New Rev. Proc. Provides that Citrus Replanting Costs Not Included in Automatic Accounting Method Changes

Released Tuesday, Rev. Proc. 2018-35 provides that the new automatic change procedures under Rev. Proc. 2018-31 do not apply section 263A to replanting costs for damaged or lost citrus plants. Section 263A generally requires taxpayers to include the costs of certain property produced or acquired for resale to be included in inventory costs. However, under section 263A(d)(2)(A) as revised by the 2017 tax act, such costs associated with replanting plants following certain loss or damage are not included. Rev. Proc. 2018-35 provides that a taxpayer wanting to change its method of accounting must follow automatic change procedures under 2018-31, which is modified by the new Rev. Proc. 2018-35. In addition, a new section is added to Rev. Proc. 2018-31, providing that taxpayers changing their accounting method do not apply section 263A to the replanting costs.

Read more: IRS Provides New Automatic Change Procedures for Replanting Costs (subscription required)

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