Steps to Ensure Compliance from the Start
Repair Regulations Update
Maintaining Compliance Will Involve a Series of Decisions
The new repair regulations are effective January 1, 2014. Therefore, during 2014 and prior to filing tax returns for years beginning in 2014 businesses need to consider how these rule affect their accounting for the acquisition of and repairs to business property. Initially, this process of analyzing and possibly rethinking your system to account for the new repair regulations may be painstaking and time-consuming. However, once set up correctly, there should be minimal future effort with compliance.
The following are items to consider when analyzing your compliance with the repair regulations:
- Have you determined whether current accounting policies need to be modified?
- Have you determined whether current accounting method needs to be changed?
- Is there a de minimis expense policy in place?
- What level of repair projects have you undertaken?
- Is there consideration into acquiring new property?
- Do you have a person on staff who is familiar with the new regulations?
- Do you frequently acquire property which would fit the de minimis safe harbor requirements?
- Do you have property or equipment that require significant routine maintenance and could qualify under routine maintenance safe harbor?
- Are the basis of your buildings less than $1 million and annual gross receipts less than $10 million, which would qualify for small taxpayer safe harbor?
Herbein has analyzed the regulations and has a good understanding of how they apply to businesses of all sizes. We can assist you in your determination of how the regulations will affect your business. In our next edition, we will discuss how there may be significant tax deduction opportunities for your company.
For additional information or questions contact Barry D. Groebel, CPA at bdgroebel@herbein.com.
