Throughout nearly a century of case law and guidance, the benefits and burdens of ownership have remained the touchstone for claiming tax attributes of tangible property.
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Topics
Capitalization & Depreciation
Planning opportunities: Sec. 179 expensing vs. bonus depreciation
As bonus depreciation phases out, practitioners need to consider Sec. 179 expensing to maximize deductions on fixed-asset purchases.
Bonus depreciation phaseout planning
With bonus depreciation phasing out through 2027, taxpayers have an opportunity to review their accounting methods with regard to fixed assets to ensure they are using the best methods.
Electing the UNICAP historic absorption ratio under the modified simplified production method
To avoid contending with the complex and time-consuming calculations of the uniform capitalization rules under Sec. 263A, taxpayers may want to consider electing the historic absorption ratio with this method.
Defining software development costs
Software development costs that historically may not have been identified as qualified research expenditures for purposes of the Sec. 41 tax credit for increasing research activities need to be identified to comply with the capitalization requirement under Sec. 174.
A UNICAP exception for real estate development
This item focuses on how real estate owners that develop, hold, and rent their own property can benefit from an exception to Sec. 263A uniform capitalization requirements if they qualify as “small businesses.”
Auto depreciation limitations make a big leap for second year in a row
The IRS issued sharply higher new depreciation limitations for passenger automobiles, including those for which bonus depreciation is applied.
Depreciation recapture in the partnership context
This item discusses how depreciation recapture applies in certain situations involving partnerships.
Auto depreciation limits leap with inflation
The Internal Revenue Service issued its annual inflation-adjusted update of depreciation limitations for passenger automobiles, including passenger vans and trucks, placed in service in 2022.
LB&I provides insight into Sec. 263A computations for resellers
This item outlines the general provisions of Sec. 263A, including special rules and exceptions for resellers, and provides insight into a reseller’s uniform capitalization calculation that may be areas of focus during an IRS examination.
Opportunities for taxpayers with residential rental properties and residential living facilities
During 2021, the IRS issued taxpayer-favorable procedures allowing certain taxpayers that have made the real property trade or business election under Sec. 163(j)(7)(B) with residential rental property to depreciate such property using the shorter 30-yearrecovery period, using ADS, and certain other taxpayers with qualified residential
living facilities to be eligible for the real property trade or business election.
Sec. 481(a) adjustment affects business interest deduction calculation
The IRS advised that a net negative Sec. 481(a) adjustment resulting from a change in method of accounting for depreciation must be included in calculating adjusted taxable income.
Automatic procedures to change a CFC’s depreciation method
The IRS issued Rev. Proc. 2021-26, which contains procedures for certain foreign corporations to obtain automatic consent to change their methods of accounting for depreciation to the alternative depreciation system.
Automobile depreciation limits adjusted for 2021
The IRS issued its annual inflation-adjusted update of depreciation limitations for passenger automobiles (including passenger vans and trucks) placed in service in 2021.
Final regs. issued on qualified improvement property under FDII, GILTI
Final regulations clarify the treatment of qualified improvement property in FDII and GILTI, and foreign tax credit transition rules address post-2017 NOL carrybacks to pre-2018 tax years.
Qualified improvement property and bonus depreciation
The CARES Act corrected an error that had made qualified improvement property ineligible for bonus depreciation; IRS regulations and guidance explain how to take advantage of the change.
IRS updates car and truck depreciation limits
The IRS issued its annual inflation-adjusted update of depreciation limitations for passenger automobiles (including passenger vans and trucks) placed in service in 2021.
Guide to expensing HVAC costs
This guide provides tax preparers an outline of questions to ask clients when evaluating HVAC repair costs.
Final Sec. 1031 regulations do not materially affect cost segregation studies
Compared to pre-TCJA rules, there is no material change in the tax treatment of a building involved in a like-kind exchange, where a cost segregation study has been performed.
IRS permits choice of bonus depreciation rules
The IRS issued final bonus depreciation regulations and withdrew proposed regulations.
employee benefits & pensions
Profits interests: The most tax-efficient equity grant to employees
By granting them a profits interest, entities taxed as partnerships can reward employees with equity. Mistakes, however, could cause challenges from taxing authorities.
