An accrual-method taxpayer could reduce gross receipts by the estimated future cost of fuel reward redemptions in the tax year that the customer earns those rewards.
A taxpayer’s long-term construction contracts requiring grading and soil compaction qualify for the completed-contract method of accounting.
The IRS is permitting some taxpayers to use a safe-harbor method of accounting for determining whether expenditures paid or incurred to remodel are deductible or must be capitalized.
A new safe harbor allows retail and restaurant taxpayers to deduct 75% of qualifying expenditures for remodeling qualified buildings and capitalize just 25%.
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."
In determining whether a contract qualifies as a home construction contract, taxpayers may include costs attributable to common improvements and development of infrastructure in the estimated costs. However, the IRS and taxpayers have long disagreed as to whether these costs are included in the tests for determining the date a contract is complete.
Rev. Proc. 2010-44 resolves some of the issues raised by TAM 200736026 involving UNICAP issues affecting automobile dealerships; specifically, whether the installation of parts on customer-owned vehicles, and on taxpayer-owned vehicles, constitutes “production” for purposes of the UNICAP regulations.
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.
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.
In a recent private letter ruling, the IRS determined that a publicly regulated utility is entitled to claim benefits under Sec. 1341 for amounts paid to a purchaser of electricity to settle claims asserted against predecessor members of the publicly regulated utility’s affiliated group.
The IRS has applied the all-events test for income recognition to service contacts that were subject to the Federal Acquisition Regulations.
The IRS issued proposed regulations expanding the types of contracts eligible for the home construction contract exemption from the percentage of completion method and amending the rules for taxpayer-initiated changes in methods of accounting to comply with Sec. 460 and the regulations thereunder.
A homebuilder’s home construction contracts are exempt from the long-term contract provisions of Sec. 460 and so are not subject to the percentage of completion method for regular tax or AMT purposes or to the lookback rules for either regular tax or AMT purposes. Further, a home construction contract is exempt from the cost allocation rules of Sec. 460.
The IRS has provided automobile resellers the option to use an alternative dollar-value last-in, first-out (LIFO) pooling method.