On December 27, 2011 the IRS issued comprehensive guidance, in the form of temporary regulations, on the tax treatment of costs incurred to acquire, repair, or improve tangible property. These regulations are commonly referred to as the “repair” regulations. (Marcum provided a detailed analysis of these regulations earlier this year and can be found at this link.) It is likely these regulations will apply to nearly all taxpayers.
On November 20, 2012 the IRS and Treasury issued Notice 2012-73 delaying the effective date of the temporary regulations issued December 27, 2011. The effective date of the temporary regulations will be amended to apply to taxable years beginning on or after January 1, 2014, but taxpayers will be permitted to apply the temporary regulations for tax years beginning on or after January 1, 2012. This means the use of the temporary regulations are optional until the final regulations are issued.
The IRS also announced that when the final regulations are published, some of the rules will be revised to simplify them. They are as follows:
- The de minimis rule;
- The rules for dispositions;
- The safe-harbor rule for routine maintenance.
The IRS did not say how these rules would be simplified, but it did comment that it would take in consideration comments requesting relief for small businesses.
Should you have any questions on how the new regulations may affect your or your business, please contact your Marcum Tax Advisor.