United States

IRS releases second component of tangible property transition guidance


The IRS has released the second of two revenue procedures (Rev. Proc. 2014-17) providing transitional guidance under the final and re-proposed tangible property regulations. This second revenue procedure provides guidance on complying with the re-proposed regulations covering the federal income tax treatment of dispositions of tangible property, as well as the treatment of assets included in one or more general asset accounts. Rev. Proc. 2014-17 provides automatic method change procedures to adopt both the temporary disposition regulations issued in December 2011 and the re-proposed regulations and supersedes Rev. Proc. 2012-20. 

Among other automatic method changes provided in the revenue procedure, Rev. Proc. 2014-17 provides that, for a certain transitional period, the IRS will treat the making of a late partial disposition election or the revocation of a general asset account election as an automatic accounting method change that may be accomplished through the filing of one or more Forms 3115. 

The re-proposed disposition regulations may be relied on for tax years beginning on or after Jan. 1, 2012, and before Jan. 1, 2014. It is anticipated that the regulations will be finalized with little to no substantive changes in the spring of 2014 for use by taxpayers in tax years beginning on or after Jan. 1, 2014.  

In the coming days, RSM will issue an additional alert with preliminary observations regarding the revenue procedure and a detailed analysis of and insights on the automatic method change procedures contained in Rev. Proc. 2014-17.

For more insight on the final regulations, see our whitepaper series on the final tangible property regulations:

The final tangible property regulations - Part I

Taxpayers should consider the opportunities and benefits of applying the final regulations to current tax years.

The final tangible property regulations - Part II

The tangible property regulations for acquisition and improvement costs provide opportunities to decrease or increase current year taxable income.

The final tangible property regulations - Part III

The regulations include carried over and new guidance intended to aide in applying the final improvement rules on a facts and circumstances basis.

The final tangible property regulations – Part IV

The proposed regulations increase flexibility in recognizing dispositions of MACRS assets that may reduce the need for general asset account elections.

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