- Expect to issue final regulations regarding the deduction and capitalization of expenditures related to tangible property in 2013
- Anticipate that the final regulations will contain changes from the 2011 temporary regulations (see TaxNewsFlash-United States 2011-635)
- Anticipate that the final regulations will apply to tax years beginning on or after January 1, 2014, and will permit taxpayers to apply the final regulations to tax years beginning on or after January 1, 2012
Notice 2012-73 [PDF 31 KB] also states that amendments to the 2012 temporary regulations will be issued so that:
- The temporary regulations apply to tax years beginning on or after January 1, 2014.
- Taxpayers may apply the temporary regulations for tax years beginning on or after January 1, 2012, and before the applicability date of the final regulations.
Background
Treasury and the IRS issued temporary regulations regarding the deduction and capitalization of expenditures related to tangible property in late December 2011, and withdrew 2008 proposed regulations and published new proposed regulations (2011 proposed regulations) that cross-referenced the temporary regulations.
The temporary regulations generally apply to tax years beginning on or after January 1, 2012.
Today’s notice also states that Treasury and the IRS received numerous written comments on the 2011 proposed regulations and at a public hearing on May 9, 2012.
Final regulations expected in 2013
Today’s notice states that Treasury and the IRS expect to publish in 2013 final regulations on the tax treatment of amounts paid to acquire, produce, or improve tangible property under sections 162 and 263(a), and on the accounting for, and disposition of, property subject to section 168.
It is expected that the final regulations will apply to tax years beginning on or after January 1, 2014, and will permit taxpayers to apply the provisions of the final regulations to tax years beginning on or after January 1, 2012.
Notice 2012-73 provides notice that certain sections of the temporary regulations—including the sections listed below—may be revised in a manner that might affect, and in certain cases simplify, taxpayers’ implementation of the rules when the regulations are issued in final form.
- De minimis rule - Reg. section 1.263(a)-2T(g);
- Dispositions - Reg. sections 1.168(i)-1T and 1.168(i)-8T; and
- Safe harbor for routine maintenance - Reg. section 1.263(a)-3T(g).
The revisions being contemplated would take into consideration all comments received, including comments requesting relief for small businesses.
Amendments to temporary regulations on effective date provision
Shortly after publication of Notice 2012-73, a Treasury Decision is to be published in order to amend the 2011 temporary regulations so that they apply to tax years beginning on or after January 1, 2014, and also to permit taxpayers to choose to apply the temporary regulations to tax years beginning on or after January 1, 2012, and before the applicability date of the final regulations.
Automatic consent of Commissioner
Notice 2012-73 states that taxpayers choosing to apply the provisions of the temporary regulations to tax years beginning on or after January 1, 2012, and before the applicability date of the final regulations, may continue to obtain the automatic consent of the IRS Commissioner to change their methods of accounting under Rev. Proc. 2012-19 and Rev. Proc. 2012-20.
For taxpayers choosing to apply the provisions of the final regulations to tax years beginning on or after January 1, 2012, Treasury and the IRS expect to publish procedures for obtaining automatic consent to change a method of accounting when the final regulations are published.