The IRS today released an advance version of Rev. Proc. 2018-49 to clarify the availability of certain changes in method of accounting for taxpayers that were “early adopters” of a method of recognizing revenues under new financial accounting standards (FASB and IASB).
Rev. Proc. 2018-49 [PDF 33 KB] modifies the effective date of Rev. Proc. 2018-29 and certain provisions of Rev. Proc. 2018-31 to provide that the automatic method change procedures apply with respect to early adopters of the new financial accounting standards.
The Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) in 2014 announced new financial accounting standards for revenue recognition. The new standards were titled “Revenue from Contracts with Customers (Topic 606).”
Publicly traded entities, certain not-for-profit entities, and certain employee benefit plans were required to adopt the new standards for annual reporting periods beginning after December 15, 2017. [All other entities must adopt the new standards for annual reporting periods beginning after December 15, 2018.] Early adoption, however, was allowed for reporting periods beginning after December 15, 2016.
After the IRS released Rev. Proc. 2018-29, there were questions as to whether Rev. Proc. 2018-29 applied to “early adopters” of the new standards.
The IRS today issued Rev. Proc. 2018-49 to modify the effective date provisions of Rev. Proc. 2018-29 and certain scope limitations under Rev. Proc. 2015-13 to clarify that the automatic method change rules apply to “early adopters.”
The effective date provisions of the earlier revenue procedures—that is, Rev. Proc. 2018-29 and Rev. Proc. 2018-31—are modified so that the guidance is effective on May 10, 2018, and applies to tax years ending on or before May 10, 2021.
© 2020 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.KPMG International Cooperative (“KPMG International”) is a Swiss entity.
Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.