Friday (February 13th), the IRS released guidance on tangible
property regulations (TPR) relief for small businesses. Requested by many
small businesses and tax professionals, the simplified procedure is available
beginning with the 2014 tax return.
Click here to view the announcement on irs.gov.
new guidelines state:
taxpayer can employ Rev Proc 2015-20 if it’s separate and distinct trade(s) or business(es)
is a qualifying taxpayer or has total assets of less than $10M as of the first
day of tax year 2014, or if it has average gross receipts of $10M or less. This
means that a taxpayer’s total businesses can be more than the limiting dollar
criteria and still qualify for Rev Proc 2015-20 if it’s separate and distinct
trade(s) or business(es) is a qualifying taxpayer or has total assets of less
than $10M as of the first day of tax year 2014.
taxpayer that does not file Form 3115s for 2014 defaults to the provisions of
Rev Proc 2015-20 which allow the taxpayer to adopt the new regulations without
filing Form 3115s for the available accounting methods.
taxpayer can amend its tax return for 2014, if it already filed with TPR Form
3115s, to withdraw those filed before the due date of the return including any
using Rev Proc 2015-20, a taxpayer reduces the administrative burden associated
with implementing the TPRs, but:
not receive audit protection for its tax years before tax year 2014 for the
issues addressed by the TPRs.
not scrub its depreciation schedule as of January 1, 2014 for repairs and
maintenance reclassification of prior year expenditures.
not claim any prior year partial asset dispositions under method #196, §6.33 of
Rev Proc 2015-14. (Note: Current year dispositions may still be claimed on the
tax return without filing a Form 3115).
- May not deduct removal costs on asset improvement.
Proc 2015-20 is optional for qualifying small businesses and taxpayers can
still choose to file the applicable Form 3115s and comply with the TPRs. We
recommend small businesses still file the applicable TPR Form 3115s where they
will have a favorable §481(a) adjustment. Please contact Teri M. Samples, CPA today to
discuss your specific situation and how these requirements could specifically
impact your 2014 return and beyond. We are here to help you navigate
through these guidelines and prepare for the tax deadline.