The proposed regulations affect taxpayers who are "producers or resellers" of property and allocate the costs under the simplified production method or the simplified resale method, the IRS notice reads. The proposal specifically relates to Section 263A and the treatment of additional negative costs under those methods.
Comments are being accepted on the proposal through December 4, 2012, and can be submitted electronically on the regulations.gov website.
For the first time, taxpayers involved in corporate reorganizations or tax-free liquidations under Section 381(a) can make an automatic accounting method change for the taxable year of the transaction. Also, electricity companies will get more time to seek automatic accounting method changes.
Under a further change, designers of energy-efficient commercial building properties that have received a tax deduction under Section 179D generally will not be eligible to apply for an automatic change to their accounting method.
In response, Walker Reid Strategies, a Florida engineering firm that specializes in the Section 179D tax deductions, issued a statement that said the change "creates immediate urgency for the designers of energy-efficient commercial buildings who are in the process of utilizing, or looking to utilize, the Section 179D tax incentive to lower tax liability."
The firm went on to say",For properties placed into service in a prior taxable year, the designer must file an amended return for that taxable year in order to claim the section 179D deduction. Unlike property owners who can go back as far as 2006, this requirement limits how far back a designer can take advantage of the 179D deduction to open tax years only (generally three years)."