Growing Your Business

October 15 Deadline for Taking Advantage of Tangible Property Regulatory Changes is Fast Approaching

October 15 Deadline for Taking Advantage of Tangible Property Regulatory Changes is Fast Approaching

Among the most important changes made to the tangible property regulations is the ability to retroactively adopt the benefits that they offer. If you are not familiar with these changes, they provide the opportunity for business owners to write off those expenses that you have capitalized in previous years as long as they have not exceeded the three-year statute of limitations. Where in previous years capital expenses have needed to be depreciated over a period of either 29 ½ or 31 ½ years, under the new regulations these expenses are fully deductible in the year that the expense took place. So if you replaced a roof on a rental property at a cost of $6,000 in the year 2012 and had been taking small deductions each year, you are now able to notify the government that you wish to retroactively adopt the new regulations and can expense any costs that remain undepreciated as an expense on your 2014 tax return. However, in order to take advantage of this opportunity, you must do so no later than October 15th, which is fast approaching.

There are a number of advantages offered by the new regulations. In addition to being able to write off an entire expense, you can also take a partial disposition. To understand this benefit, let's look at the previous example of having replaced the roof. If instead of replacing the entire roof you had only needed to replace a portion of the existing roof, in previous years you were required to depreciate the remaining undepreciated value of the replaced roof along with the rest of the building and the part of the roof that was not replaced. Now, however, you are able to count the undepreciated value of the existing roof along with the portion that was replace as a fully deductible expense in the year that the partial repair took place.

These new regulations are applicable to all types of tangible business assets, but in order to take advantage of them retroactively for expenses within the last three years, it is necessary to take affirmative action by the extended deadline for 2014 taxes, which is October 15th. Failure to do so simply prevents you from taking advantage of the change retroactively – you will automatically default to the new rules going forward.

Those who wish to take advantage of the new regulations retroactively can do so by filing a completed IRS Form 3115 and attaching it to your 2014 tax return if you have not previously filed, or an amended 2014 tax return if you have.

share this post
Search for matches...
Jeffrey Mathews

Jeffrey Mathews

Jeffrey B Mathews CPA, LLC provides Sulphur and Lake Charles accounting services for small to medium businesses. We serve companies throughout Louisiana, Texas and beyond with our virtual CFO and outsourced accounting plans. Look to us for help with your business accounting,payroll, and advisory services -- all for an affordable, fixed rate plan. Our satisfied clients includes companies across start-ups, medical, professional, technical, retail, and service industries. Our services will include helping you with cash flow management, budgeting, senior-level financial decision making, creating a tax strategy and reviewing your insurance policies in order to ensure that you are well-protected. With our meticulous attention to detail, we help to make sure that you understand what is happening with your accounting process and financial plan at every turn. We will make sure that our role as part-time chief financial officer translates into full-time confidence. Locations served include Lake Charles, Lafayette, and Baton Rouge from our CPA firm headquartered in Sulphur, La and other locations coming soon.

JEFFREY B. MATHEWS, CPA, LLC
0 reviews

Out of US

Recommended Professionals

In the face of economic uncertainty, TaxBuzz is the industry's most up-to-date tax information.

Join 60,000 who get our weekly newsletter. No spam.

We know tax and accounting issues are complicated.

Do you have additional questions on this topic for this author?

Related Posts

Latest Posts