In Rev. Proc. 2011-26, the IRS has issued guidance on how taxpayers can deduct 100% of the cost of qualified business property placed in service in 2011 under rules enacted last year .
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Capitalization & Depreciation
IRS Releases 2011 Automobile Depreciation Limits
The IRS has issued the 2011 inflation adjustments to the depreciation limitations and lease inclusion amounts for certain automobiles. This year, the IRS has provided the limitation amounts for vehicles placed in service in 2011 for which bonus depreciation applies and for those to which it does not apply.
Guidance Issued on 100% Bonus Depreciation Rules
The IRS issued guidance on how taxpayers can deduct 100% of the cost of qualified business property placed in service in 2011 under rules enacted last year.
2011 Automobile Depreciation Limits Released
The IRS issued the 2011 inflation adjustments to the depreciation limitations and lease inclusion amounts for certain automobiles under Sec. 280F.
The Blurred Line Between Production and Handling Costs
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.
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.
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.
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.
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
Treatment of Capitalized Costs of Intangible Assets (Part II)
Executive Summary This two-part article provides an overview of cost recovery for intangible asset expenditures. Part II covers the income- forecast and units-of-production methods, computer software, transaction costs and Sec. 195 deductions. This two-part article examines how capitalized costs of intangible assets are recovered. Part I, in the April 2007
Depreciation Method Changes
Editor: Terence E. Kelly, CPA The IRS recently released final, temporary and proposed regulations specifying when changes in depreciation and amortization will be considered accounting-method changes under Sec. 446 (TD 9307, 12/22/06). The rules also reflect the Service’s attempt to provide more consistent treatment and increased certainty for taxpayers on
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.
