IRS Revenue Procedure
2002-28

 Code Secs. 162, 263A, 446, 447, 448, 460 ....



<<FULL TEXT>>

26 CFR 601.204: Changes in accounting periods and methods of accounting.
(Also Part I sections, 162, 263A, 446, 447, 448, 460, 471, 481, 1001;
1.162-3, 1.263A-1, 1.446-1, 1.448-1T, 1.460-1, 1.471-1, 1.481-1, 1.481-4,
1.1001-1.)


REV. PROC. 2002-28

SECTION 1. PURPOSE

In order to reduce the administrative and tax compliance burdens on
certain small business taxpayers and to minimize disputes between the
Internal Revenue Service and small business taxpayers regarding the
requirement to use an accrual method of accounting (accrual method) under
section 446 of the Internal Revenue Code because of the requirement to
account for inventories under section 471, this revenue procedure provides
that the Commissioner of Internal Revenue will exercise his discretion to
except a qualifying small business taxpayer (as defined in section 5.01 of
this revenue procedure) from the requirements to use an accrual method of
accounting under section 446 and to account for inventories under section
471. This revenue procedure also provides the procedures by which a
qualifying small business taxpayer may obtain automatic consent to change
to the cash receipts and disbursements method of accounting (cash method)
and/or to a method of accounting for inventoriable items as materials and
supplies that are not incidental under section 1.162-3 of the Income Tax
Regulations.


SECTION 2. BACKGROUND

.01 Section 446(a) provides that taxable income must be determined
under the method of accounting on the basis of which the taxpayer
regularly computes its income in keeping its books.

.02 Section 446(c) generally allows a taxpayer to select the method of
accounting it will use to compute its taxable income. A taxpayer is
entitled to adopt any one of the permissible methods for each separate
trade or business, including the cash method or an accrual method, subject
to certain restrictions. For example, section 446(b) provides that the
selected method must clearly reflect income. In addition, section
1.446-1(c)(2)(i) requires that a taxpayer use an accrual method with
regard to purchases and sales of merchandise whenever section 471 requires
the taxpayer to account for inventories, unless otherwise authorized by
the Commissioner under section 1.446-1(c)(2)(ii). Under section
1.446-1(c)(2)(ii), the Commissioner has the authority to permit a taxpayer
to use a method of accounting that clearly reflects income even though the
method is not specifically authorized by the regulations.

.03 Section 447 generally requires the taxable income from farming of a
C corporation engaged in the trade or business of farming, or a
partnership engaged in the trade or business of farming with a C
corporation partner, to be determined using an accrual method, unless the
C corporation meets the $1,000,000 ($25,000,000 for family corporations)
gross receipts test.

.04 Section 448 generally prohibits the use of the cash method by a C
corporation (other than a farming business and a qualified personal
service corporation) and a partnership with a C corporation partner (other
than a farming business and a qualified personal service corporation),
unless the C corporation or partnership with a C corporation partner meets
a $5,000,000 gross receipts test. Section 448 also prohibits tax shelters
from using the cash method.

.05 The cash method generally requires an item of income to be included
in income when actually or constructively received and permits a deduction
for an expense when paid. Section 1.446-1(c)(1)(i). Other provisions of
the Code or regulations applicable to cash method taxpayers may change
these general rules, including, for example, section 263 (requiring the
capitalization of expenses paid out for a new building or for permanent
improvements or betterments made to increase the value of any property or
estate, or for restoring property or making good the exhaustion of
property for which an allowance is or has been made); section 263A
(requiring capitalization of direct and allocable indirect costs of real
or tangible personal property produced by a taxpayer or real or personal
property that is acquired by a taxpayer for resale); section 460
(requiring the use of the percentage-of-completion method for certain
long-term contracts); and section 475 (requiring dealers in securities to
mark securities to market).

.06 Section 471 provides that whenever, in the opinion of the
Secretary, the use of inventories is necessary to clearly determine the
income of the taxpayer, inventories must be taken by the taxpayer. Section
1.471-1 generally requires a taxpayer to account for inventories when the
production, purchase, or sale of merchandise is an income-producing factor
in the taxpayer's business.

.07 Section 1.162-3 requires taxpayers carrying materials and supplies
(other than incidental materials and supplies) on hand to deduct the cost
of materials and supplies only in the amount that they are actually
consumed and used in operations during the taxable year. In the case of
incidental materials and supplies on hand for which no record of
consumption is kept or of which physical inventories at the beginning and
end of the year are not taken, taxpayers may include in their expenses and
deduct from gross income the total cost of such incidental supplies and
materials as were purchased during the taxable year for which the return
is made, provided the taxable income is clearly reflected by this method.

.08 Section 263A generally requires direct costs and an allocable
portion of indirect costs of certain property produced or acquired for
resale by a taxpayer to be included in inventory costs, in the case of
property that is inventory, or to be capitalized, in the case of other
property. However, resellers with gross receipts of $10,000,000 or less
are not required to capitalize costs under section 263A, and certain
producers with $200,000 or less of indirect costs are not required to
capitalize certain costs under section 263A. See sections 263A (b)(2)(B)
and 1.263A-2(b)(3)(iv).

.09 Sections 446(e) and 1.446-1(e) state that, except as otherwise
provided, a taxpayer must secure the consent of the Commissioner before
changing a method of accounting for federal income tax purposes. Section
1.446-1(e)(3)(ii) authorizes the Commissioner to prescribe administrative
procedures setting forth the limitations, terms, and conditions deemed
necessary to permit a taxpayer to obtain consent to change a method of
accounting in accordance with section 446(e).

.10 Section 481(a) requires those adjustments necessary to prevent
amounts from being duplicated or omitted to be taken into account when the
taxpayer's taxable income is determined under a method of accounting
different from the method used to determine taxable income for the
preceding taxable year.


SECTION 3. SCOPE

.01 APPLICABILITY. This revenue procedure applies to a qualifying small
business taxpayer as defined in section 5.01.

.02 TAXPAYERS NOT WITHIN THE SCOPE OF THIS REVENUE PROCEDURE.

Notwithstanding section 3.01 of this revenue procedure, this revenue
procedure does not apply to a farming business (within the meaning of
section 263A(e)(4)) of a qualifying small business taxpayer. If a
qualifying small business taxpayer is engaged in the trade or business of
farming, this revenue procedure may apply to the taxpayer's non-farming
trades or businesses, if any. A taxpayer engaged in the trade or business
of farming generally is allowed to use the cash method for any farming
business, unless the taxpayer is required to use an accrual method under
section 447 or is prohibited from using the cash method under section 448.


