The Final Repair Regulations
The IRS issued comprehensive Repair Regulations regarding the deduction and capitalization of expenditures related to tangible property. The regulations are commonly known as the Repair Regulations or the Tangible Property Regulations. The regs are applicable to businesses in all industries that acquire, produce, replace or improve tangible property. Application of the new Repair Regulations requires an in-depth understanding of various tax cases and circumstances that must be met. KBKG is ready to identify and claim your missed deductions and help you conform to the new Repair Regulations. Our experts have been educating tax professionals with seminars and webinar, and helping businesses retroactively claim any missed deductions.
Who can benefit from a Repair Regulations Study?
The Repair Regulations mostly affect real property, and can provide significant benefits even if a cost segregation study has already been performed. IRS procedures allow you to apply these rules retroactively and claim any missed deductions using Form 3115. Correcting these errors is considered an Automatic Change of Accounting Method and does not require amending any returns.
Generally, anyone that has incurred significant costs for renovations to their existing property in the last 15 years is an ideal candidate. The original improvements should be placed in service for at least one year before renovations occur. KBKG recommends a formal study if at least $500,000 or more is spent on renovations.
Significant changes to Rules
Whether building expenditures are capital improvements or repair expenses.
Write-off structural components of buildings when retired or demolished.
“Plan of Rehabilitation Doctrine” is now obsolete!
Updates to the Tangible Property Repair Regulations Webinar
Repair Regs Resources
» Gian’s commentary on the Final Tangible Property Repair Regulations on Accounting Today
Blue inc acquires an office building for $5M. Five years later they spend $1M to remodel the second floor. KBKG engineers perform an Asset Retirement Study and identify $450,000 of 39 year life items that were removed during the remodel. This might include things like lighting, drywall, doors, floor coverings, acoustic ceilings, etc.
Results: $400,477 of additional deductions on current year return.
Green inc capitalized all $4M of "renovation" costs to their building four years ago. KBKG engineers find that $300,000 was used to replace certain windows, asphalt patchwork, painting, roof tiles, some plumbing fixtures and one HVAC unit. KBKG determines all these costs are repair expenses.
Results: Filing Form 3115 and claiming an additional $266,985 of deductions
Meet the Experts
KBKG experts have years of experience and are published authors and national speakers on tax issues.