New IRS Repair Regulations require property owners to account many repairs that were previously an expense must now be capitalized.

What does this mean for a property owner? How can you easily determine what qualifies for an expense versus a capital improvement?

I talked with Jonathan McGuire of AKT CPA’s for an in depth look at what changed and how can property owners easily account for the new repair regulations.

Download the flowchart to follow along: https://qc115.infusionsoft.com/app/form/repairregulationsflowchart

We discuss:

History of the IRS Repair Regulations

The ruling stems from a 2003 Federal Court case FEDEX vs IRS in which FEDEX argued the engines were not a Unit of Property, UOP. The repairs were incidental and necessary expense.

How much can be expensed for routine maintenance?

The current safe harbor limit is $2,500 for routine maintenance

What is a Unit of Property?

What are Capitalization Standards?

The give back: Partial Asset Disposals

The new regulations allow for expensing of a system asset that has not been fully depreciated in the year of replacement and recapitalization.

Jonathan’s article in The Tax Advisor magazine: http://www.thetaxadviser.com/issues/2015/dec/long-term-tax-benefits-of-partial-disposition-election.html .

For more go to:

https://www.aktadvisors.com/

jmcguire@aktcpa.com

CREPN #61 - Repair Regulations with Jonathan McGuire

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