SECTION 4. QUALIFYING SMALL BUSINESS TAXPAYER EXCEPTION

.01 Pursuant to his discretion under sections 446 and 471, and to
simplify the recordkeeping requirements of a qualifying small business
taxpayer, the Commissioner, as a matter of administrative convenience,
will allow a qualifying small business taxpayer to use the cash method as
described in this revenue procedure for a trade or business described in
this section 4.01 (eligible trade or business).

(1) A qualifying small business taxpayer may use the cash method as
described in this revenue procedure for all of its trades or businesses if
the taxpayer satisfies any one of the following three tests and did not
previously change (and was not previously required to have changed) from
the cash method to an accrual method for any trade or business as a result
of becoming ineligible to use the cash method under this revenue
procedure.

(a) The taxpayer reasonably determines that its principal business
activity (as defined in section 5.04, below) is described in a North
American Industry Classification System ("NAICS") code other than one of
the ineligible codes listed below. The ineligible NAICS codes are as
follows:

(i) mining activities within the meaning of NAICS codes 211 and 212;

(ii) manufacturing within the meaning of NAICS codes 31-33;

(iii) wholesale trade within the meaning of NAICS code 42;

(iv) retail trade within the meaning of NAICS codes 44 and 45; and,

(v) information industries within the meaning of NAICS codes 5111 and
5122.


Information regarding the NAICS codes can be found at www.census.gov.
Visitors to the site should select "Subjects A to Z," followed by "N," and
then should select "North American Industry Classification System."
Taxpayers also may find a partial list of NAICS codes, described as
"Principal Business Activity Codes," in the instructions to their tax
return forms.

(b) Notwithstanding that a taxpayer's principal business activity is
described in one of the ineligible NAICS codes listed above in section
4.01(1)(a), the taxpayer reasonably determines that its principal business
activity is the provision of services, including the provision of property
incident to those services.

(c) Notwithstanding that a taxpayer's principal business activity is
described in one of the ineligible NAICS codes listed above in section
4.01(1)(a), the taxpayer reasonably determines that its principal business
activity is the fabrication or modification of tangible personal property
upon demand in accordance with customer design or specifications. For
purposes of this rule, tangible personal property is not fabricated or
modified in accordance with customer design or specifications if the
customer merely chooses among pre-selected options (such as size, color,
or materials) offered by the taxpayer or if the taxpayer must make only
minor modifications to its basic design to meet the customer's
specifications. Moreover, a taxpayer that manufacturers an item in
quantities for a customer is not treated as fabricating or modifying
tangible personal property in accordance with customer design or
specifications.


(2) Under current law, a taxpayer with two or more trades or businesses
that has a trade or business that is permitted to use the cash method may
use such method for such trade or business. Therefore, notwithstanding
that a taxpayer's principal business activity is not described above in
section 4.01(1) and thus the taxpayer can not use the cash method for all
of its trades or businesses, a taxpayer may use the cash method with
respect to any separate and distinct trade or business if the principal
business activity of the trade or business is not described in an
ineligible NAICS code in section 4.01(1)(a)(i) through (v) or is described
in either section 4.01(1)(b) or section 4.01(1)(c). No trade or business
will be considered separate and distinct unless a complete and separable
set of books and records is kept for such trade or business. See section
1.446-1(d)(2).


.02 A taxpayer who satisfies the qualifying small business taxpayer
exception described in section 4.01 and chooses not to use an overall
accrual method with inventories being accounted for under section 471 has
the following three options for an eligible trade or business under this
revenue procedure:

(1) The taxpayer can use the overall cash method and account for
inventories under section 471;

(2) The taxpayer can use an overall accrual method and account for
inventoriable items, as defined in section 5.09 below, in the same manner
as materials and supplies that are not incidental under section 1.162-3
(see sections 4.04 and 4.05 below); or

(3) The taxpayer can use the overall cash method and account for
inventoriable items in the same manner as materials and supplies that are
not incidental under section 1.162-3 (see sections 4.04 and 4.05 below).


.03 Notwithstanding section 1001 and the regulations thereunder,
qualifying small business taxpayers that use the cash method for an
eligible trade or business under section 4.01 of this revenue procedure
shall include amounts attributable to "open accounts receivable" (as
defined in section 5.10) in income as such amounts are actually or
constructively received. However, section 1001 may be applicable to other
transactions.

.04 Qualifying small business taxpayers that are permitted to use the
cash method for an eligible trade or business under section 4.01 of this
revenue procedure and that do not want to account for inventories under
section 471 must treat all inventoriable items in such trade or business
in the same manner as materials and supplies that are not incidental under
section 1.162-3. For purposes of this revenue procedure, taxpayers are not
required to apply section 263A to inventoriable items that are treated as
materials and supplies that are not incidental. Items that would be
accounted for as incidental materials and supplies for purposes of section
1.162-3 may still be accounted for in that manner. Whether an item is
purchased for resale or use (and thus accounted for as a non-incidental
material and supply) or is purchased to provide to customers incident to
services (and thus may be accounted for as either an incidental or a
non-incidental material and supply depending on the facts and
circumstances) must be determined under general tax principles.

.05 Under section 1.162-3, materials and supplies that are not
incidental are deductible only in the year in which they are actually
consumed and used in the taxpayer's business. For purposes of this revenue
procedure, inventoriable items that are treated as materials and supplies
that are not incidental are consumed and used in the year the qualifying
small business taxpayer provides the items to a customer. Thus, the cost
of such inventoriable items are deductible only in that year, or in the
year in which the taxpayer actually pays for the goods, whichever is
later. A qualifying small business taxpayer may determine the amount of
the allowable deduction for non-incidental materials and supplies by using
either a specific identification method, a first in, first out (FIFO)
method, or an average cost method, provided that method is used
consistently. See section 1.471-2(d). A taxpayer may not use the last in,
first out (LIFO) method described in section 472 and the regulations
thereunder to determine the amount of the allowable deduction for
non-incidental materials and supplies.

.06 The method of accounting used by a qualifying small business
taxpayer for financial accounting ("book") purposes will not affect the
taxpayer's eligibility under this revenue procedure to use the cash method
or the method of accounting for inventoriable items as non-incidental
materials and supplies under section 1.162-3. However, taxpayers must
still comply with the requirements under section 446(a) and the
regulations thereunder to maintain adequate books and records, which may
include a reconciliation of any differences between such books and records
and their return. See section 1.446-1(a)(4).


