Tax Alert

IRS Issues Examination Guidance for Tangible Property Regulations
(April 8, 2013)

The IRS issued a directive to the Large Business and International (LB&I) Division on Mar. 22, 2013, providing revised examination guidelines for cases involving repair costs and other issues addressed in the tangible property regulations.

The guidelines direct LB&I agents generally to exclude examination of repair and maintenance cost capitalization issues until the 2014 tax year. However, if the taxpayer has filed to change the accounting method for repair and maintenance costs, or the treatment of the repair and maintenance costs is addressed in guidance separate from the tangible property regulations, under the new examination guidelines the audit may include those items.

The new LB&I guidelines were developed in response to Notice 2012-73. This notice indicated that final tangible property regulations would be issued in 2013, effective for tax years beginning on or after Jan. 1, 2014. In response, the proposed and temporary tangible property regulations were subsequently updated, changing their effective date to Jan. 1, 2014.

Additional information about Notice 2012-73 can be found in this previously published Crowe Tax Alert.


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