IRS to Create Repair vs. Capitalization Guidelines Specific to Retail Industry

Recently, the IRS and the Treasury Department announced that they have accepted a request from the National Retail Federation and Retail Industry Leaders Association for guidance under the IRS’ Industry Issue Resolution (IIR) program regarding the new Repair vs. Capitalization Regulations. The purpose of the IIR Program is to resolve frequently disputed business tax issues in a particular industry with the goal of reducing time and expenses that would otherwise have been expended on tax examinations.

The specific issues of note the retail industry requested clarification on are: Application of unit of property

• Repair and remodeling expenses
• Rules for general maintenance and repair expenses

» Read the IRS notice

KBKG will follow the progress of this IIR and keep you up to date with developments. The Repair vs. Capitalization Regulations are expected to be finalized in 2013 with an effective date of January 1, 2014. These regulations are applicable to businesses in all industries that acquire, produce, replace or improve tangible property. For more information on the Repair vs. Capitalization Regulations, please see prior commentary issued by KBKG here.

To find out if the new Repair vs. Capitalization regulations will benefit you, visit