Quiero saber acerca de...

266

Federal Register / Vol. 86, No. 2 / Tuesday, January 5, 2021 / Rules and Regulations
of income and the pattern of consistent treatment of an item, see section 446
and 1.4461. The amount of the net section 481a adjustment and the adjustment period necessary to implement a change in method of accounting required under this section are determined under 1.4461e and the applicable administrative procedures to obtain the Commissioners consent to change a method of accounting as published in the Internal Revenue Bulletin see Revenue Procedure 201513 20155
IRB 419 or successor see also 601.601d2 of this chapter.
ii Automatic consent for certain method changes. Certain changes in method of accounting made under paragraph j of this section may be made under the procedures to obtain the automatic consent of the Commissioner to change a method of accounting. See Revenue Procedure 201513 20155
IRB 419 or successor see also 601.601d2 of this chapter. In certain situations, special terms and conditions may apply.

m
6 Exemption for certain small business taxpayers. The second and third sentence in paragraph a2i, paragraphs b1 and j of this section apply to taxable years beginning on or after January 5, 2021. However, for a taxable year beginning after December 31, 2017, and before January 5, 2021, a taxpayer may apply the paragraphs described in the first sentence of this paragraph m6, provided that the taxpayer follows all the applicable rules contained in the regulations under section 263A for such taxable year and all subsequent taxable years.
Par. 4. Section 1.263A2 is amended by:
1. Adding a sentence at the end of paragraph a introductory text.
2. Revising paragraph a1iiC.
3. Revising paragraph g subject heading.
4. Adding paragraph g4.
The additions and revisions read as follows:

jbell on DSKJLSW7X2PROD with RULES

1.263A2 Rules relating to property produced by the taxpayer.

a For taxable years beginning after December 31, 2017, see 1.263A
1j for an exception in the case of a small business taxpayer that meets the gross receipts test of section 448c and 1.4482c.
1
ii
C Home construction contracts.
Section 263A applies to a home construction contract unless that
VerDate Sep<11>2014

16:32 Jan 04, 2021

Jkt 253001

contract will be completed within two years of the contract commencement date, and, for contracts entered into after December 31, 2017, in taxable years ending after December 31, 2017, the taxpayer meets the gross receipts test of section 448c and 1.4482c for the taxable year in which such contract is entered into. Except as otherwise provided in this paragraph a1iiC, section 263A applies to such a contract even if the contractor is not considered the owner of the property produced under the contract under Federal income tax principles.

g Applicability dates.
4 The rules set forth in the last sentence of the introductory text of paragraph a of this section and in paragraph a1iiC of this section apply for taxable years beginning on or after January 5, 2021. However, for a taxable year beginning after December 31, 2017, and before January 5, 2021, a taxpayer may apply the paragraphs described in the first sentence of this paragraph g4, provided that the taxpayer follows all the applicable rules contained in the regulations under section 263A for such taxable year and all subsequent taxable years.
Par. 5. Section 1.263A3 is amended:
1. In paragraph a1, by revising the second sentence.
2. By revising paragraphs a2ii and iii.
4. In paragraph a3, by removing the language small reseller and adding in its place the language small business taxpayer.
5. In paragraph a4ii, removing the language within the meaning of paragraph a2iii of this section and adding in its place the language within the meaning of paragraph a5
of this section.
6. By adding paragraph a5.
7. By removing and reserving paragraph b.
8. By revising paragraph f.
The revisions and additions read as follows:
1.263A3 Rules relating to property acquired for resale.

a 1 However, for taxable years beginning after December 31, 2017, a small business taxpayer, as defined in 1.263A1j, is not required to apply section 263A in that taxable year.
2
ii Exemption for certain small business taxpayers. For taxable years beginning after December 31, 2017, see 1.263A1j for an exception in the case of a small business taxpayer that
PO 00000

Frm 00044

Fmt 4700

Sfmt 4700

meets the gross receipts test of section 448c and 1.4482c.
iii De minimis production activities.
See paragraph a5 of this section for rules relating to an exception for resellers with de minimis production activities.

5 De minimis production activities i In general. In determining whether a taxpayers production activities are de minimis, all facts and circumstances must be considered. For example, the taxpayer must consider the volume of the production activities in its trade or business. Production activities are presumed de minimis if A The gross receipts from the sale of the property produced by the reseller are less than 10 percent of the total gross receipts of the trade or business; and B The labor costs allocable to the trade or businesss production activities are less than 10 percent of the resellers total labor costs allocable to its trade or business.
ii Definition of gross receipts to determine de minimis production activities. Gross receipts has the same definition as for purposes of the gross receipts test under 1.4482c, except that gross receipts are measured at the trade-or-business level rather than at the single-employer level.
iii Example: Reseller with de minimis production activities. Taxpayer N is in the retail grocery business. In 2019, Ns average annual gross receipts for the three previous taxable years are greater than the gross receipts test of section 448c. Thus, N is not exempt from the requirement to capitalize costs under section 263A. Ns grocery stores typically contain bakeries where customers may purchase baked goods produced by N. N produces no other goods in its retail grocery business. Ns gross receipts from its bakeries are 5
percent of the entire grocery business.
Ns labor costs from its bakeries are 3
percent of its total labor costs allocable to the entire grocery business. Because both ratios are less than 10 percent, Ns production activities are de minimis.
Further, because Ns production activities are incident to its resale activities, N may use the simplified resale method, as provided in paragraph a4ii of this section.

f Applicability dates. 1 Paragraphs d3iC3, d3iD3, and d3iE3 of this section apply for taxable years ending on or after January 13, 2014.
2 The rules set forth in the second sentence of paragraph a1 of this section, paragraphs a2ii and iii of
E:FRFM05JAR1.SGM

05JAR1