What You Need to Know About Repair Regulations

Tax Law and News Granite statue of lion with building background. Short depth-of-field, focus on mouth.

Chances are you have clients who need more information on the somewhat complicated tangible property or repair regulations.

The tax code allows an owner to deduct all ordinary and necessary expenses incurred to carry on a trade or business, including the costs of materials, supplies, repairs and maintenance. However, the taxpayer is required to capitalize the costs of acquiring, producing and improving tangible property, regardless of the size or the cost incurred.

On Sept. 17, 2013, the U.S. Department of the Treasury issued regulations that combined existing case law and other authoritative sources into formal guidance to help determine whether costs are currently deductible or need to be capitalized. These regulations also provide some simplifying provisions and elections.

Please refer to the IRS’ Tangible Property Regulations – Frequently Asked Questions for a recap and explanation of these repair regulations.

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