Capitalization of Tangible Property - IRS tax forms
Internal Revenue Service
Capitalization of Tangible Property
Treas. Reg. ? 1.263(a) and related regulations
Large Business and International
9/14/2016
Table of Contents
CHAPTER 1 EXAMINATION OF TANGIBLE PROPERTY .............. i
INTRODUCTION.................................................................................................................. 1 CAPITALIZATION OF TANGIBLE PROPERTY ? BACKGROUND ..................................... 1 FINAL REGULATIONS - OVERVIEW .................................................................................. 3 GENERAL TERMINOLOGY................................................................................................. 4
CHAPTER 2 COMPLIANCE CONSIDERATIONS ......................... 11
IMPLEMENTATION OF THE REGULATIONS................................................................... 11 CAPITALIZATION TO REPAIR STUDIES ......................................................................... 11 STAND DOWN................................................................................................................... 12 STATISTICAL SAMPLING ................................................................................................. 12 INDUSTRY SPECIFIC GUIDANCE.................................................................................... 13 COORDINATION WITH OTHER CODE SECTIONS ......................................................... 15 EXAMINATION CONSIDERATIONS ................................................................................. 19 INTERVIEW QUESTIONS ................................................................................................. 22
CHAPTER 3 UNIT OF PROPERTY................................................ 24
INTRODUCTION................................................................................................................ 24 DETERMINING THE UOP ................................................................................................. 24 BUILDINGS ........................................................................................................................ 26 PROPERTY OTHER THAN BUILDINGS ........................................................................... 29 COST SEGREGATION STUDIES...................................................................................... 31 IMPROVEMENTS TO PROPERTY.................................................................................... 31 ADDITIONAL RULES......................................................................................................... 32 AUDIT PROCEDURES ...................................................................................................... 33
i | Page
CHAPTER 4 AMOUNTS PAID TO ACQUIRE OR PRODUCE PROPERTY .................................................................................... 36
INTRODUCTION................................................................................................................ 36 GENERAL RULES ............................................................................................................. 36 EXCEPTIONS .................................................................................................................... 37 DEFENSE OR PERFECTION OF TITLE ........................................................................... 37 TRANSACTION COSTS .................................................................................................... 37 SPECIAL RULES ............................................................................................................... 39 AUDIT PROCEDURES ...................................................................................................... 40
CHAPTER 5 DE MINIMIS SAFE HARBOR ................................... 42
INTRODUCTION................................................................................................................ 42 SAFE HARBOR ELECTION............................................................................................... 42 SAFE HARBOR REQUIREMENTS AND LIMITATIONS.................................................... 43 APPLICABLE FINANCIAL STATEMENTS......................................................................... 45 ACCOUNTING POLICY ..................................................................................................... 45 ADDITIONAL RULES......................................................................................................... 47 EXCEPTIONS TO THE SAFE HARBOR ........................................................................... 48 ANTI-ABUSE RULE ........................................................................................................... 48 AUDIT PROCEDURES ...................................................................................................... 49
CHAPTER 6 IMPROVEMENT RULES ? BETTERMENTS ............ 52
IMPROVEMENTS IN GENERAL ....................................................................................... 52 BETTERMENTS ................................................................................................................ 52 APPLICATION OF THE BETTERMENT RULES ............................................................... 54 AUDIT PROCEDURES ...................................................................................................... 57
ii | P a g e
CHAPTER 7 IMPROVEMENT RULES ? RESTORATIONS .......... 60
