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IRS Suspends Audits on Repair vs. Capitalization Issue

As the final “repair regs” are being drafted, The IRS has put a moratorium on audits relating to several of the issues being addressed in the new regulations.  For years beginning before Jan. 1, 2012, IRS agents have been instructed to not examine the issue of:

  • Whether repair costs incurred to maintain, replace or improve tangible property must be capitalized under Sec. 263(a); and
  • Related issues involving the disposal of structural components of a building or dispositions of tangible property.

Final regulations are expected in June or July of this year.