Tax Alert

ALERT: IRS simplifies compliance with
tangible asset and repair regulations

February 17, 2015

The IRS announced on Friday, Feb. 13, that it would allow businesses with total assets of less than $10 million or average annual gross receipts of $10 million or less for the prior three taxable years to comply with the new regulations without filing Forms 3115 for 2014 tax year returns.

government picture

This simplification does not provide audit protection for prior years.

Though this option is available, consideration should still be given to filing Forms 3115 for accounting method changes resulting in adjustments for:

  • Compliance with required depreciation lives and methods
  • Proper expensing or capitalization of repairs and maintenance
  • Claiming benefits of prior year partial dispositions
  • Removal costs
  • Materials and supplies

It's important to talk with your tax professional as soon as possible to determine whether your organization will benefit by making accounting method changes related to the "repair regs" - and if you choose not to do so, to understand any potential risk involved.

If you have not already been contacted by your AGH tax professional, please call as soon as possible so we can talk through your options and help you determine the pros and cons for your individual situation.

To get a clearer picture of how these changes may affect your organization, please contact your AGH tax professional, or AGH senior vice president Shawn Sullivan.

Shawn Sullivan

Senior Vice President
Tax Services

Shawn serves as one of two primary leaders in the firm’s large tax group. He has extensive public and private experience in the fields of tax and accounting and works frequently with clients in the manufacturing, wholesale/retail distribution, real estate development and management, construction, and contractor industries. In addition to enhancing business performance to minimize tax consequences, he has experience in mergers and acquisitions and international tax and business structuring.

A certified public accountant, Shawn is a member of the American Institute of Certified Public Accountants, the Kansas Society of Certified Public Accountants (KSCPA) and chairs the KSCPA Committee on Taxation.

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NOTE: Any advice contained in this material is not intended or written to be tax advice, and cannot be relied upon as such, nor can it be used for the purpose of avoiding tax penalties that may be imposed by the IRS or states, or promoting, marketing or recommending to another party any transaction or matter addressed herein.