Rev. Proc. 2002-9

Audio summary

A short audio walkthrough of this rule: what it says and why it matters for your study.

What it holds

Listed cost segregation reclassifications among the automatic accounting method changes under Section 446(e). A taxpayer could move a component from 39-year to 5- or 7-year class without advance IRS approval by filing Form 3115. The catch-up was a Section 481(a) deduction in the year of change.

Where this comes from

After Rev. Proc. 96-31 opened the door to automatic method changes in 1996, subsequent procedures refined the list of what qualified. Rev. Proc. 2002-9 became the main operating procedure. It listed specific method changes that qualified as automatic, organized by type of change.

Cost segregation reclassifications, moving components from 39-year to 5- or 7-year MACRS property, appeared on that list. This confirmed the practice across the industry.

What it established

The procedure settled two things. First, the reclassification itself is automatic. You do not have to request IRS consent before doing a study and reclassifying components. You file Form 3115 with your return and the change takes effect.

Second, the procedure confirmed that moving from slower to faster depreciation is an impermissible-to-permissible change. That classification matters because it unlocks the full Section 481(a) catch-up. All missed prior-year depreciation comes in as a single deduction in the year you file Form 3115.

How it shows up in a study

For studies completed and filings made between 2002 and 2015, this was the operative procedure. Study reports from that era cite it.

In current filings, the process works the same way but references Rev. Proc. 2015-13 as the framework and Rev. Proc. 2025-23 as the current automatic-changes list. The underlying mechanics Rev. Proc. 2002-9 established are unchanged.

What it does not mean

This procedure is superseded. Current filings should not cite it as operative authority.

It remains relevant as a predecessor and as the standard that governed studies filed between 2002 and 2015. Understanding the lineage helps explain why the current system works the way it does.

Category

Methodology & procedure

Applies to

All property types

Status

Vetted

This page explains a tax authority in plain words. It is not tax advice for your situation. The way this authority applies to your property is reviewed by a licensed tax professional. Citation is provided so you or your advisor can read the primary source.