United States

Changes in tax rules related to deductible repairs and more


The temporary tax regulations issued in late 2011 define when taxpayers need to capitalize costs to acquire, maintain or improve fixed assets. The IRS and Treasury Department (the government) anticipate issuing these regulations in final form during 2013. Many manufacturing and distribution companies are currently capitalizing more costs than these new rules require.

In late 2012, the government announced a delay in the effective date of the regulations until taxable years beginning on or after Jan. 1, 2014, and provided rules for the optional early adoption of the temporary regulations. The two year delay of the effective date of the final regulations provides an opportunity for taxpayers to optimally plan and early adopt sections of the temporary regulations and selectively file automatic method change request for taxable years beginning after Dec. 31, 2011, depending on their facts, circumstances and tax planning objectives.

It is imperative that every manufacturing and distribution company take time now to determine how these rules may affect them, as well as what accounting method changes should be filed and when.

For a discussion of the rules and how they may affect your company, read the article titled Consider changes in tax rules for tangible assets and repairs.

For additional tax-related information that may have an impact on your business, visit McGladrey's tax services page.

In This Issue

Changes in tax rules related to deductible repairs and more

The future of Obamacare

McGladrey Monitor Update