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The Tangible Property "Repair" Regulations Overview

June 08, 2012

Crystal Germanese, CPA
Tax Manager

On December 23, 2011, the IRS released the highly anticipated regulations regarding the deduction and capitalization of tangible asset costs in temporary and proposed form. The Temporary Regulations apply to tax years beginning on or after January 1, 2012 or to amounts paid or incurred in tax years beginning on or after January 1, 2012, as applicable and will affect every taxpayer that acquires, produces or improves tangible property.

The temporary regulations provide guidance under sections 162(a) and 263(a) which we will cover in the following areas:

  • Definition and treatment of materials and supplies (Reg. section 1.162-3T)
  • Accounting for depreciable (Reg. sections 1.167(a)-7T) and MACRS property (Reg. section 1.168(i)-7T), including retirements (Reg. section 1.167(a)-8T) and general asset account rules (Reg. section 1.168(i)-1T)
  • Rules for amounts paid for the acquisition or production of tangible property, including a de minimis rule (Reg. section 1.263(a)-2T)
  • Rules for amounts paid for the improvement of tangible property, including a safe harbor for routine maintenance (Reg. section 1.263(a)-3T)

We have compiled a series of additional articles to help taxpayers understand the new rules and understand how they will be implemented.

The new regulations require virtually every business to review how repairs, maintenance, improvements and replacements are handled for tax purposes. BlumShapiro will continue to provide additional information as to how this change will affect your business and what steps you need to take.

If you have additional questions, please contact Crystal Germanese at cgermanese@blumshapiro.comor 860-570-6496.


Advisors | Auditors | Consultants | CPAs - Blum Shapiro is one of the premier public accounting firms in the northeast and a Top 100 CPA Firm in the U.S. Our professionals serve businesses, individuals and organizations in Boston (MA), Hartford (CT), Cranston (RI), Shelton (CT) ,Quincy (MA) and Newton (MA) with audit, tax and business consulting services. Our firm has developed practice areas in automotive, construction, education, government, healthcare, hospitality, manufacturing, nonprofit organizations and professional service firms. New Haven CT, Fairfield CT, Norwalk CT, Waterbury CT.