The IRS has issued new regulations for determining whether amounts paid to acquire, produce, or improve tangible property may be currently deducted as business expenses or must be capitalized. The regulations will affect virtually all taxpayers that acquire, produce, or improve tangible property. Comprehensive and voluminous, the regulations virtually rewrite the rules in this area. For example, they provide detailed definitions of “materials and supplies” and “rotable and temporary spare parts.” They prescribe new rules for elective de minimis and other optional methods for handling their cost. They also have rules for differentiating between deductible repairs and capitalizable improvements, among many other items. The regulations generally are effective in tax years beginning after Dec. 31, 2011. However, to add to their complexity, some of the new rules in the regulations do not supersede prior IRS guidance.
As you make decisions regarding your fixed asset purchases or improvements, you may want to ask your Las Vegas CPAs about the tax consequences regarding these planned investments. As always, feel free to contact a professional at Wallace Neumann & Verville, LLP for guidance on the new rules for deducting or capitalizing tangible property costs.
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