New guidance for individuals and businesses from the IRS on compliance rules and regulations for acquiring, maintaining, repairing, and replacing tangible property (T.D. 9636) is providing important answers – while still raising some questions.
These much-anticipated regulations provide many taxpayer-friendly changes to the 2011 temporary measures and have an effective date of January 1, 2014. Certain retroactive elections are also available. For all taxpayers, the regulations spell out key differences between expensing and capitalizing, which can mean the difference between an immediate tax deduction at full value versus a deduction that is spread out over five, ten, fifteen, and twenty years or more.
"Although they're designed to be a simplified version of the current rules and generally more favorable to taxpayers, it may be a challenge to comb through more than 200 pages of these new regulations to ensure full compliance by deadline," said CCH Senior Federal Tax Analyst George Jones, JD, LLM. "The retail, manufacturing, and hospitality industries may be especially impacted because every business that has some fixed assets, so really the vast majority, must be in compliance when the new regulations go into effect."
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