SECTION 5. DEFINITIONS

.01 QUALIFYING SMALL BUSINESS TAXPAYER. A qualifying small business
taxpayer is any taxpayer with "average annual gross receipts" of
$10,000,000 or less that is not prohibited from using the cash method
under section 448.

.02 AVERAGE ANNUAL GROSS RECEIPTS. A taxpayer has average annual gross
receipts of $10,000,000 or less if, for each prior taxable year ending on
or after December 31, 2000, the taxpayer's average annual gross receipts
for the three taxable-year period ending with the applicable prior taxable
year do not exceed $10,000,000. If a taxpayer has not been in existence
for three prior taxable years, the taxpayer must determine its average
annual gross receipts for the number of years (including short taxable
years) that the taxpayer has been in existence. See section 448(c)(3)(A).

.03 BUSINESS ACTIVITY. A taxpayer may use any reasonable method of
applying the relevant facts and circumstances to determine what is a
business activity. For example, for some taxpayers, the provision of
services, the sale of goods, and the production of goods each will be
treated as a different business activity. However, if a taxpayer sells or
produces goods incident to the performance of services, the different
activities may be treated as one business activity -- the provision of
services.

.04 PRINCIPAL BUSINESS ACTIVITY. A principal business activity is
determined by the sources of gross receipts. Under sections 4.01(1)(a),
(b), and (c), a taxpayer must apply the tests in this section to all the
taxpayer's trades or businesses in the aggregate. Under section 4.01(2), a
taxpayer must apply the tests in such section separately to each trade or
business for which the taxpayer keeps a complete and separable set of
books and records. A taxpayer may use either of the following tests to
determine the principal business activity of the taxpayer or of the
taxpayer's trades or businesses.

(1) PRINCIPAL BUSINESS ACTIVITY PRIOR YEAR TEST. Under the principal
business activity prior year test, the principal business activity is the
activity from which the largest percentage of gross receipts was derived
during the prior taxable year (even if this amount is less than 50 percent
of the aggregate gross receipts of the taxpayer or the trade or business).
If a taxpayer or a trade or business is in its first taxable year, the
principal business activity is the activity from which the largest
percentage of gross receipts is derived for that taxable year.

(2) PRINCIPAL BUSINESS ACTIVITY THREE-YEAR AVERAGE TEST. Under the
principal business activity three-year average test, the principal
business activity is the activity from which the largest percentage of
average annual gross receipts was derived over the three taxable-year
period ending with the prior taxable year. If a taxpayer or a trade or
business has not been in existence for three prior taxable years, the
taxpayer must determine average annual gross receipts for the number of
years (including short taxable years) that the taxpayer or the trade or
business has been in existence. See section 448(c)(3)(A).


.05 GROSS RECEIPTS. Gross receipts is defined consistent with section
1.448-1T(f)(2)(iv) of the Temporary Income Tax Regulations. Thus, gross
receipts for a taxable year equal all receipts that must be recognized
under the method of accounting actually used by the taxpayer for that
taxable year for federal income tax purposes. For example, gross receipts
include total sales (net of returns and allowances), all amounts received
from services, interest, dividends, and rents. However, gross receipts do
not include amounts received by the taxpayer with respect to sales tax or
other similar state and local taxes if, under the applicable state or
local law, the tax is legally imposed on the purchaser of the good or
service, and the taxpayer merely collects and remits the tax to the taxing
authority. See also section 448(c)(3)(C).

.06 AGGREGATION OF GROSS RECEIPTS. For purposes of computing gross
receipts under section 5.02, all taxpayers treated as a single employer
under subsection (a) or (b) of section 52 or subsection (m) or (o) of
section 414 (or that would be treated as a single employer under these
sections if the taxpayers had employees) will be treated as a single
taxpayer. However, when transactions occur between taxpayers that are
treated as a single taxpayer by the previous sentence, gross receipts
arising from these transactions will not be treated as gross receipts for
purposes of the average annual gross receipts limitation. See sections
448(c)(2) and 1.448-1T(f)(2)(ii).

.07 TREATMENT OF SHORT TAXABLE YEARS. In the case of a short taxable
year, a taxpayer's gross receipts must be annualized by multiplying the
gross receipts for the short taxable year by 12 and then dividing the
result by the number of months in the short taxable year. See sections
448(c)(3)(B) and 1.448-1T(f)(2)(iii).

.08 TREATMENT OF PREDECESSORS. Any reference to a taxpayer in this
section 5 includes a reference to any predecessor of that taxpayer. See
section 448(c)(3)(D).

.09 INVENTORIABLE ITEM DEFINED. An inventoriable item is any item
either purchased for resale to customers or used as a raw material in
producing finished goods.

.10 OPEN ACCOUNTS RECEIVABLE DEFINED. For purposes of this revenue
procedure, open accounts receivable is defined as any receivable due in
full in 120 days or less.


SECTION 6. EXAMPLES

For purposes of the following examples, assume that:

(1) the taxpayers use the calendar year;

(2) the taxpayers are not prohibited from using the cash method under
section 448 (except Example 4); and

(3) the taxpayers satisfy the average annual gross receipts test of
section 5.02 of this revenue procedure (except Examples 2 and 3).

EXAMPLE 1 -- PRINCIPAL BUSINESS ACTIVITY NOT AN INELIGIBLE NAICS CODE.
Taxpayer is a graphic design firm. Taxpayer plans, designs, and manages
the production of visual communications that convey specific messages or
concepts. Taxpayer's activities include the design of printed materials,
packaging, advertising, signage systems, and corporate identification
(logos). Taxpayer reasonably determines that its principal business
activity is described in NAICS code 541430 (graphic design services),
which is not one of the ineligible NAICS codes listed in section
4.01(1)(a)(i)-(v) of this revenue procedure. Taxpayer may use the cash
method for its graphic design business.

