SAVINGS UNDER THE TANGIBLE PROPERTY REPAIR REGULATIONS

The Final Tangible Property Repair Regulations are here to stay and provide significant benefits to taxpayers. Under these “TPR’s,” taxpayers must account for their annual expenses relating to:

  • Materials & Supplies
  • Repairs & Maintenance
  • Routine Maintenance
  • Improvements to Tangible property
  • Depreciable Assets

The Final Repair Regulations affect your day-to-day accounting processes which is why it is important to be aware of their impact on your company and to benefit from the on-going opportunities that may apply to you.

Four items are of paramount importance that must be considered:

  1. Revised capitalization policies should have been put in place by January 1, 2014.
  2. The ability to make a retroactive partial disposition election no longer exists as of January 1, 2016.
  3. Under the final regulations, a cost segregation study serves both as a benefit and necessity. These regulations require the identification of clearly defined components within your property for the purposes of accurate depreciation and retirements of assets at the time of removal.
  4. A proper fixed-asset schedule will also maintain current year improvements, repairs & maintenance, identify write-offs, and ensure compliance under these new IRS regulations

Although retroactive partial disposition opportunities are no longer available, there are STILL look-back opportunities for cost segregation, current year dispositions and repairs & maintenance items. While the documentation and calculations of a TPR analysis can be complex, the return on investment for taxpayers who take full advantage of them are far greater through additional write-offs, reduced tax liability, and safer tax filing position. If you own property and have annual repair and improvement costs associated with that building, we suggest that you give us a call to discuss these changes and what actions you need to take place.