ALERT: IRS simplifies compliance with tangible asset and repair regulations

Shawn Sullivan

ALERT: IRS simplifies compliance with tangible asset and repair regulations

By Shawn Sullivan
AGH Specialized Tax Solutions
February 17, 2015

The IRS announced on Friday, Feb. 13, that it would allow businesses with total assets of less than $10 million or average annual gross receipts of $10 million or less for the prior three taxable years to comply with the new regulations without filing Forms 3115 for 2014 tax year returns.

This simplification does not provide audit protection for prior years.

Though this option is available, consideration should still be given to filing Forms 3115 for accounting method changes resulting in adjustments for:

Compliance with required depreciation lives and methods
Proper expensing or capitalization of repairs and maintenance
Claiming benefits of prior year partial dispositions
Removal costs
Materials and supplies

It's important to talk with your tax professional as soon as possible to determine whether your organization will benefit by making accounting method changes related to the "repair regs" - and if you choose not to do so, to understand any potential risk involved.

If you have not already been contacted by your AGH tax professional, please call as soon as possible so we can talk through your options and help you determine the pros and cons for your individual situation.

To get a clearer picture of how these changes may affect your organization, please contact your AGH tax professional, or AGH executive vice president Shawn Sullivan.

Any discussion of tax matters contained herein is not intended or written to be tax advice, and cannot be relied upon as such, nor can it be used for the purpose of: (i) avoiding tax penalties that may be imposed by the IRS or states, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. If you seek definitive tax advice on a matter, please request a written tax memorandum from your AGH tax advisor.