EXAMPLE 2 -- SATISFACTION OF THE AVERAGE ANNUAL GROSS RECEIPTS TEST.
Taxpayer is a plumbing contractor that installs plumbing fixtures in
customers' homes and businesses. Taxpayer reasonably determines that its
principal business activity is construction, which is described in NAICS
code 23. Taxpayer's gross receipts at the end of the three preceding
taxable years are:

Gross receipts
--------------
1998: $6,000,000
1999: 9,000,000
2000: 12,000,000


Taxpayer's average annual gross receipts for the three taxable-year period
ending in the 2000 taxable year are $9,000,000 (($6,000,000 + $9,000,000 +
$12,000,000) / 3 = $9,000,000). Taxpayer may use the cash method for all
its trades or businesses pursuant to this revenue procedure for its 2001
taxable year because its average annual gross receipts for each prior
taxable year ending on or after December 31, 2000, is $10,000,000 or less
and its principal business activity is not described in the ineligible
NAICS codes listed in section 4.01(1)(a)(i)-(v).

EXAMPLE 3 -- FAILURE OF THE AVERAGE ANNUAL GROSS RECEIPTS TEST. Same as
Example 2, except that Taxpayer's gross receipts in 2001 equal
$15,000,000. Taxpayer's average annual gross receipts for the three
taxable-year period ending in the 2001 taxable year are $12,000,000
(($9,000,000 + $12,000,000 + $15,000, 000/3) = $12,000,000). Taxpayer is
not a qualifying small business taxpayer for purposes of this revenue
procedure for its 2002 taxable year or any subsequent year because its
average annual gross receipts for each prior taxable year ending on or
after December 31, 2000, is not $10,000,000 or less.

EXAMPLE 4 -- INABILITY TO USE THIS REVENUE PROCEDURE WHEN SECTION 448
APPLIES. Same as Example 2, except that Taxpayer is a C corporation.
Because Taxpayer's average annual gross receipts for the previous three
years ($9,000,000) exceed $5,000,000, Taxpayer is prohibited from using
the cash method under section 448. Consequently, Taxpayer is not eligible
to use the cash method under this revenue procedure. The same result would
apply under section 448 if, instead of being a C corporation, Taxpayer
were a tax shelter (regardless of Taxpayer's average annual gross
receipts) or Taxpayer were a partnership with a C corporation as a
partner.

EXAMPLE 5 -- PRINCIPAL BUSINESS ACTIVITY PRIOR YEAR TEST. Taxpayer is a
plumbing contractor that installs plumbing fixtures in customers' homes
and businesses. Taxpayer also has a store that sells plumbing equipment to
homeowners and other plumbers who visit the store. During its prior
taxable year, Taxpayer derived 60 percent of its total receipts from
plumbing installation (including amounts charged for parts and fixtures
used in installation) and 40 percent of its total receipts from the sale
of plumbing equipment through its store. Under the principal business
activity prior year test, Taxpayer reasonably determines that its
principal business activity is plumbing installation, which is a
construction activity described in NAICS code 23. Because Taxpayer's
principal business activity -- plumbing installation -- is not described
in the ineligible NAICS codes listed in section 4.01(1)(a)(i)-(v),
Taxpayer may use the cash method for both business activities (plumbing
installation and retail sales).

Example 6 -- Principal Business Activity Three-Year Average Test.

Same as Example 5, except that for the prior taxable year, Taxpayer
derived 40 percent of its total receipts from plumbing installation
(including amounts charged for parts and fixtures used in installation)
and 60 percent of its total receipts from the sale of plumbing equipment
through its store. Under the principal business activity prior year test,
Taxpayer's principal business activity is retail, which is described in an
ineligible NAICS code. Thus, Taxpayer is not eligible to use the cash
method for all of its trades or businesses under the principal business
activity prior year test. However, Taxpayer may still be eligible to use
the cash method for all of its trades or businesses under section 4.01(1)
of this revenue procedure if Taxpayer reasonably determines that its
principal business activity is plumbing installation under the principal
business activity three-year average test. Taxpayer's gross receipts for
the prior three taxable years are as follows:

3 Year
2000 1999 1998 Average
---- ---- ---- -------
Plumbing installation $2,000,000 $6,000,000 $4,000,000 $4,000,000
Retail sale of equipment $3,000,000 $2,000,000 $4,000,000 $3,000,000
---------- ---------- ---------- ----------
Total $5,000,000 $8,000,000 $8,000,000 $7,000,000

<<END RULING>>



The approximate percentage of Taxpayer's average annual gross receipts for
the prior three taxable years is 57 percent ($4,000,000/$7,000,000 total
average gross receipts) for plumbing installation and 43 percent
($3,000,000/$7,000,000) for the retail sale of plumbing equipment through
its store. Thus, Taxpayer reasonably determines that its principal
business activity is plumbing installation under the principal business
activity three-year average test. Because Taxpayer's principal business
activity -- plumbing installation -- is not described in the ineligible
NAICS codes listed in section 4.01(1)(a)(i)-(v), Taxpayer may use the cash
method for both business activities (plumbing and retail sales).

EXAMPLE 7 -- APPLICATION OF SECTION 4.01(2) WHERE TAXPAYER IS
INELIGIBLE TO USE THE CASH METHOD UNDER SECTION 4.01(1). Same as Examples
5 and 6, except that Taxpayer's principal business activity is retail
sales under both the principal business activity prior year test and the
principal business activity three-year average test. Taxpayer is not
eligible to use the cash method for all of its trades or businesses under
section 4.01(1) because Taxpayer's principal business activity (retail
sales) is described in an ineligible NAICS code under section
4.01(1)(a)(iv) and is neither the provision of services under section
4.01(1)(b) nor the fabrication or modification of tangible personal
property under section 4.01(1)(c). Taxpayer, however, maintains its retail
sales and plumbing installation activities as separate and distinct
businesses with a complete and separable set of books and records for each
business. Under section 4.01(2) of the revenue procedure, Taxpayer may use
the cash method for its separate plumbing installation business
notwithstanding that its principal business activity (retail sales) is
ineligible under section 4.01(1)(a)-(c).

EXAMPLE 8 -- A PRINCIPAL BUSINESS ACTIVITY CAN ACCOUNT FOR LESS THAN 50
PERCENT OF GROSS RECEIPTS. Taxpayer has four activities, Activities A
through D. During the prior taxable year, Taxpayer derived 35 percent of
its gross receipts from Activity A, 25 percent from Activity B, 20 percent
from Activity C, and 20 percent from Activity D. Under the principal
business activity prior year test, Activity A would be Taxpayer's
principal business activity because it represents the largest percentage
of gross receipts. Similarly, if the percentages of Taxpayer's average
annual gross receipts for the prior three taxable years were 35 percent
from Activity A, 25 percent from Activity B, 20 percent from Activity C,
and 20 percent from Activity D, under the principal business activity
three-year average test, Activity A would be Taxpayer's principal business
activity because it represents the largest percentage of average annual
gross receipts.

