Effective date of tangible property regs. delayed

February 1, 2013

The IRS delayed the mandatory effective date of temporary regulations it issued in December 2011 governing whether tangible property expenses can be deducted or have to be capitalized (T.D. 9564). The temporary regulations originally were to apply to tax years beginning on or after Jan. 1, 2012. In response to numerous comments from taxpayers, in December 2012 the IRS amended the temporary regulations to make them apply to tax years beginning on or after Jan. 1, 2014, instead, but will allow taxpayers to apply the temporary regulations for tax years beginning on or after Jan. 1, 2012, and before the applicability date of final regulations. This makes the use of the temporary regulations optional until 2014. The IRS expects to finalize the regulations in 2013. In Notice 2012-73, the IRS said the final regulations also are expected to apply to tax years beginning on or after Jan. 1, 2014, although taxpayers may choose to apply them to tax years beginning on or after Jan. 1, 2012.

The IRS, recognizing that many taxpayers are expending resources to comply with the temporary regulations, also announced in Notice 2012-73 that when the final regulations are published, the following rules will be revised to simplify them:


The IRS did not specify how these rules would be simplified, but it did note that it would take into consideration comments requesting relief for small businesses.

Taxpayers who choose to apply the rules in the temporary regulations for tax years beginning on or after Jan. 1, 2012, can use the procedures in Rev. Procs. 2012-19 and 2012-20 to obtain automatic consent to change their accounting method. For taxpayers who choose to apply the provisions of the final regulations to tax years beginning on or after Jan. 1, 2012, the IRS says it will publish new automatic consent procedures when the final regulations are issued.

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