[Code of Federal Regulations]
[Title 26, Volume 6]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.466-3]

[Page 292-293]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.466-3  Manner of and time for making election under section 466.

    (a) In general. Section 466 provides a special method of accounting 
for accrual basis taxpayers who issue qualified discount coupons (as 
defined in section 466(b)). In order to use the special method under 
section 466, a taxpayer must make an election with respect to the trade 
or business in connection with which the qualified discount coupons are 
issued. If a taxpayer issues qualified discount coupons in connection 
with more than one trade or business, the taxpayer may use the special 
method of accounting under section 466 only with respect to the 
qualified discount coupons issued in connection with a trade or business 
for which an election is made. The election must be made in the manner 
prescribed in this section. The election does not require the prior 
consent of the Internal Revenue Service. An election under section 466 
is effective for the taxable year for which it is made and for all 
subsequent taxable years, unless the taxpayer secures the prior consent 
of the Internal Revenue Service to revoke such election.
    (b) Manner of and time for making election--(1) General rule. Except 
as provided in paragraph (b)(2) of this section, an election is made 
under section 466 and this section by filing a statement of election 
containing the information described in paragraph (c) of this section 
with the taxpayer's income tax return for the taxpayer's first taxable 
year for which the election is made. The election must be made not later 
than the time prescribed by law (including extensions thereof) for 
filing the income tax return for the first taxable year for which the 
election is made. Thus, the election may not be made for a taxable year 
by filing an amended income tax return after the time prescribed 
(including extensions) for filing the original return for such year.
    (2) Transitional rule. If the last day of the time prescribed by law 
(including extensions thereof) for filing a taxpayer's income tax return 
for the taxpayer's first taxable year ending after December 31, 1978, 
falls before December 3, 1979, and the taxpayer does not make an 
election under section 466 with respect to such taxable year in the 
manner prescribed by paragraph (b)(1) of this section, an election is 
made under section 466 and this section with respect to such taxable 
year if--
    (i) Within the time prescribed by law (including extensions thereof) 
for filing the taxpayer's income tax return for such taxable year, the 
taxpayer has made a reasonable effort to notify the Commissioner of the 
taxpayer's intent to make an election under section 466 with respect to 
such taxable year, and
    (ii) Before January 2, 1980, the taxpayer files a statement of 
election

containing the information described in paragraph (c) of this section to 
be associated with the taxpayer's income tax return for such taxable 
year.

For purposes of paragraph (b)(2)(i) of this section, a reasonable effort 
to notify the Commissioner of an intent to make an election under 
section 466 with respect to a taxable year includes the timely filing of 
an income tax return for such taxable year if the taxable income 
reported on the return reflects a deduction for the redemption costs of 
qualified discount coupons as determined under section 466(a).
    (c) Required information. The statement of election required by 
paragraph (b) of this section must indicate that the taxpayer 
(identified by name, address, and taxpayer identification number) is 
making an election under section 466 and must set forth the following 
information:
    (1) A description of each trade or business for which the election 
is made;
    (2) The first taxable year for which the election is made;
    (3) The redemption period (as defined in section 466(c)(2)) for each 
trade or business for which the election is made;

[[Page 293]]

    (4) If the taxpayer is required to establish a suspense account 
under section 466(e) for a trade or business for which the election is 
made, the initial opening balance of such account (as defined in section 
466(e)(2)) for each such trade or business; and
    (5) In the case of an election under section 466 that results in a 
net increase in taxable income under section 481(a)(2), the amount of 
such net increase.

The statement of election should be made on a Form 3115, which need 
contain no information other than that required by this paragraph or 
paragraph (c) of Sec. 1.466-4.

[T.D. 8022, 50 FR 18477, May 1, 1985]