Expense vs Capitalize? Tangible Real Property Regulations
The question is not “what is new?” but “what is not new?”
The world of acquiring, repairing, renovating, and improving a building has changed. In 1986, dividing a building into its various components was “out-lawed.” As time went by, building owners were able to have Engineering Studies performed and values were assigned to various components of the building for depreciation purposes.
The IRS has finalized their Tangible Property Regulations and we have NEW RULES. Instead of components, we have “Building Systems” and “Units of Property.”
Those persons/companies that acquire or build improvements on real estate may have elections to make, and new definitions for the improvements, renovations, adaptations, and betterments of their buildings.
Which brings us to the new rules on when an amount may be expensed or is required to be capitalized.
In this course you will learn the definitions of:
- Maintenance vs. Improvements
Included are discussions on:
- Building Systems
- Unit of Property
- Safe Harbors
- When building a building, how to separate the costs between Building Systems.
- If a change to a Building System is a cost to be expensed or is required to be capitalized.
- If a change to a Unit of Property is a cost to be expensed or is required to be capitalized.
- What elections are still available to you?
Chuck Borek is a practicing attorney and founder of the Borek Group, LLC. Chuck is also a CPA, and his background includes five years as a partner in a public accounting firm. He received his law degree and MBA summa cum laude from the University of Baltimore in 1993, where he was editor-in-chief of the Law Review. He has been teaching professionally since 1989, including four years as an Associate Professor of Accounting and two years as a Visiting Assistant Professor of Law. He ha... View Full Profile