Additional Guidance on Final Repair Regulations

The IRS has released Rev. Proc. 2014-16, which provides further guidance regarding the final repair regulations issued last September.

The procedure details automatic consent for making accounting method changes related to final repair regulations and for changing to a reasonable UNICAP method for self-constructed assets. It also details procedures for changing to a permissible method for costs related to real property acquired through foreclosure, by deed in lieu of foreclosure, or in another similar transaction.

Rev. Proc. 2014-16 modifies and supersedes previous procedures regarding changes to amounts paid to acquire, produce, or improve tangible property. All taxpayers must apply the final repair regulations beginning with their first tax year that begins on or after Jan. 1, 2014; however, a taxpayer is also allowed to apply either the final or temporary regulations to the 2012 or 2013 tax years.

To find out how the new repair and capitalization regulations will affect you, contact your BDO professional.