FAQs on Tangible Property Regulations Released 3/5/15
On March 5th, 2015, the IRS released a number of frequently asked questions (FAQs) on Tangible Property Regulations to help taxpayers and preparers determine whether certain costs are currently deductible or must be capitalized.
Before the issuance of the final tangible property regulations on Sept. 17, 2013, [Treasury Decision 9636 (“final regulations”)], these decisions were guided by decades of often conflicting case law, as well as administrative rulings on specific factual situations.
The final regulations combine the case law and other authorities into a framework to help you determine whether certain costs are currently deductible or must be capitalized. The final tangible property regulations also contain several simplifying provisions that are elective and prospective in application (for example, the election to apply the de minimis safe harbor, the election to utilize the safe harbor for small taxpayers, and the election to capitalize repair and maintenance costs in accordance with books and records).
- Do the tangible property regulations apply to you?
- A de minimis safe harbor election
- Clarified rules for the treatment of materials and supplies costs
- A regulatory framework for analyzing whether expenditures are for deductible repairs or capital improvements
- What is the facts and circumstances analysis for distinguishing capital improvements from deductible repairs?
- What are the simplifying alternatives to the facts and circumstances analysis?
- How do these regulations coordinate with other provisions of the IRC?
- When and how do you apply the final regulations?
- When and how do you make elections under the final regulations?
- When and how do you change a method of accounting to use the final regulations?
- Simplified procedures for small business taxpayers
» Read the Full Tangible Property Regulations FAQ
These regulations are still pretty difficult to interpret. If you have any questions about them, just give Bressler & Company a call at 559.924.1225. We’d be happy to answer your questions.
