On September 13, 2013, the IRS announced the final tangible property regulations under sections 162 and 263. The final regulations provide for simpler and clearer rules for many taxpayers (i.e., de minimis and safe harbor rules). The final regulations contain a new safe harbor for qualifying small taxpayer ($10M or less of average gross receipts plus an eligible building with an unadjusted basis of $1M or less) and expanded routine maintenance safe harbor for buildings. In response to AICPA's concern, the final de minimis rule eliminates the ceiling amount for taxpayers with applicable financial statements (AFS) and includes taxpayers without AFS. The final regulations generally apply to taxable years beginning on or after January 1, 2014. The procedural guidance is expected soon.
The IRS also announced REG-110732-13 (prop. regulations on disposition of depreciable property) on September 13, 2013. The new proposed regulations include changes on determining assets disposed of and definition of qualifying disposition. The new proposed regulations provide a new rule for partial dispositions. The changes give taxpayers more flexibility and address AICPA's concern on disposition of structural components in our letter
. Comments on the new proposed regulations are due November 19 and a public hearing is to follow on December 19.
Overall, the AICPA is pleased with many taxpayer favorable provisions in the final regulations and these changes will reduce administrative burden on many small businesses.
For additional resources related to the tangible property regulations, please click here.
Please see below for more detailed coverage on the tangible property regulations including our advocacy efforts, member tools and aids, articles, and other resources. Please click here for history and background information on the tangible property regulations.
AICPA Advocacy Efforts:
02.14.2013 The AICPA led a roundtable discussion regarding the tangible property regulations at the Small Business Administration. Participants include several organizations including representatives from National Federation of Independent Business, National Small Business Advocate, National Association of the Self-Employed, and Financial Services Industry. The AICPA provided a general overview of the temporary regulations and potential impact on small businesses.
07.16.2012 AICPA Comment Letter submitted to the IRS and Treasury
with further comments and recommendations on December 2011 Proposed and Temporary Regulations and 2012 Transition Guidance
05.09.2012 AICPA Testified at Public Hearing
05.09.2012 AICPA Oral Statement Presented at Public Hearing
04.17.2012 AICPA Comment Letter Submitted to the IRS and Treasury
on December 2011 Proposed and Temporary Regulations and 2012 Transition Guidance
02.22.2011 AICPA Comment Letter Submitted to the IRS and Treasury
on March 2008 version of Proposed Regulations under Section 263(a) regarding "Tangible Property"
IRS Pronouncements and Resources:
(Prop. Regs. on Disposition of Depreciable Prop.), September 13, 2013
(Final Repair Regulations), September 13, 2013
, to correct the temporary regulations
(T.D. 9564, 2012-14, IRB 614) to provide time and manner of making general asset election, January 18, 2013.
, to delay the completion of the final repair regulations until 2013, November 20, 2012
, March 15, 2012
Instructions to Form 3115 (Revised March 2012)
, to be used with December 2009 revision of Form 3115
Revenue Procedure 2012-20
Revenue Procedure 2012-19
(T.D. 9564) were published in the Federal Register on December 27, 2011, and generally effective for tax years beginning on or after January 1, 2012