EXAMPLE 9 -- TAXPAYER DOES NOT SATISFY THE NAICS CODE EXCEPTION IN
SECTION 4.01(1)(a), the Service Exception in Section 4.01(1)(b), or the
Custom Manufacturing Exception in Section 4.01(1)(c). Taxpayer sells
refrigerators. As part of the sale price, Taxpayer delivers the
refrigerator to the customer and confirms that the refrigerator is
functioning properly at the customer's site. Taxpayer's principal business
activity is described in the ineligible NAICS code 44. Moreover,
Taxpayer's principal business activity is not the provision of services
under section 4.01(1)(b). Taxpayer does not provide refrigerators incident
to the performance of services. Rather, Taxpayer performs certain services
(delivery and confirmation of functionality) incident to the sale of
refrigerators. In addition, Taxpayer does not fabricate or modify tangible
personal property under section 4.01(1)(c). Taxpayer may not use the cash
method under this revenue procedure.

EXAMPLE 10 -- TAXPAYER DOES NOT SATISFY THE NAICS CODE EXCEPTION IN
SECTION 4.01(1)(a), the Service Exception in Section 4.01(1)(b), or the
Custom Manufacturing Exception in Section 4.01(1)(c). Taxpayer is a sofa
manufacturer that only produces sofas upon receipt of a customer order.
Customers are allowed to pick among 150 different fabrics offered by the
Taxpayer or to provide their own fabric, which the Taxpayer will use to
finish the customer's sofa. Taxpayer's principal business activity is
described in the ineligible NAICS code 33. Taxpayer does not provide sofas
incident to the performance of services for purposes of section
4.01(1)(b). Rather, Taxpayer performs certain services (upholstering)
incident to the sale of sofas. Taxpayer also does not fabricate or modify
tangible personal property for purposes of section 4.01(1)(c) because
customers merely choose among pre-selected options offered by Taxpayer and
Taxpayer only makes minor modifications to the basic design of its sofa.
Taxpayer may not use the cash method under this revenue procedure.

EXAMPLE 11 -- TAXPAYER DOES NOT SATISFY THE NAICS CODE EXCEPTION IN
SECTION 4.01(1)(a), the Service Exception in Section 4.01(1)(b) or the
Custom Manufacturing Exception in Section 4.01(1)(c). Taxpayer is a
publisher who produces and sells high school and college yearbooks.
Taxpayer's principal business activity is described in the ineligible
NAICS code 5111 (newspaper, periodical, book, and database publishers).
Taxpayer is not providing a service for purposes of section 4.01(1)(b)
because Taxpayer's principal business activity is the production of
yearbooks for customers. In addition, Taxpayer is not a custom
manufacturer for purposes of section 4.01(1)(c) because Taxpayer, although
it produces yearbooks to the detailed specifications of schools, is
producing yearbooks in quantities. As such, Taxpayer may not use the cash
method under this revenue procedure.

EXAMPLE 12 -- TAXPAYER CREATING PROTOTYPE DOES NOT SATISFY THE NAICS
CODE EXCEPTION IN SECTION 4.01(1)(a) BUT DOES SATISFY THE CUSTOM
MANUFACTURING EXCEPTION IN SECTION 4.01(1)(c). Taxpayer makes tools based
entirely on specific designs and specifications provided to it by
customers. Taxpayer produces the customer's prototype and gives the
prototype to the customer for production. Taxpayer's principal business
activity is described in the ineligible NAICS code 33. However, Taxpayer's
principal business activity is the fabrication of tangible personal
property upon demand in accordance with customer design or specifications
for purposes of section 4.01(1)(c). Taxpayer may use the cash method under
this revenue procedure (subject to the potential application of section
460).

EXAMPLE 13 -- TAXPAYER PRODUCING QUANTITIES OF PROTOTYPE DOES NOT
SATISFY THE CUSTOM MANUFACTURING EXCEPTION IN SECTION 4.01(1)(c). Same as
Example 12, except that instead of producing the customer's prototype and
giving the prototype to the customer for further production, Taxpayer is
also the producer of the customer's goods using the prototype. Taxpayer's
principal business activity would not fall under the custom manufacturer
exception of section 4.01(1)(c).

EXAMPLE 14 -- APPLICATION OF ACCOUNTS RECEIVABLE 120-DAY RULE IN
SECTION 4.03. Taxpayer is eligible to use the cash method under this
revenue procedure. Taxpayer chooses to use the cash method and to account
for inventoriable items as non-incidental materials and supplies under
section 1.162-3. In December 2001, Taxpayer transfers property to a
customer in exchange for an open accounts receivable (due in full in 120
days or less). In February 2002, the customer satisfies the accounts
receivable when it pays cash to Taxpayer. As provided by section 4.03 of
this revenue procedure, Taxpayer would not include any amount attributable
to the accounts receivable in income in 2001. Rather, Taxpayer would
include the full amount of the accounts receivable in income in 2002 when
it actually receives the cash payment from the customer.

EXAMPLE 15 -- TIMING OF DEDUCTION FOR INVENTORIABLE ITEMS TREATED AS
NON-INCIDENTAL MATERIALS AND SUPPLIES UNDER SECTION 1.162-3 --
CONSTRUCTION. Taxpayer is a roofing contractor that is eligible to use the
cash method under this revenue procedure. Taxpayer chooses to use the cash
method and to account for inventoriable items as non-incidental materials
and supplies under section 1.162-3. Taxpayer enters into a contract with a
homeowner in December 2001 to replace the homeowner's roof. Taxpayer
purchases roofing shingles from a local supplier and has them delivered to
the homeowner's residence. Taxpayer pays the supplier $5,000 for the
shingles upon their delivery later that month. Taxpayer replaces the
homeowner's roof in December 2001, and gives the homeowner a bill for
$15,000 at that time. Taxpayer receives a check from the homeowner in
January 2002. The shingles are non-incidental materials and supplies. The
cost of the shingles is deductible in the year Taxpayer uses and consumes
the shingles or actually pays for the shingles, whichever is later. In
this case, Taxpayer both pays for the shingles and uses the shingles (by
providing the shingles to the customer in connection with the performance
of roofing services) in 2001. Thus, Taxpayer deducts the $5,000 cost of
the shingles on its 2001 federal income tax return. Taxpayer includes the
$15,000 in income in 2002 when it receives the check from the homeowner.

