Tangible Property Regulations That Will Effect Every Business and Property Owner
Deducting and capitalizing business expenses under final regs
An important development this year will affect every business, including yours. The IRS has issued long-awaited regs on the tax treatment of amounts paid to acquire, produce, or improve tangible property. The regs explain when those payments can be deducted, which confers an immediate tax benefit, and when they must be capitalized.
These final regs retain many provisions of the temporary regs that were issued in 2011. However, the final regs refine and simplify the temporary regs and add new safe harbor provisions that will help you to nail down expense deductions.
The regs must be followed for tax years that begin after Dec. 31, 2013 – whether a calendar year or a fiscal year, such as a fiscal year beginning July 1, 2014. Taxpayers have the option of applying the final regs retroactively to the 2012 and 2013 tax years. There’s also a third option to apply the temporary regs to the 2012 and 2013 tax years.
The regs are lengthy and complex. The summary below is intended to give an overview of how they treat issues of deduction and capitalization. We would be happy to […]