The AICPA raised concerns about the low amount of the de minimis safe harbor threshold in the tangible property regulations and about the retrospective application of the new rules.
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Topics
Tax Planning; Tax Minimization
IRS Expands on Timing of Deducting Year-End Cash Bonuses
The IRS’s issuance of several items of administrative guidance over the past few years indicates its increasing focus on the timing of an accrual-basis taxpayer’s deduction of cash bonuses paid to its employees.
Repair Regulations Are Finally Issued
The IRS issued long-awaited final and proposed regulations regarding the treatment of expenditures incurred in acquiring, producing, or improving tangible assets.
Collateral Issues to Consider in Repair Regs. Accounting Method Changes
Accounting method changes adopted under the repair regulations will, in certain cases, affect the computation of other deductions or credits allowed under the Internal Revenue Code.
IRS Clarifies Definition of On-Site Sales Under Sec. 263A
For purposes of the UNICAP costing rules under Sec. 263A, a sale is considered “on-site” only when the retail customer is physically present at the sales facility at some point during the sales transaction.
Fixed-Asset Implications Under the American Taxpayer Relief Act of 2012
The American Taxpayer Relief Act of 2012 contains many provisions that are favorable to businesses, particularly in the fixed-asset area.
Now and Later: GAAP vs. Tax Treatment of the Reinstated R&D Credit
The late reinstatement of the R&D credit has a key effect on the U.S. GAAP treatment of the credit on businesses’ 2012 financial statements.
Key Aspects of the New Tangible Property Regulations
Temporary regulations on expenditures to acquire, improve, and maintain tangible property significantly modify previous guidance and earlier proposed regulations.
Tangible Property Regs. Amended to Implement Delayed Effective Date
The IRS released technical amendments that delay the effective date of the temporary regulations it issued in December 2011 governing whether tangible property expenses could be deducted or had to be capitalized.
Effective Date of Tangible Property Regs. Delayed
The IRS announced it is delaying the effective date of the temporary regulations it issued in Dec. 2011 governing whether tangible property expenses could be deducted or had to be capitalized.
Temporary Regulations Create New Applications for Cost-Segregation Studies
Owners of real estate should consider the implications of the new regulations regarding tangible property and repair costs when engaging firms to perform cost-segregation studies.
Corporation Cannot Deduct California Business Privilege Tax in Year Paid
An accrual-basis taxpayer could not deduct the California business privilege tax in the year it was paid, even though California treated the tax as being incurred in that year.
AICPA Recommends Changes to Tangible Property Guidance
The AICPA recommended various changes and simplifications to the regulations regarding the treatment of expenditures incurred in selling, acquiring, producing, or improving tangible assets.
Tangible Property Regulations
The IRS recently released the long-awaited tangible property regulations, commonly referred to as the “repair” regulations.
Tangible Property Costs and Repair Expenditures Regs.
The IRS issued long-awaited regulations regarding the treatment of expenditures incurred in selling, acquiring, producing, or improving tangible assets, including rules on determining whether costs related to tangible property are deductible repairs or capital improvements.
IRS Changes Position on Current-Year Bonus Deductions for Accrual-Method Taxpayers
In a change of position, the IRS ruled that accrual-method employers in certain circumstances can currently deduct accrued bonuses paid within 2½ months of year-end despite a contingency in the bonus plan that the employee be still employed on the date the bonus is paid.
Regulations Issued on Repair Expenditures
The IRS issued long-awaited regulations regarding the treatment of expenditures incurred in selling, acquiring, producing, or improving tangible assets, including rules on determining whether costs related to tangible property are deductible repairs or capital improvements.
Unrealized Built-in Gains and Losses Under Sec. 382 and the Tax Accounting Rules
Do not forget to consider the tax accounting method rules (for accrued income or expense items) when dealing with Sec. 382.
IRS Issues Technical Advice on Success-Based Fees
When a taxpayer incurs success-based fees, the determination of whether the fees are currently deductible, as opposed to capitalizable, depends on whether the taxpayer can establish contemporaneously that all or a portion of the fees are allocable to activities that do not facilitate the transaction.
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.
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.
