2014 Update: Tangible Property Regulations

The U.S. Department of the Treasury and the Internal Revenue Service issued final and re-proposed Tangible Property Regulations on September 19, 2013.

The 200+ page guide provides a framework for taxpayers with respect to the treatment of materials and supplies, disposition of MACRS property, capitalization of amounts paid to acquire or produce tangible property, and the determination of whether expenditure with respect to tangible property is a deductible repair or must be capitalized.

While these regulations answer many questions, they also leave taxpayers asking several more. Mainly, “Where do I start”?

Due to the wide-reach of the regulations, the variety of companies subject to these regulations, and the significant changes to established accounting methods, most companies are required to make changes to comply with the rules.

As part of ongoing compliance with these regulations, taxpayers must:

  1. Consider a proactive timeline for when and how they will comply with the new guidance.
  2. Gain an in-depth understanding of current accounting methods to determine changes, which may be required.
  3. File timely applications for changes in accounting methods (IRS Form 3115).

Though recent transition guidance has provided more clarity with regard to implementation of the property regulations, additional guidance is anticipated to be issued during the remainder of 2014.

Taxpayers should continue to discuss the specifics of the property regulations with their advisors to ensure compliance and a smooth transition for the 2014 tax year.

If you have any questions about the final tangible property regulations, and their impact on tax planning and implementation, please contact Matt Bralove (410-785-8546) or Bob Dillon (410-785-6746).

Learn more about SC&H Group’s Tax Advisory Services.