[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: 26CFR1.458-2]

[Page 193-194]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.458-2  Manner of and time for making election.

    (a) Scope. For taxable years beginning after September 30, 1979, 
section 458 provides a special method of accounting for taxpayers who 
account for sales of magazines, paperbacks, or records using an accrual 
method of accounting. In order to use the special method of accounting 
under section 458, a taxpayer must make an election

[[Page 194]]

in the manner prescribed in this section. The election does not require 
the prior consent of the Internal Revenue Service. The election 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) Separate election for each trade or business. An election is 
made with respect to each trade or business of a taxpayer in connection 
with which qualified sales (as defined in section 458(b)(5)) of a 
category of merchandise were made. Magazines, paperbacks, and records 
are each treated as a separate category of merchandise. If qualified 
sales of two or more categories of merchandise are made in connection 
with the same trade or business, then solely for purposes of section 
458, each category is treated as a separate trade or business. For 
example, if a taxpayer makes qualified sales of both magazines and 
paperbacks in the same trade or business, then solely for purposes of 
section 458, the qualified sales relating to magazines are considered 
one trade or business and the qualified sales relating to paperbacks are 
considered a separate trade or business. Thus, if the taxpayer wishes to 
account under section 458 for the qualified sales of both magazines and 
paperbacks, such taxpayer must make a separate election for each 
category.
    (c) Manner of, and time for, making election. An election is made 
under section 458 and this section by filing a statement of election 
containing the information described in paragraph (d) of this section 
with the taxpayer's income tax return for first taxable year for which 
the election is made. The election must be made no later than the time 
prescribed by law (including extensions) for filing the income tax 
return for the first taxable year for which the election is made. Thus, 
the election may not be filed with an amended income tax return after 
the prescribed date (including extensions) for filing the original 
return for such year.
    (d) Required information. The statement of election required by 
paragraph (c) of this section must indicate that an election is being 
made under section 458(c) and must set forth the following information:
    (1) The taxpayer's name, address, and identification number;
    (2) A description of each trade or business for which an election is 
made;
    (3) The first taxable year for which an election is made for each 
trade or business;
    (4) The merchandise return period (as defined in section 458(b)(7)) 
for each trade or business for which an election is made;
    (5) With respect to an election that applies to magazines, the 
amount of the adjustment computed under section 481(a) resulting from 
the change to the method of accounting described in section 458; and
    (6) With respect to an election that applies to paperbacks or 
records, the initial opening balance (computed in accordance with 
section 458(e)) in the suspense account for each trade or business for 
which an election is made.

The statement of election should be made on a Form 3115 which need 
contain no information other than that required by this paragraph.

[T.D. 7628, 44 FR 33398, June 11, 1979. Redesignated by T.D. 8426, 57 FR 
38599, Aug. 26, 1992]