parent is eligible to make a change in method of accounting under section 7.01 of Rev. Proc. 2024-23, as modified by Rev. Proc. 2024-34; or (5) Taxpayer's proposed method of accounting to comply with § 174 is a permissible method of accounting, including whether any expenditures paid or incurred in the Taxable Year are SRE expenditures.

  Moreover, this letter ruling does not grant an extension of time for filing Parent's consolidated federal income tax return for the Taxable Year.

   The ruling contained in this letter ruling is based upon facts and representations submitted by Taxpayer with an accompanying penalty of perjury statement executed by the appropriate party. While this office has not verified any of the material submitted in support of this request for an extension of time to file the required Forms 3115 and to make the election under § 168(k)(7) not to deduct the additional first year depreciation, all material is subject to verification on examination.

  This letter ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) provides that it may not be used or cited as precedent.

    In accordance with the power of attorney on file with this office, we are sending a copy of this letter ruling to your authorized representatives. We are also sending a copy of this letter ruling to the appropriate IRS operating division official.

    A copy of this letter must be attached to any federal income tax return to which it is relevant. Alternatively, a taxpayer filing its federal return electronically may satisfy this requirement by attaching a statement to the return that provides the date and control number of the letter ruling.

                                               Sincerely,

                                               Elizabeth R. Binder
                                               Senior Counsel, Branch 7
                                               Office of Associate Chief Counsel
                                               (Income Tax & Accounting)

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