Tangible changes — Revised IRS regs address deducting vs. capitalizing property

Description

Abstract: Early in 2012, the IRS released its much-anticipated revised regulations on the tax treatment of expenditures related to tangible property. The regulations address when expenses related to tangible property can be fully deducted in the current year (which creates an immediate tax benefit) vs. when they must be capitalized (which creates a series of smaller deductions over a period of years). This article discusses changes to the definition of “materials and supplies,” the distinction between “repaired” vs. “improved” property, and how to handle “functionally interdependent” building components. A sidebar discusses an exception to the capitalization requirement for certain property acquisitions.