On September 15, 2009, the IRS announced in a field directive that it was temporarily suspending the examination of Sec. 263A (UNICAP) issues involving automobile dealerships. The suspension will end on December 31, 2010.
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Tax Computation
Electing to Accelerate AMT and Research Credits in Lieu of Bonus Depreciation
The Housing Assistance Tax Act of 2008 allows corporations to make an election to forgo bonus depreciation and instead claim an accelerated pre-2006 research and/or AMT credit.
Guidance on Electing Not to Take 50% Bonus Depreciation
The IRS released guidance on how taxpayers can elect not to claim 50% bonus depreciation under Sec. 168(k)(1) but instead increase their credit limitation under Sec. 38(c) and their AMT credit limitation under Sec. 53(c) (Rev. Proc. 2009-33). The revenue procedure gives guidance on what property is eligible is for
When Cost Segregation Costs Extra
Cost segregation is a popular tax planning technique for owners of depreciable real property. While it is a legitimate and sometimes beneficial technique, some taxpayers have adopted it without considering the potential adverse consequences that can occur upon disposition of the property.
Unit of Property for Network Assets
Treasury issued proposed regulations under Secs. 162 and 263(a) providing guidance on the capitalization and deduction of costs relating to tangible property. Included in these regulations are the “repair regulations,” a comprehensive set of rules for determining whether costs incurred for tangible property are deductible repairs or capital improvements.
Depreciation Options for Avoiding Corporate AMT Adjustments and Preferences
An election of a particular depreciation system affects both taxable income and the taxpayer’s administrative burden.
Like-Kind Exchanges: Deferral Is Not Always the Best Option
Sec. 1031 gives taxpayers the opportunity to defer taxation on the gains they may have on their transactions. Anytime there is an opportunity to defer tax costs, tax practitioners and their clients automatically tend to assume that they should take advantage of the opportunity. However, in the case of like-kind exchanges, it is not always in the taxpayer’s best interest to elect to defer the recognition of gain on realty.
Sec. 168(k)(4) Credit in Lieu of Bonus Depreciation
As part of the Housing and Economic Recovery Act of 2008, Congress enacted a special tax benefit under Sec. 168(k)(4) that allows corporations to claim a refundable tax credit in lieu of 50% bonus depreciation for certain capital investments made during the period April 1–December 31, 2008
IRS Issues Guidance on Electing Out of 50% Additional First-Year Depreciation
The IRS has provided guidance on new Sec. 168(k)(4), added by Section 3081 of the Housing and Economic Recovery Act of 2008.
The Economic Stimulus Act of 2008
The tax benefits the Economic Stimulus Act provides affect both individuals and businesses. The legislation’s purpose is to increase consumer and business spending in an effort to stimulate the economy.
Issues Under Proposed De Minimis Rule for Expensing Tangible Property
The IRS recently re-proposed regulations under Sec. 263(a) regarding the treatment of amounts paid to acquire, produce, or improve tangible property.
IRS Issues Prop. Regs. on Capitalization of Improvements to Property
Proposed regulations under Sec. 263(a) clarify the treatment of expenditures incurred in selling, acquiring, producing, or improving tangible assets.
President Signs Stimulus Tax Legislation
On February 13, 2008, President Bush signed into law the Economic Stimulus Act of 2008, which included several tax items among its provisions.
Catch-Up Opportunities for Depreciation
Selecting the proper class life for assets placed in service may allow a business to increase its cashflow by accelerating depreciation and thus deferring federal and state income taxes.
Hurricane GO Zones: An Update on Relevant Tax Provisions
The widespread devastation left in the wake of hurricanes has resulted in numerous tax provisions aimed at revitalizing and rebuilding the affected areas. Congress passed the Gulf Opportunity Zone Act of 2005, P.L. 109-135 (the GO Zone Act), in response to Hurricane Katrina and then revised it as Hurricanes Rita
Placed-in-Service Decision Requires Careful Planning
Editor: Kevin F. Reilly, J.D., CPA Sec. 167(a) allows a depreciation deduction for assets used in the taxpayer’s trade or business or held for the production of in-come (e.g., rental income). Regs. Sec. 1.167(a)-10(b) provides that the period for depreciation of such an asset begins when it is placed in
Lease Termination Payments
Editor: Kevin F. Reilly, J.D., CPA A client owns a commercial building and leases it to various tenants. For business purposes, the client decides that he needs space currently occupied by tenants. To induce the current tenants to cancel their leases, the client will have to pay them a lease
Allocating Partnership Depreciation Between Trusts and Beneficiaries
This article reviews how depreciation from a partnership is allocated between a trust and its beneficiaries and highlights the potential trap the allocation can cause when the depreciation deduction flows through a partnership.
GO Zone Depreciation
Notice 2007-36 contains guidance on the extended placed-in-service dates for the 50% additional first-year depreciation available for certain Gulf Opportunity (GO) Zone property and provides additional rules on the “original use” requirement. (GO Zone property is depreciable property that meets the definitions in Sec. 1400N(d)(2) and Notice 2006-77, Section 2.02.)
IRS Will No Longer Challenge Negative Additional Sec. 263A Costs
Editor: Mary Van Leuven, J.D., LL.M. Negative additional Sec. 263A costs generally arise when taxpayers capitalize certain expenses for financial accounting purposes, but are not required or permitted to capitalize them for tax purposes. The Service recently issued Notice 2007-29 to provide interim guidance on this issue. Until further guidance
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