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TAX CLINIC

may disregard any prior change to the such as the small business exemptions, Effective date
overall cash method for purposes of the including the limitation of the business Rev. Proc. 2022-9 is effective for Forms
five-year eligibility requirement. interest deduction. As explained below, 3115 filed on or after Dec. 16, 2021.
a taxpayer that wishes to revoke the Several transition rules are provided for
Syndicate election binding election for a year beginning changes that can no longer be made
Finally, Rev. Proc. 2022-9 provides before Jan. 5, 2021, must take action under an automatic change and a dupli-
procedures for taxpayers to revoke the (by making the annual election under cate copy of the Form 3115 has already
binding election made under Prop. Regs. the final regulations, or if it does not been filed, or changes that were filed
Sec. 1.448-2(b)(2)(i)(B) to use alloca- make the annual election for the year it as nonautomatic that now qualify as an
tions made in the immediately preceding applies the final regulations, by attaching automatic change.
tax year, instead of the current tax year’s a statement to the return or by timely From Karen Messner, E.A., Stamford,
allocations, when determining if more filing certain automatic accounting Conn., and Lina Ivanova, CPA, Rich-
than 35% of losses of an entity are al- method changes specified in Section mond, Va. ■
located to limited partners or limited 5.02(3)(c) of Rev. Proc. 2022-9 for an
entrepreneurs for purposes of the syndi- early-adoption year). If not, the binding
cate definition, for tax years beginning election is automatically revoked
on or after Jan. 5, 2021, or in an early beginning with the taxpayer’s first tax
application year. The final regulations year beginning on or after Jan. 5, 2021,
have favorably modified this election by and for all subsequent tax years. An Editor
making it an annual election that is ir- entity will have to determine annually
Kevin D. Anderson, CPA, J.D., is a man-
revocable for the year made. whether it wishes to make the annual
aging director, National Tax Office, with
The election applies for all provisions election to use the prior-year allocations
BDO USA LLP in Washington, D.C.
of the Code that specifically refer to and take the appropriate action under
Sec. 448(a)(3) to define a tax shelter, Regs. Sec. 1.448-2(b)(2)(iii)(B).

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30 May 2022 The Tax Adviser