Reg. § 1.171-5 Effective date and transition rules.
(a) Effective date
(1) In general Sections through 1.171-4 apply to bonds acquired on or after March 2, 1998. However, if a holder makes the election under for the taxable year containing March 2, 1998, or any subsequent taxable year, through apply to bonds held on or after the first day of the taxable year in which the election is made.
(2) Transition rule for use of constant yield Notwithstanding of this section, (providing that the bond premium allocable to an accrual period is determined with reference to a constant yield) does not apply to a bond issued before September 28, 1985.
(b) Coordination with existing election A holder is deemed to have made the election under for the taxable year containing March 2, 1998, if the holder elected to amortize bond premium under section and that election is effective on March 2, 1998. If the holder is deemed to have made the election under for the taxable year containing March 2, 1998, through apply to bonds acquired on or after the first day of that taxable year. See for rules relating to a revocation of an election under section .
(c) Accounting method changes
(1) Consent to change A holder required to change its method of accounting for bond premium to comply with through must secure the consent of the Commissioner in accordance with the requirements of . of this section provides the Commissioner's automatic consent for certain changes. A holder making the election under does not need the Commissioner's consent to make the election.
(2) Automatic consent The Commissioner grants consent for a holder to change its method of accounting for bond premium with respect to taxable bonds to which through apply. Because this change is made on a cut-off basis, no items of income or deduction are omitted or duplicated and, therefore, no adjustment under section is allowed. The consent granted by this applies provided—
(i) The holder elected to amortize bond premium under section for a taxable year prior to the taxable year containing March 2, 1998, and that election has not been revoked;
(ii) The change is made for the first taxable year for which the holder must account for a bond under through ; and
(iii) The holder attaches to its return for the taxable year containing the change a statement that it has changed its method of accounting under this section.
[T.D. 8746, 62 FR 68182, Dec. 31, 1997]