On Friday December 14, 2012, the IRS issued technical amendments to the tangible property regulations that were originally issued in December 2011. These technical amendments change the effective date of the final regulations for complying with the new rules on capitalization and repairs of tangible property from taxable years beginning on or after January 1, 2012 to taxable years beginning on or after January 1, 2014.
The technical amendments allow taxpayers to choose to apply sections of the temporary regulations to taxable years beginning on or after January 1, 2012 and prior to the release of the final regulations. As a result, taxpayers have an opportunity to utilize the 19 method changes contained in the temporary regulations in their tax planning for the 2012, 2013, and 2014 tax years.
Since the final regulations are effective for taxable years beginning on or after January 1, 2014, all taxpayers should conduct a comprehensive review of their accounting methods for tangible property (including materials and supplies) before the start of their 2014 tax year to identify the method changes that may be necessary to comply with the final regulations. Favorable method changes can be made in 2012 or 2013 and method changes that are unfavorable can be deferred until 2014.
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FreedMaxick's CapX (Capitalization or Expense) Consulting Service is a comprehensive program designed to quickly and efficiently bring you into compliance and optimal tax savings. Click here for more information or call Don Warrant at 716-847-2651.