Rev. Proc. 99-49

Audio summary

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

What it holds

Provided automatic consent for depreciation method changes for tax years 1999 and 2000, including a 1998 transition, with a four-year Section 481(a) framework for both over- and under-depreciation corrections.

Where this comes from

By the late 1990s, the IRS had been issuing annual or near-annual procedures for automatic depreciation method changes. The framework was working, but it was fragmented across multiple single-year procedures.

Rev. Proc. 99-49 continued the pattern for tax years 1999 and 2000, providing the same automatic-consent path that prior procedures had established. It was a maintenance step, keeping the system running while the IRS worked toward a permanent framework.

What it established

The procedure covered automatic consent for changing from impermissible to permissible depreciation, in either direction, for the applicable years. The four-year Section 481(a) spread applied to both favorable and unfavorable adjustments.

The 1998 transition rule was a practical accommodation. Taxpayers whose prior-year returns were affected by the change in procedure could use 99-49 to make the correction without being forced back to the 98-60 framework.

How it shows up in a study

For look-back studies on properties placed in service in 1997 to 2000, this procedure and its predecessors were the legal vehicles for the method change at the time. A study done today on a building from that era still draws on the same underlying principle, but uses the current procedure.

Understanding the historical chain matters for audit defense. If an examiner questions why a method change was made years ago, the relevant procedure from that time is the authority that authorized it.

What it does not mean

Rev. Proc. 99-49 is superseded. The next major step was Rev. Proc. 2002-9, the first permanent automatic method-change procedure that did not need to be reissued each year. Today, the current authority is Rev. Proc. 2015-13.

This procedure also did not change the classification rules. The correct recovery periods for any given asset still came from the section 1245 analysis and the case law. The procedure only governed how you made the correction, not which corrections were right.

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.