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:
- Revised capitalization policies should have been put in place by January 1, 2014.
- The ability to make a retroactive partial disposition election no longer exists as of January 1, 2016.
- 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.
- 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.