Tangible Property Regulations
If you are a business taxpayer who has Tangible Property acquired, produced or improved tangible property such as buildings, machinery or equipment, you may need to make changes to accounting methods and revise your tax planning strategy. Based on new regulations granted by the IRS, you may have the opportunity to expense items capitalized when removed or taken out of service.
Property Example:
Place: Riverside County, California
Facility: Warehouse and distribution
Replacement: Flat EPDM Roof in 2006
Square Foot: 205,000
Tangible Property Possible Recoverable
Depreciation: $236,550
The recent finalization of the Tangible Property Repair Regulations incorporates these additional tax benefits:
• Allows a look back at building components that may have been retired in prior years or may be retired in future years.
• Determines whether future expenditures should be expensed in the year they are incurred or capitalized over a longer term.
• Allows current or prior year building related costs to be expensed as a repair and/or as maintenance cost if certain criteria is met.
• Allows commercial property owners to expense remaining depreciation on structural components that have been remodeled or replaced or are no longer in service.
(Structural or long life assets include: Windows, HVAC systems, Lighting/Electrical, Walls, Plumbing, Roofs, Parking lots, and Landscape Features).
Note: There are some important decisions that should be considered before the 2014 return is filed as the IRS is granting an automatic consent for certain changes. After 2014 the process is a little bit more tedious.
Download out White Paper on Tangible Property Regulations:
Changes to Asset Classification Under Tangible Property Regulations
Understand the requirements
and what options are available
to you, based on your specific
situation