Tangible Property "Repairs" Regulations

Your latest Repairs Regulations information

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Modified LB&I directive addresses revised effective dates for ‘temporary repairs regulations’

The IRS Large Business and International Division (LB&I) recently issued a memorandum for all LB&I staff that provides direction to field examiners on the repair versus capitalization issue.

 

General Asset Accounts: Considerations in preparing 2012 returns

The repairs regulations provide increased flexibility for general asset account (GAA) treatment of property subject to section 168.

 

IRS formally delays effective date of the temporary repairs regulations

On December 14, 2012, the IRS published regulations amending the temporary regulations regarding deduction and capitalization of expenditures related to tangible property to delay the effective date of the regulations as announced in Notice 2012-73.

 

IRS issues guidance related to final "repairs" regulations and delay of effective date

The IRS on November 20 issued Notice 2012-73, alerting taxpayers that final regulations regarding deduction and capitalization of expenditures related to tangible property (the final repairs regulations) are expected to be released in 2013.

 

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How will your company be affected by the Repairs Regulations?

• On December 23, 2011, Treasury published regulations (the "repairs regulations" or "temporary regulations") that create new rules related to the acquisition, production, or improvement of tangible property. These rules are meant to help companies better distinguish between currently deductible repair and maintenance expenses under section 162(a) and expenditures that must be capitalized under section 263(a).
• On December 14, 2012, the IRS amended the temporary regulations regarding deduction and capitalization of expenditures related to tangible property by delaying the effective date of those regulations. The temporary repairs regulations now will apply to tax years beginning on or after January 1, 2014. In addition, the IRS expects to finalize the repairs regulations sometime in 2013. The final repairs regulations also will apply to tax years beginning on or after January 1, 2014.

How we can help you

Our fixed asset tax specialists can help your company:

• Review its current policies regarding how repair expenditures are treated for federal income tax purposes under your current method(s) of accounting
• Identify available current year repair deductions
• File the requisite application(s) for change in accounting method to comply with the repair regulations
• Update its fixed asset tracking procedures and implement system changes to improve the tracking and calculation of repair expenditures for future tax years
• Seek relief through the drafting of thoughtful comment letters