What are the Tax Deduction Opportunities for my Company?

November 20, 2014

What are the Tax Deduction Opportunities for my Company?
Repair Regulations Update

In our prior repair regulations articles we provided an overview and briefly explained the complexity and potential difficulties with complying with these new rules. Not necessarily happy news. In this article we try to be more upbeat and will explain some favorable aspects of the new regulations that may actually result in current tax savings.

As is usually the case with new tax rules, in addition to restrictions there often opportunities for taxpayers to enjoy some benefits. We believe some aspects of the new repair regulations may provide some tax benefits to businesses.

The new regulations and related IRS pronouncements allow businesses to review their records to determine if there are prior costs that were capitalized and depreciated under the old rules but may have been currently deductible under new rules. If that is the case, it may be possible to file a “change in accounting method” with respect to those costs and claim a current year tax deduction for the remaining cost basis of the applicable assets. Examples of potentially applicable items include building repairs that may be currently deductible under new rules or assets that could have a shorter depreciable life then was used originally.

The IRS has indicated that accounting method changes to recoup remaining basis will only be allowable in 2014.  Therefore, this is an issue that will need to be address prior to or during the preparation of the tax returns for 2014.

Herbein will assist clients in reviewing their depreciation records to determine if there are opportunities to file a change of accounting method to take advantage of this potentially favorable rule. For more information, contact Barry D. Groebel, CPA or download the full whitepaper below.