What Are the Areas of Benefit?

Four categories of expenditures have been specifically identified and defined by the final regulations, which provide an opportunity for expense treatment. Determination of whether or not compliance has been met is the key. In order to comply, expenditures may satisfy any one of the four below categories:

De minimis safe harbor - Either: (1) $5,000 limitation (taxpayer has an Applicable Financial Statement (AFS)); or (2) $2,500 limitation (without an AFS)
Routine maintenance safe harbor
Materials and supplies
Partial dispositions

In addition to the above categories, a second major area of opportunity under the final regulations exists for taxpayers who incur costs to remodel or repair assets. Those taxpayers must apply guidance provided related to areas defined in the final regulations as betterments, adaptations or restorations. Costs for the following types of activities often may be able to take advantage of the new regulations and receive expense treatment:

Remodeling Costs
Roof repairs	Replacement of doors & windows
Parking lot repairs	Replacement of ceilings
HVAC repair or replacement	Regular maintenance
Refresh store appearance	Removal of walls

In summary, a properly implemented tangible asset repair study, also commonly known as a repair regulation study or fixed asset review study, provides the following benefits:

Current year cash flow savings from identification of expenditures made during the current year which qualify for expense treatment
Implementation of capitalization policies & procedures to maximize benefits utilizing safe harbor rules
Identify and adopt accounting methods that meet requirements of new regulations and maximize current and future deductions of repair and maintenance expenditures
Minimize non-compliance risk