Final regulations affect all for-profit taxpayers that have expenditures that are classified as either materials and supplies, repairs and maintenance, asset acquisitions, production of assets, or improvements of tangible assets.
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Tax Accounting
Safe Harbor for Purchases of De Minimis Tangible Property Will Be Raised
The IRS announced that is raising the current de minimis limit for deducting expenses for purchases of items of tangible property from $500 to $2,500 for taxpayers without applicable financial statements.
Majority of Costs to Remodel or Refresh Retail Stores Are Deductible Under New Safe Harbor
The IRS announced a safe-harbor method that allows qualifying taxpayers to deduct 75% of these expenses.
The Tangible Property Regulations’ Small Business Exceptions: To File or Not to File
Small business taxpayers should be aware of the implications of adopting the regulations through the small business exception.
Revenue Procedure Permits Safe Harbor for Ratable Service Contracts
Taxpayers using the accrual-basis method of accounting were given a safeharbor to treat economic performance as occurring on a ratable basis for certain
service contracts.
IRS Notice Asks for Comments on Proposed Revenue Recognition Standards
The IRS asked for comments on what effect the new proposed financial accounting revenue recognition standards issued by FASB and the International Accounting Standards Board should have on taxpayers’ methods of accounting.
The Interaction Between Sec. 179 and the Repair Regs.
There is an overlap between Sec. 179 expensing and the materials and supplies and de minimis safe-harbor rules in the repair regulations.
New Safe Harbor Governs Accounting for Ratable Service Contracts
Qualifying accrual-basis taxpayers will be allowed to treat economic performance of certain service contracts as occurring on a ratable basis under a safe harbor introduced by the IRS.
Revised Form 3115 Issued in Draft Form
The IRS has posted a draft revised version of Form 3115, Application for Change in Accounting Method, on its website.
Nonperiodic Payments Under Notional Principal Contracts Treated as Two Separate Transactions
The IRS issued temporary and proposed regulations under Secs. 446 and 956 amending how nonperiodic payments made or received under certain notional principal contracts are treated.
Don’t Miss This Opportunity to File Form 3115
The relief from the requirement to file Form 3115 may not be the best choice for all small business taxpayers. Find out here whether to revisit this choice.
New Procedures for Obtaining IRS Consent for Voluntary Accounting Method Changes
Procedures for filing Form 3115, Application for Change in Accounting Method, for both automatic and nonautomatic method changes have been combined into one procedure, and the list of automatic method changes has been separated into its own procedure.
New Accounting Method Change Procedures Give More Time to File Form 3115
Taxpayers affected by the tangible property regulations will have more time to file Form 3115 under Rev. Proc. 2011-14 according to revised procedures issued by the IRS.
IRS Asks for Comments on Accounting Method Changes for Proposed Revenue Recognition Standards
The IRS asked for comments on what effect the new proposed financial accounting revenue recognition standards should have on taxpayers’ methods of accounting
Regs. on Notional Principal Contracts Change Treatment of Nonperiodic Payments
The IRS issued temporary and proposed rules under Secs. 446 and 956 amending how nonperiodic payments made or received under certain notional principal contracts are treated.
IRS Modifies Rules for Filing Accounting Method Changes and Procedures for Taxpayers Under Examination
This item highlights the significant developments in rules for filing accounting method changes and procedures for taxpayers under examination.
IRS Provides Safe-Harbor Methods of Accounting to Cable System Operators
The IRS issued Rev. Proc. 2015-12 to provide guidance and several safe-harbor methods of accounting for cable system operators that provide video, high-speed internet, and voice-over-internet-protocol (VoIP) phone services through a “cable network.”
Accounting for Income Tax Implications of the Tangible Property Regs.
Final regulations further clarify the capitalization and expensing of amounts paid to acquire, maintain, improve, or replace tangible property, which will affect both taxable income and accounting for income taxes.
Small Businesses Get Relief From Complying With the Tangible Property Regulations
Small business taxpayers will be allowed to make certain accounting method changes under the repair regulations without filing Form 3115 in their first tax year beginning on or after Jan. 1, 2014, the effective date of the regulations.
Cost-Segregation Studies and the Impact of the Tangible Property Regulations
This item highlights several important aspects of the final tangible property regulations and related transition guidance that may affect cost-segregation studies and resulting changes in accounting methods.
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