Expense or capitalize? New repair regulations offer guidance for contractors
Abstract: For years, contractors have struggled to determine whether certain costs may be expensed for tax purposes (that is, deducted currently) or if they must be capitalized and depreciated. Recently, the IRS issued long-awaited final regulations on this subject, known as the “Repair Regs.” This article reviews some of the highlights as they pertain to buildings and to materials and supplies. A sidebar explains how contractors can use this knowledge to help customers with their own tax strategies.