Final Guidance Issued Finalizing & Extending Disposition Elections

The IRS issued final regulations September 18, 2014 relating to disposition of tangible depreciable property.


In 93 pages of guidance, Rev. Proc. 2014-54 sets forth the procedures by which a taxpayer may obtain the automatic consent of the Commissioner to change to the methods of accounting concerning the rules for general asset accounts, accounting for property depreciated as MACRS property, and for disposition of MACRS property.

The recent change also allows a late partial disposition election to be treated as a change in method of accounting for a limited period of time, through January 1, 2015 (previously only available for years January 1, 2012-2013.) allowing taxpayers to make a late partial disposition now through the 2014 tax year.

The revenue procedure also modifies section 10.11 of the Appendix of Rev. Proc. 2011-14 regarding a change to the method of accounting for amounts paid to acquire, produce, or improve tangible property, and certain changes in method of accounting for dispositions of tangible depreciable property.


Summary

Rev. Proc. 2014-54 modifies the Appendix of Rev. Proc. 2011-14 by:

  • Removing section 6.19 (lessor improvements abandoned at termination of lease) because it is obsolete
  • Revising section 6.29 (disposition of a building or structural component) to provide that this measure does not apply to any demolition of a structure to which section 280B and Reg. section 1.280B-1 apply
  • Revising sections 6.32 (general asset account elections), 6.34 (revocation of a general asset account election), and 6.35 (partial dispositions of tangible depreciable assets to which the IRS’s adjustment pertains) to allow these changes in method of accounting to be made under Reg. section 1.168(i)-1 or 1.168(i)-8
  • Revising section 6.33 (late partial disposition election) to allow a late partial disposition election under Reg. section 1.168(i)-8 to be treated as a change in method of accounting for a limited period of time
  • Revising section 6.37 (permissible to permissible method of accounting for depreciation of MACRS property) to provide additional changes in method of accounting that are consistent with Reg. section 1.168(i)-1 or 1.168(i)-8
  • Revising section 10.11 (tangible property) to clarify that this section of the Appendix does not apply to amounts paid or incurred for certain materials and supplies that the taxpayer has elected to capitalize and depreciate under Reg. section 1.162-3(d) or 1.162-3T(d)
  • Modifying the Appendix of Rev. Proc. 2011-14 by adding sections 6.38 through 6.40 to provide additional changes in method of accounting that are consistent with Reg. section 1.168(i)-1 or 1.168(i)-8
  • Providing charts that summarize the changes in methods of accounting that may be made under Rev. Proc. 2011-14 for dispositions of MACRS property

Learn more about how disposition studies and the tangible property regulations can benefit you by visit Engineered Tax Services here. Through a thorough analysis of your expenses for repairs and maintenance, ETS can help you reduce your tax liability and improve cash flow by properly reclassifying these expenditures.

Author

Engineered Tax Services

Engineered Tax Services

Recent Posts

Establishing Your Accounting Firm On Social Media

Establishing your accounting firm’s voice on social media should be a top priority. If your firm doesn’t have a brand guide that includes its tone of voice, now is the perfect time to create one. It doesn’t have to be a full-blown brand guide⁠—just something that helps to establish and maintain a consistent brand voice.

Read More »
employee retention tax credit scams

How to avoid employee retention tax credit scams

A survey by the National Federation of Independent Business (NFIB) found that only 4% of small business owners are “very familiar” with the Employee Retention Tax Credit program. Furthermore, only 32% said they were “somewhat familiar” with the incentive. Scammers are taking advantage of this unfamiliarity to collect high fees from business owners. Unscrupulous companies

Read More »
accounting firms

Tips for Accounting Firms looking to get started on Social Media

Getting started on social media can be confusing and hard to understand. Especially for accounting firms that keep putting it off. Yet it truly is not as bad as it seems. Trust me. I manage over 20 social accounts, many of which I created from scratch. With the busy season behind us, now is the

Read More »

Contact Us