What's New

IRS has issued final regs for tangible
property repairs vs. improvements

Who’s affected: Businesses that have made repairs or improvements to tangible property, such as buildings, machinery, equipment and vehicles.

Key changes: Costs incurred to acquire, produce or improve tangible property must be depreciated. But costs incurred on incidental repairs and maintenance can be expensed and immediately deducted. The final IRS regulations make distinguishing between repairs and improvements simpler. Here are some key provisions:

The final regs also address how to identify “units of property” when distinguishing repairs from improvements in relation to commercial buildings.

Planning tips: These are only some of the rules under the final regs, which apply to tax years beginning on or after Jan. 1, 2014. Contact your tax advisor to learn exactly how the final regs apply to you and ensure that you’re taking all of the repair and maintenance deductions you’re entitled to.