Final ‘repair’ regulations contain provisions that may be of particular interest to middle-market taxpayers
Private Company Services Tax Insight
The IRS and Treasury Department recently released final regulations (the ‘final regulations’) regarding the deduction and capitalization of expenditures related to tangible property, as well as re-proposed regulations regarding the disposition of tangible depreciable property (the ‘2013 proposed regulations’). Collectively, these regulations are meant to help taxpayers better distinguish between currently deductible repair and maintenance expenses under Section 162(a) and expenditures that must be capitalized under Section 263(a), and provide them with more guidance regarding dispositions, including partial dispositions. For tax years beginning on or after January 1, 2014, middle-market taxpayers will need to evaluate the impact of these new regulations on their businesses.