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May 28, 2013

IRS Initiates Major Changes For Tracking Fixed Assets

New tangible property regulations were issued in late December 2011 by the IRS to guide taxpayers on how to account for amounts paid to acquire, produce or improve tangible property. Originally scheduled to be effective for tax years beginning on, or after, January 1, 2012, mandatory compliance with the new regulations has been delayed to tax years beginning on, or after, January 1, 2014.

The new tangible property regulations are designed to change the way each taxpayer treats capital assets. The regulations are also intended to provide guidance for taxpayers when deciding to expense versus capitalize an item. Some of the more likely changes in the way taxpayers do business relate to:

  • Repairs & Maintenance/De Minimus Rule
  • Materials & Supplies
  • Depreciation/Unit of Property
  • General Asset Accounts

Here are 5 questions to determine whether early adoption is right for your company:

1. Own a building?

2. Have any recently completed renovation or expansion projects to your buildings?

3. Acquire many small dollar fixed assets on an annual basis?

4. Accumulate large expenditures to maintain equipment?

5. Incur a large annual cost for materials and supplies?

If you would like more information regarding the Tangible Property Regulations contact Mark Baricos: 
(901) 685.5575 | mbaricos@cbiz.com

Mark has more than 10 years of public accounting experience. He specializes in tax engagements for large privately-held and publicly-held companies. These engagements include planning tax strategies, accounting for income taxes (ASC 740), supervising the preparation of federal and state income tax returns and coordinating federal and state examinations. His industry experience includes distribution, manufacturing and service companies.



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