What the Tangible Property Regulations Mean for Your Business

The IRS has issued final rules on the capitalization and deduction of costs incurred to acquire, maintain, repair and replace tangible property.  The IRS also issued new proposed rules pertaining to the disposition of tangible property.  These rules will impact taxpayers that acquire, produce, or improve real or personal property.  In addition, there are rules that will impact owners of rental properties.

Included in these rules is tax deduction safe harbor for routine maintenance, a new election allowing for deductions of “de minimis” fixed asset purchases, and an election to partially write off dispositions of building structures.  These provisions generally are effective for tax years beginning on or after January 1, 2014, but may be applied to tax years beginning on or after January 1, 2012.

Owners of tangible business property should begin preparations now to comply with and take advantage of these new rules.  Since many of these rules will require a taxpayer to change their method of tax accounting, impacted taxpayers should be in contact with their tax advisors to measure the tax benefit or cost. Read more …