Delayed Application of the Tangible Property "Repair" RegulationsJanuary 22, 2013
Crystal A. Germanese, CPA
On December 23, 2011 the IRS issued regulations on the deduction and capitalization of expenditures related to tangible property and accounting for, and dispositions of, depreciable property. The regulations, issued in temporary and proposed form, were originally applicable to tax years beginning on or after January 1, 2012.
However, in anticipation of the issuance of the final regulations in 2013, the IRS announced a delayed application date. The temporary regulations have been amended to apply to tax years beginning on or after January 1, 2014. The IRS announced that portions of the temporary regulations addressing the de minimis capitalization rule, dispositions and the safe harbor for routine maintenance will be revised and potentially simplified when the regulations become final.
In Notice 2012-73, the IRS advised taxpayers that the regulations would be amended to reflect the delayed application while permitting taxpayers to choose to apply the temporary regulations to taxable years beginning on or after January 1, 2012 and before the applicability date of the final regulations. Taxpayers choosing to apply the provisions of the temporary regulations to taxable years beginning on or after January 1, 2012, and before the applicability date of the final regulations, may continue to obtain the automatic consent of the Commissioner of Internal Revenue to change their methods of accounting under Revenue Procedures 2012-19, 2012-14 I.R.B. 689, 2012-20, 2012-14 and I.R.B. 700. For taxpayers choosing to apply the provisions of the final regulations to taxable years beginning on or after January 1, 2012, the Internal Revenue Service and the Treasury Department expect to publish procedures for obtaining automatic consent to change a method of accounting when the final regulations are published.
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