IMPROVEMENTS IN GENERAL ....................................................................................... 60 RESTORATIONS ............................................................................................................... 60 REPLACEMENT OF A COMPONENT OF A UOP ? LOSS DEDUCTED (NOT A CASUALTY LOSS)............................................................................................................. 61 REPLACEMENT OF A COMPONENT OF A UOP ? GAIN/LOSS REALIZED AND BASIS ADJUSTED ........................................................................................................................ 62 REPLACMENT OF A MAJOR COMPONENT/SUBSTANTIAL STRUCTURAL PART OF A UOP ................................................................................................................................... 63 RESTORATION OF DAMAGE FROM A CASUALTY LOSS.............................................. 67 RETURNS THE UOP TO OPERATIONAL CONDITION ? AFTER DETERIORATED AND NON-FUNCTIONAL ........................................................................................................... 68 REBUILDS TO LIKE-NEW CONDITION ? AFTER THE END OF CLASS LIFE ................ 69 AUDIT PROCEDURES ...................................................................................................... 70
CHAPTER 8 IMPROVEMENT RULES ? NEW OR DIFFERENT USE ................................................................................................. 74
IMPROVEMENTS IN GENERAL ....................................................................................... 74 NEW OR DIFFERENT USE ............................................................................................... 74 AUDIT PROCEDURES ...................................................................................................... 76
CHAPTER 9 SAFE HARBORS ? SPECIAL RULES ? OTHER PROVISIONS .................................................................................. 78
INTRODUCTION................................................................................................................ 78 SAFE HARBOR FOR ROUTINE MAINTENANCE ............................................................. 78 SAFE HARBOR FOR SMALL TAXPAYERS...................................................................... 82 CERTAIN COSTS INCURRED DURING AN IMPROVEMENT.......................................... 84 SPECIAL RULES FOR REMOVAL COSTS....................................................................... 85 OPTIONAL REGULATORY ACCOUNTING METHOD ...................................................... 87
iii | P a g e
ELECTION TO CAPITALIZE REPAIR AND MAINTENANCE COSTS............................... 88 ELECTION TO DEDUCT OR CAPITALIZE EXPENDITURES UNDER OTHER IRC SECTIONS ......................................................................................................................... 89
CHAPTER 10 MATERIALS AND SUPPLIES ................................ 90
INTRODUCTION................................................................................................................ 90 AMOUNTS PAID TO ACQUIRE OR PRODUCE A UNIT OF PROPERTY ? EXCEPTION FOR MATERIALS AND SUPPLIES ................................................................................... 90 TIMING OF DEDUCTION FOR MATERIALS AND SUPPLIES.......................................... 90 DEFINITION OF MATERIALS AND SUPPLIES................................................................. 91 COORDINATION OF ?? 263(a) and 263A......................................................................... 92 ROTABLE, TEMPORARY, AND STANDBY EMERGENCY SPARE PARTS .................... 93 ELECTION TO CAPITALIZE AND DEPRECIATE ROTABLE, TEMPORARY, AND EMERGENCY SPARE PARTS .......................................................................................... 94 OPTIONAL METHOD OF ACCOUNTING FOR ROTABLE AND TEMPORARY SPARE PARTS ............................................................................................................................... 95 DE MINIMIS SAFE HARBOR ELECTION.......................................................................... 96 ACCOUNTING METHOD CHANGES AND EFFECTIVE DATES ...................................... 96 MATERIALS AND SUPPLIES SUMMARY......................................................................... 98 AUDIT PROCEDURES ...................................................................................................... 99
CHAPTER 11 LEASED PROPERTY ........................................... 102
INTRODUCTION.............................................................................................................. 102 LEASEHOLD IMPROVEMENTS UNDER THE FINAL REGULATIONS .......................... 102 COORDINATION WITH SECTION 263A ......................................................................... 103 LEASEHOLD IMPROVEMENT OR ACQUISITION OF TANGIBLE PROPERTY? .......... 103 LEASED BUILDING PROPERTY..................................................................................... 103 LEASED PROPERY OTHER THAN BUILDINGS ............................................................ 105 COST RECOVERY FOR LEASEHOLD IMPROVEMENTS ............................................. 106
iv | P a g e
................
................
In order to avoid copyright disputes, this page is only a partial summary.
To fulfill the demand for quickly locating and searching documents.
It is intelligent file search solution for home and business.
Related download
- depreciation recapture 1245 and 1250
- valuation of leasehold interests
- what is a capital expenditure
- repairs vs capital improvements do the final
- chapter 7 depreciation
- recent irs guidance for qualified improvement
- understanding improvements and betterments be
- internal revenue service memorandum irs tax forms
- capitalization of tangible property irs tax forms
- foster care placement stability rfp
Related searches
- state of michigan sales tax forms 2019
- state of michigan tax forms 2019
- michigan secretary of state tax forms 2019
- irs estimated tax forms 2020
- irs form 1040 tax forms for 2019
- irs tax forms 2019
- irs tax forms 2019 printable
- 2018 irs tax forms 1040
- irs tax forms 2020 printable
- irs tax forms 2017
- irs tax forms 2017 990
- 2020 irs tax forms printable