Understanding the new tangible asset regulations
Though the temporary regulations defining the tax treatment of tangible assets and repairs have been out for several months, many financial and tax executives have not had the resources or time to assess how these new rules will impact their companies' tax filings and financial statements for 2012. This may be attributable to the relatively late enactment of the rules considering an initial 2012 effective date, as well as the rules' voluminous and complex nature. In addition, some aspects of the rules are still expected to change before being finalized in early 2013. Recognizing the constraints imposed by this timing, the IRS and Treasury recently delayed the effective date of the rules until 2014.
So what should companies do now? We suggest they begin assessing how the new rules impact their particular business situations. Now is the time to begin scoping which areas of the rules will result in tax benefits and what information and resources will be needed to implement the new rules once they are finalized. While the effective date may have been delayed, companies have the ability to selectively early adopt provisions of the regulations. Some companies have been surprised by just how beneficial some of the new provisions can be. For example, some have found savings by reviewing capitalization policies to identify routine maintenance costs, and by examining the historical treatment of components of buildings.
Please download our whitepaper "Understanding the New Tangible Asset Regulations" to learn more about these new rules as currently written, our observations about potential revisions and be sure to check back for future developments.
This article represents the views of the author or authors only, and does not necessarily represent the views or professional advice of McGladrey.
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