EXAMPLE 16 -- TIMING OF DEDUCTION FOR INVENTORIABLE ITEMS TREATED AS
NON-INCIDENTAL MATERIALS AND SUPPLIES UNDER SECTION 1.162-3 --
CONSTRUCTION. Same as in Example 15, except that Taxpayer does not replace
the roof until January 2002 and is not paid until March 2002. Because the
shingles are not used until 2002, their cost can only be deducted on
Taxpayer's 2002 federal income tax return notwithstanding that Taxpayer
paid for the shingles in 2001. Thus, on its 2002 return, Taxpayer must
report $15,000 of income and $5,000 of deductions.

EXAMPLE 17 -- TIMING OF DEDUCTION FOR NON-INVENTORIABLE ITEMS --
SPECULATIVE HOME SALES. Taxpayer is eligible to use the cash method as
described in this revenue procedure. Taxpayer is a speculative builder of
houses that are built on land it owns. In 2001, Taxpayer builds a house
using various items such as lumber, piping, and metal fixtures that it had
paid for in 2000. In 2002, Taxpayer sells the house to a buyer. Because
the house is real property held for sale by Taxpayer, the house and the
material used to build the house are not inventoriable items under this
revenue procedure. Thus, Taxpayer may not account for the items used to
build the house as non-incidental materials and supplies under section
1.162-3. Rather, Taxpayer must capitalize the costs of the lumber, piping,
metal fixtures and other goods used by Taxpayer to build the house under
section 263. Upon the sale of the house in 2002, the costs capitalized by
Taxpayer will be offset against the house sales price to determine
Taxpayer's gain or loss from the sale.

EXAMPLE 18 -- TIMING OF DEDUCTION FOR INVENTORIABLE ITEMS TREATED AS
NON-INCIDENTAL MATERIALS AND SUPPLIES UNDER SECTION 1.162-3 --
CONSTRUCTION. Same as in Example 17, except that (1) Taxpayer builds
houses on land its customers own, and (2) the houses are built in three
months with payment due at completion. Because Taxpayer does not own the
house, the lumber, piping, metal fixtures and other goods used by Taxpayer
in the provision of construction services are inventoriable items, not
real property held for sale. Taxpayer elects to treat the goods used to
build the house as non-incidental materials and supplies under section
1.162-3. Taxpayer must deduct the cost of the lumber, piping, metal
fixtures and other non-incidental materials and supplies that are used by
it to build the house in 2001 (the year those items were used by Taxpayer
to build the house) notwithstanding that Taxpayer had paid for the items
in 2000. Taxpayer will report income it receives from its customer as the
income is actually or constructively received.

EXAMPLE 19 -- TIMING OF DEDUCTION FOR INVENTORIABLE ITEMS TREATED AS
NON-INCIDENTAL MATERIALS AND SUPPLIES UNDER SECTION 1.162-3 -- RESELLER.
Taxpayer is a veterinarian that also sells pet supplies from its clinic.
Taxpayer reasonably determines that its principal business activity is
veterinary services, which is not described in one of the ineligible NAICS
codes in section 4.01(1)(a)(i)-(v). Consequently, Taxpayer is eligible to
use the cash method for all its business activities (veterinary services
and retail sales). For both business activities, Taxpayer chooses to use
the cash method and to account for inventoriable items (such as pet food)
as non-incidental materials and supplies under section 1.162-3. In
December of 2001, Taxpayer purchases and pays for pet food to be resold
from its clinic. Taxpayer sells the pet food from its clinic (and receives
cash payment from the customer) in 2002. Because the pet food is not
provided to customers until 2002, its cost can not be deducted until 2002.

EXAMPLE 20 -- TIMING OF DEDUCTION FOR INVENTORIABLE ITEMS TREATED AS
NON-INCIDENTAL MATERIALS AND SUPPLIES UNDER SECTION 1.162-3 --
MANUFACTURER. Taxpayer is a landscape designer that also manufactures lawn
ornaments. Taxpayer does not manufacture lawn ornaments pursuant to
customer contracts. Taxpayer reasonably determines that its principal
business activity is landscape design, which is not described in an
ineligible NAICS code under section 4.01(1)(a)(i)-(v). Consequently,
Taxpayer is eligible to use the cash method for all its business
activities (landscape design and lawn ornament manufacturing). For both
business activities, Taxpayer chooses to use the cash method and to
account for inventoriable items (such as raw materials) as non-incidental
materials and supplies under section 1.162-3. In 2001, Taxpayer purchases
and pays for raw materials to be used in its manufacturing business and
uses the raw materials to produce lawn ornaments. During 2002, Taxpayer
sells the lawn ornaments to customers. Because the lawn ornaments are not
provided to customers until 2002, the cost of the raw materials used to
produce the lawn ornaments can not be deducted until 2002.

EXAMPLE 21 -- APPLICATION OF LONG TERM CONTRACT RULES -- SECTION 460
APPLICABLE. Taxpayer is a specialty tool and die manufacturer. Taxpayer
receives a request from a large automobile manufacturer to design and
produce a custom-made die that the customer will use in its manufacturing
operation. The contract to manufacture the die is entered into in December
2001 but is not completed until May 2002. Because it satisfies the
requirements of section 4.01(1)(c) of this revenue procedure, Taxpayer is
eligible to use the overall cash method of accounting. Notwithstanding the
Taxpayer's eligibility to use the overall cash method, however, because
the contract to manufacture the custom-made die requires the production of
a "unique item" and will not be completed in the year it is entered into,
it is a "long term contract" for purposes of section 460, and the income
and expense relating to that contract must be accounted for under the
percentage-of-completion method of accounting described in section 460 and
the underlying regulations.

EXAMPLE 22 -- APPLICATION OF LONG TERM CONTRACT RULES -- SECTION 460
NOT APPLICABLE. Taxpayer is a residential home builder that specializes in
modest single family homes whose construction period averages six months.
Taxpayer uses an overall accrual method of accounting, and although it is
not required to do so, Taxpayer has elected to use the
percentage-of-completion method of accounting, as described in section
1.460-4(b), in accounting for its home construction activities. Because
its principal business activity is not described in an ineligible NAICS
code described in section 4.01(1)(a), Taxpayer may elect the overall cash
method described in this revenue procedure. Further, because its home
construction activity is not required to be accounted for using the
percentage-of-completion method described in section 460, Taxpayer is
eligible (but not required) to change its method of accounting for that
activity to the cash method.

