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Update on Tangible Property “Repair” Regulations

What It Is

The regulations contain tax guidance for determining whether and when a business must capitalize costs incurred in acquiring, maintaining, or improving any tangible property. Our experience enables us to work with clients to implement practical solutions to comply with this new law. Furthermore, we can assist clients with the implementation of favorable method changes for taxpayers now, while delaying the implementation of unfavorable changes until 2014.

Effective Dates

The Temporary Sec. 263(a) regulations were issued in December 2011, with an original effective date starting in 2012. In Notice 2012-73, the IRS extended the effective dates to tax years beginning on or after January 1, 2014, with the option to early adopt the temporary regulations as early as 2012.

Finalization

The IRS recently stated they plan to finalize and issue the Regulations by July 2013

Anticipated Changes to the Regulations

Notice 2012-73 indicates that the IRS is considering changes to the De Minimis Rule, Dispositions and small business relief. The IRS also stated they are considering extending the routine maintenance safe harbor to real property.

Timing of Implementation

Companies are advised to assess and/or implement full compliance after the regulations are finalized. Companies should plan to implement compliance with the regulations during mid-to-late 2013 so they are compliant before 2014 begins.

Implementation Approach

Each implementation is customized to the unique issues, information systems and data of each company. Factoring variation of each company, we apply a phased approach to each implementation. Our approach is summarized in more detail here.

 

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Lundy
Contact
  • Rich Lundy
  • Director, Tax & Business Advisory Services
  • (614) 947-5264
  • rlundy@gbq.com