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I D E A S T O H E L PG R O W Y O U RB U S I N E S S©Copyright2013.CBIZ,Inc.NYSEListed:CBZ.Allrightsreserved.In late Decemb...
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Tangible Property Regulations: Is Early Adoption Right for You?

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In late December 2011 new tangible property regulations were issued by the IRS to guide taxpayers on how to account for amounts paid to acquire, produce or improve tangible property. Originally scheduled to be effective for tax years beginning on, or after, January 1, 2012, mandatory compliance with the new regulations has been delayed to tax years beginning on, or after, January 1, 2014. Despite the delay, certain taxpayers may benefit from early adoption of all or select provisions in the regulations. This article identifies key triggers that can help determine whether early adoption is right for your company.

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Transcript of "Tangible Property Regulations: Is Early Adoption Right for You?"

  1. 1. I D E A S T O H E L PG R O W Y O U RB U S I N E S S©Copyright2013.CBIZ,Inc.NYSEListed:CBZ.Allrightsreserved.In late December 2011 new tangible property regulationswere issued by the IRS to guide taxpayers on how toaccount for amounts paid to acquire, produce or improvetangible property. Originally scheduled to be effective for taxyears beginning on, or after, January 1, 2012, mandatorycompliance with the new regulations has been delayed totax years beginning on, or after, January 1, 2014.Despite the delay, certain taxpayers may benefit fromearly adoption of all or select provisions in the regulations.Regardless of whether early adoption is right for yourcompany, it is expected that most companies will incuradditional expenses next year in complying with the newregulations. The following questions identify key triggersthat can help determine whether early adoption is right foryour company.Does your company own a building?If you have replaced a significant component of yourbuilding, you may be able to write off the old componentstill sitting on your books. You also may be able to usegeneral asset accounts to group types of expenditurestogether, potentially increasing the ability to deduct similarfuture expenditures as repairs.Has your company recently completed renovationor expansion projects to your buildings?You should have your records reviewed to ensurethat replaced components are written off and that newexpenditures are depreciated over the shortestperiod allowable.Does your company acquire many small-dollar fixedassets on an annual basis?If you have an applicable financial statement andhave expensed property costing below a specifiedamount, the de minimis rule may allow you to deductexpenditures below the de minimis cap instead ofcapitalizing them.Does your company accumulate large expenditures tomaintain equipment?You may be able to use the de minimis rule or theroutine maintenance safe harbor to increase your currentdeductions or at least deduct them with more certainty.The new regulations provide favorable rules to correct anyimpermissible methods that are used in accounting formaterials and supplies.Does your company have Net Operating Losses (NOLs)?Early adoption of the tangible property regulationsbased on the facts and circumstances described above aretypically negated if you have NOLs. Consult your tax providerregarding your specific circumstances. our business is growing yoursTax & AccountingTangible Property Regulations: Is Early Adoption Right for You?Article reprinted from Summer 2013GROWTHBIZS T R A T E G I E SMICHAEL FINNEGANCBIZ MHM, LLC • Phoenix, AZ602.264.6835 • mfinnegan@cbiz.com

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