EXAMPLE 23 -- TAXPAYER SATISFIES THE NAICS CODE PROVISION IN SECTION
4.01(1)(a). Taxpayer is a licensed medical clinic that provides
specialized chemotherapy treatment to cancer patients. The medication
provided to patients accounts for 26 percent of Taxpayer's average annual
gross receipts. Taxpayer does not sell the medications separately from its
provision of services, selects the medications to be used in a particular
session based on its own professional skill and judgment, and does not
maintain medications for more than two weeks. Because the provision of
medical services (NAICS code 62) represents Taxpayer's principal business
activity, Taxpayer qualifies to use the cash method under section
4.01(1)(a) for all of its trades or businesses. Even if the cost of the
chemotherapy medications represented Taxpayer's principal source of gross
receipts, Taxpayer nonetheless would qualify to use the cash method under
section 4.01(1)(a) of this revenue procedure, because its principal
business activity would still be providing medical services, with goods
being provided only incident to the provision of those services. See
Osteopathic Medical Oncology and Hematology, P.C. v. Commissioner, 113
T.C. 376 (1999), acq. in result 2000-1 C.B. xvi.


EXAMPLE 24 -- CHANGE IN PRINCIPAL BUSINESS ACTIVITY. Taxpayer owns a
hardware store and a small appliance repair business. Following the
issuance of this revenue procedure, Taxpayer reasonably determined that
its principal business activity was its appliance repair business, which
is not described in an ineligible NAICS code under section
4.01(1)(a)(i)-(v). Consequently, Taxpayer was eligible to use the cash
method under this revenue procedure for both its business activities
(appliance repair and retail sales). Over time, Taxpayer's hardware store
began to generate a larger portion of Taxpayer's gross receipts than its
repair business. In 2005, Taxpayer's retail business became its principal
business activity. Because retail trade is described in ineligible NAICS
code 44, starting in 2006, Taxpayer is no longer eligible to use the cash
method for all its trades or businesses under section 4.01(1).
Accordingly, Taxpayer must change to an accrual method for its retail
business. If Taxpayer maintains a complete and separable set of books and
records in 2006 for its repair business, Taxpayer may continue to use the
cash method for its repair business under section 4.01(2). If Taxpayer
does not maintain a complete and separable set of books and records in
2006 for its repair business, Taxpayer also must change to an accrual
method for its repair business -- however, in any subsequent taxable year
that Taxpayer maintains complete and separable books and records for its
repair business, Taxpayer will be eligible under section 4.01(2) to change
to the cash method for its repair business.

EXAMPLE 25 -- CHANGE IN PRINCIPAL BUSINESS ACTIVITY. Same as Example
24, except that Taxpayer's repair business again becomes its principal
business activity in 2009. Taxpayer is no longer eligible to use the cash
method for its retail business under section 4.01(1). For section 4.01(1)
to apply, Taxpayer must not have previously changed (or have been
previously required to change) from the cash method to an accrual method
for any trade or business as a result of becoming ineligible to use the
cash method under this revenue procedure. Because Taxpayer was required to
change to an accrual method for its retail business in 2006 as a result of
becoming ineligible to use the cash method under this revenue procedure,
Taxpayer is not eligible to rely on section 4.01(1) for 2006 or any
subsequent taxable year.

EXAMPLE 26 -- CHANGE IN PRINCIPAL BUSINESS ACTIVITY. Same as Example
24, except that following the issuance of this revenue procedure,
Taxpayer's principal business activity was retail sales and Taxpayer used
an accrual method for both businesses (retail and repair). Over time,
Taxpayer's repair business began to generate a larger portion of
Taxpayer's gross receipts than its retail business. In 2007, Taxpayer's
repair business became its principal business activity. Starting in
taxable year 2008, Taxpayer is eligible under section 4.01(1) to use the
cash method for all its trades and businesses because Taxpayer did not
change (and was not required to have changed) from the cash method to an
accrual method for any trade or business as a result of becoming
ineligible to use the cash method for that trade or business under this
revenue procedure, and Taxpayer's principal business activity is no longer
described in an ineligible NAICS code under section 4.01(1)(a)(i)-(v).


SECTION 7. CHANGE IN ACCOUNTING METHOD

.01 IN GENERAL. Any change in a taxpayer's method of accounting
pursuant to this revenue procedure is a change in method of accounting to
which the provisions of sections 446 and 481 and the regulations
thereunder apply.

.02 AUTOMATIC CHANGE FOR TAXPAYERS WITHIN THE SCOPE OF THIS REVENUE
PROCEDURE.

(1) AUTOMATIC CHANGE TO THE CASH METHOD. A qualifying small business
taxpayer that wants to use the cash method as described in this revenue
procedure for an eligible trade or business must follow the automatic
change in accounting method provisions of Rev. Proc. 2002-9 (2002-3 I.R.B.
327) (or its successor), as modified by Rev. Proc. 2002-19 (2002-13 I.R.B.
696), and Announcement 2002-17 (2002-8 I.R.B. 561), with the following
modifications:

(a) The scope limitations in section 4.02 of Rev. Proc. 2002-9 do not
apply. However, if the taxpayer is under examination, before an appeals
office, or before a federal court with respect to any income tax issue,
see section 6.02(9) of Rev. Proc. 2002-9 for additional filing
requirements.

(b) Taxpayers filing Form 3115, Application for Change in Accounting
Method, for a change in method of accounting under this revenue procedure
must complete all applicable parts of the form but need not complete Part
II of Schedule A of Form 3115. Specifically, Part II of Form 3115, line 17
(regarding information on gross receipts in previous years) and Part III
of Form 3115 (regarding the section 481(a) adjustment) must be completed.
Taxpayers should write "Filed under Rev. Proc. 2002-28" at the top of
their Form 3115.

(c) A taxpayer making a change under section 7.02 of this revenue
procedure for its first taxable year ending on or after December 31, 2001,
that, on or before May 6, 2002, files or filed its original federal income
tax return for such year, is not required to comply with the filing
requirement in section 6.02(3)(a) of Rev. Proc. 2002-9, provided the
taxpayer complies with the following filing requirement. The taxpayer must
complete and file a Form 3115 in duplicate. The original must be attached
to the taxpayer's amended federal income tax return for the taxpayer's
first taxable year ending on or after December 31, 2001. This amended
return must be filed no later than September 16, 2002. A copy of the Form
3115 must be filed with the national office (see section 6.02(6) of Rev.
Proc. 2002-9 for the address) no later than when the taxpayer's amended
return is filed.


