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Summary and Background |
What's New? |
AICPA Advocacy Efforts |
AICPA Trainings, Tools and Aids |
AICPA Coverage in Articles, Newsletters and Journals |
IRS Pronouncements and Resources
Summary and Background:
The proper tax treatment as deductible or capitalizable for expenditures associated with the acquisition, production or improvement of tangible property has long been an area of disagreement between the IRS and taxpayers. A significant step forward was made in December 2011 with the release of the latest version of proposed regulations under section 263(a), and the concurrent release of temporary regulations. These rules affect
all taxpayers that acquire, produce or improve tangible property. The guidance also impacts the tax treatment associated with materials and supplies, as well as dispositions of tangible property. The temporary regulations are generally applicable for tax years beginning on or after January 1, 2012.
The IRS requested comments on the proposed regulations, and a public hearing was held on May 9, 2012.
This has been an ongoing project of IRS / Treasury for quite some time now. The first set of proposed regulations were released in August 2006, but were withdrawn after significant public response. A second set of proposed regulations (often referred to as the re-proposed regulations) were released in March 2008. Comments from various taxpayers and others in the tax community, including AICPA, were submitted to the government. The temporary and proposed regulations to be published in the Federal Register on December 27, 2011 are the third attempt at guidance in this area in recent years. The temporary regulations are generally effective for tax years beginning on or after January 1, 2012.
With an antipation of the final regulations at the end of 2012, Notice 2012-73 was issued on November 20, 2012. Notice indicates that the final regulations will be issued in 2013 instead of 2012. The final regulations will contain numerous changes from the temporary regulations including de minimis rule, dispositions, and safe harbor for routine maintenance. In addition, the effective date of the temporary regulations is extended to January 1, 2014 from January 1, 2012. Taxpayers choosing to apply the temporary regulations during the extended period may continue to obtain the automatic consent of the Commissioner of Internal Revenue to change their method of accounting under Rev. Proc. 2012-19 and 2012-20. Please check out the notice and an associated article from Journal of Accountancy below.
While there are many documents associated with this topic located throughout our website, this page was created to gather together in one place many of the links necessary to take you to information regarding this issue and the AICPA's response.
What's New?:
IRS issues
IRB 2013-4 to correct the
temporary regulations (T.D. 9564, 2012-14, IRB 614) to provide time and manner of making general asset election.
IRS to finalize the tangible property regulations in 2013
Notice 2012-73
Chart of Annual Elections to Consider once a taxpayer is in compliance with the temp. regs. (as of October 27, 2012)
Schedules C, E & F Are You Aware? - These Rules Currently Apply to You Too
Chart Summarizing Key Aspects of Rev. Procs. 2012-19 and 2012-20 (as of October 1, 2012)
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
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"
AICPA Trainings, Tools and Aids:
Chart of Annual Elections to Consider once a taxpayer is in compliance with the temp. regs. (as of October 27, 2012)
Chart Summarizing Key Aspects of Rev. Procs. 2012-19 and 2012-20 (as of October 1, 2012)
Register for AICPA's 2012 National Tax Conference, which includes session on Demystifying the Tangible Property Rules: A practical approach to implementing the regulations, on November 7, 2012
Register for AICPA's 2012 Federal Real Estate Conference, which includes sessions regarding New Capitalization Rules, Parts I and II, on June 21, 2012
Archive of AICPA Infocast of April 23, 2012, Do You Know What to Deduct and What to Capitalize? Understanding the New Temporary Regulations for Tangible Property, including recording and materials
AICPA Coverage in Articles, Newsletters and Journal
Effective Date Of Tangible Property Regs. Delayed, The Journal of Accountancy, Nov 20, 2012
Schedules C, E & F Are You Aware? - These Rules Currently Apply to You Too, webarticle and Tax E-Alert, October 25, 2012 and
November 2, 2012
AICPA Recommends Changes to Complex IRS Capitalization Rules, The CPA Advocate (advocacy newsletter), August 15, 2012
AICPA Recommends Changes to Tangible Property Guidance, The Tax Adviser, July 17, 2012
The New Rules for Tangible Property Cast a Wide Net, AICPA Insights (blog), June 14, 2012
Tangible Property Regulations are too Complex, AICPA Says at IRS Hearing, The CPA Advocate (advocacy newsletter), June 13, 2012
Webcast Archives and Materials Available, Tax E-Alert, May 25, 2012
AICPA Testifies to IRS on Tangible Property Regulations, Tax E-Alert, May 11, 2012
AICPA Testified 05.09.2012 regarding Deduction and Capitalization of Tangible Property Expenditures, web article, May 9, 2012
IRS Issues Guidance on Accounting Method Changes for Repair Regs., The Tax Adviser, May 1, 2012
Tangible Property Regulations, The Tax Adviser, May 1, 2012
AICPA Offers Comments on Tangible Property Regulations, Tax E-Alert, April 27, 2012
Form 3115 Instructions Revised for Capitalization Regulations, web article and Tax E-Alert, March 30, 2012 and April 13, 2012
IRS Examination Activity Suspended on Repair / Capitalization Issues, web article and Tax E-Alert, March 16, 2012 and March 23, 2012
Much-Anticipated Guidance Issued on Accounting Method Changes for Repair Regs., The Tax Adviser, March 8, 2012
Transitional Guidance Released for Temporary Repair Regulations, web article and Tax E-Alert, March 7, 2012 and March 9, 2012
Tangible Property Costs and Repair Expenditure Regs., The Tax Adviser, March 1, 2012
Regulations Issued on Repair Expenditures, The Tax Adviser, December 27, 2011
Temporary and Proposed Tangibles Regs. Impact Most Business Taxpayers, web article and Tax E-Alert, December 24, 2011 and January 6, 2012
IRS Pronouncements and Resources:
IRB 2013-4, January 18, 2013
Notice 2012-73, November 20, 2012
IRS Directive, 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
Temporary regulations (TD 9564), to be published in the Federal Register on December 27, 2011, and generally effective for tax years beginning on or after January 1, 2012
Proposed regulations (REG-168745-03), to be published in the Federal Register on December 27, 2011