(2) AUTOMATIC CHANGE TO SECTION 1.162-3. A qualifying small business
taxpayer that does not want to account for inventories under section 471
must make any necessary change from the taxpayer's inventory method (and,
if applicable, from the method of capitalizing costs under section 263A)
to treat inventoriable items in the same manner as materials and supplies
that are not incidental under section 1.162-3. For purposes of such a
change, the rules of section 7.02(1) of this revenue procedure apply.

(3) OTHER AUTOMATIC CHANGES. An automatic change in method under this
revenue procedure would also include any other change in method of
accounting that is eligible to be made under this revenue procedure in
conjunction with either or both of the above changes in this section 7.02
(such as a change from a long-term contract method that is not required to
be used by section 460). For purposes of such a change, the rules of
section 7.02(1) of this revenue procedure apply.

(4) SINGLE FORM 3115. Any combination of changes under this revenue
procedure may be included in the same Form 3115 to be filed by the
taxpayer.


.03 SECTION 481(a) ADJUSTMENT.

(1) DETERMINING THE NET AMOUNT. The net amount of the section 481(a)
adjustment computed under this revenue procedure must take into account
both increases and decreases in the applicable account balances such as
accounts receivable, accounts payable, and inventory. For example, the
section 481(a) adjustment may include the difference resulting from
changing from taking inventory accounts under section 471 to treating the
inventoriable items as materials and supplies that are not incidental
under section 1.162-3.

(2) MULTIPLE ADJUSTMENTS. In the event that a taxpayer is taking into
account a section 481(a) adjustment from another accounting method change
in addition to the section 481(a) adjustment required by this revenue
procedure, the section 481(a) adjustments would be taken into account
separately. For example, a taxpayer that changed from the cash method to
an accrual method in 1999 and was required to take its section 481(a)
adjustment into account over four years would continue to take into
account that adjustment over the appropriate four years even though the
taxpayer changes back to the cash method in 2001 and has an additional
section 481(a) adjustment required by this revenue procedure.

(3) SECTION 481(a) ADJUSTMENT PERIOD. As provided in section 2 of Rev.
Proc. 2002-19, the period for negative section 481(a) adjustments is one
year, and the period for positive section 481(a) adjustments is four
years.


.04 TAXPAYERS NOT WITHIN THE SCOPE OF THIS REVENUE PROCEDURE.

(1) A taxpayer that ceases to qualify for the qualifying small business
taxpayer exception described in section 4 of this revenue procedure for a
trade or business and that otherwise is required to use an accrual method
for that trade or business must change to an accrual method (and, if
applicable an inventory method that complies with sections 263A and 471)
for that trade or business using either the automatic change in accounting
method provisions of section 5.01 of the APPENDIX to Rev. Proc. 2002-9, if
applicable, as modified by Rev. Proc. 2002-19 or the advance consent
provisions of Rev. Proc. 97-27 (1997-1 C.B. 679) (or its successor), as
modified by Rev. Proc. 2002-19.

(2) No inference is intended regarding whether a taxpayer that does not
satisfy the qualifying small business taxpayer exception in section 4 is
otherwise permitted to use the cash method. Taxpayers who do not qualify
to change to the cash method under this revenue procedure may still
request permission to change to the cash method under Rev. Proc. 97-27, as
modified. See also Rev. Proc. 2001-10 (2001-1 C.B. 272).


SECTION 8. EFFECT ON OTHER DOCUMENTS

Rev. Proc. 2002-9 is modified and amplified to include this automatic
change in sections 5 and 9 of the APPENDIX. Notice 2002-14 (2002-8 I.R.B.
548) is modified and superseded.


SECTION 9. EFFECTIVE DATE

This revenue procedure is effective for taxable years ending on or
after December 31, 2001. However, the Service will not challenge a
taxpayer's use of the cash method under section 446 or a taxpayer's
failure to account for inventories under section 471 for a trade or
business in an earlier year if the taxpayer, for that year, would have
been a qualifying small business taxpayer as described in section 5.01 of
this revenue procedure and would have been eligible to use the cash method
in such year under section 4 of this revenue procedure if this revenue
procedure had been applicable to that taxable year.


DRAFTING INFORMATION

The principal author of this revenue procedure is W. Thomas McElroy,
Jr., of the Office of Associate Chief Counsel (Income Tax and Accounting).
For further information regarding this revenue procedure, contact Mr.
McElroy at (202) 622-4970 (not a toll-free call).


APPENDIX

APPLICATION OF REV. PROC. 2002-28

--------------------------------
---------------------------- | You may use the cash method, |
| Are your "average annual | | unless you are prohibited |
| gross receipts" $1 | Yes | from doing so by section |
| million or less? |--------->| 448(a)(3) (tax shelters). |
---------------------------| | Rev. Proc. 2001-10. |
No | --------------------------------
/
--------------------------
| Are you either (i) |
| prohibited from using | Yes ------------------------
| the cash method by |----------->| You may not use Rev. |
| section 4,48, or (ii) | | Proc. 2002-28. |
| a "farming business" ? | ------------------------
-------------------------- /|\par No | |
/ No |
----------------------------- |
| Are your "average annual | |
| gross receipts" $10 |-------------------
| million or less? Rev. |
| Proc. 2002-28, sec. 5.02. |
-----------------------------
Yes |
/
------------------------------
| Is the NAICS code of your |
| principal business |
| activity described in |
A | section 4.01(1)(a) of Rev. | No
| Proc. 2002-28, such as |---------------------
| retail, wholesale, manu- | |
| facturing, mining, or | |
| certain information | /
| industries? | ----------------------------
------------------------------ | You may use Rev. Proc. |
Yes | | 2002-28 for all of |
/ | your business activities |
--------------------------- | (unless you previously |
| Regardless of its NAICS | | did so and later became |
| code, is your principal | | ineligible). |
B | business activity the | ----------------------------
| provision of services, | /| /|\par | including the provision | Yes | |
| of property incident to |----------------------- |
| those services? Rev. | |
| Proc. 2002-28, sec. | |
| 4.01(1)(b). | |
--------------------------- |
No | |
/ |
---------------------------- |
| Regardless of its NAICS | |
| code, is your principal | |
C | business activity the | |
| fabrication or | |
| modificatio