IRS issues fixed asset repair guidelines
December 27, 2011
The Internal Revenue Service (IRS) recently released regulations pertaining to fixed asset
property repairs under Section 263(a) of the Tax Code.
Accounting Today reports that the guidelines could affect manufacturers, retailers, utilities, telecommunication companies and other types of businesses. Specifically, they clarify and expand 263(a) standards with regard to fixed asset repairs and improvements.
Susan Grais, executive director of Ernst & Young's Federal Tax Services Group in Washington, D.C., told the news source that the regulations are "probably the most broad-ranging guidance in terms of the breadth of the new rules and the taxpayers that they may affect across industries." She added that they are likely "the most comprehensive set of rules issued related to fixed asset accounting
for federal tax purposes, in my view, since the 1986 Tax Reform Act."
Grais noted that the regulations address whether repairs are alternatively currently deductible, as well as how asset retirement should be taken into account.
Due to the complexities of fixed asset management
, the IRS is considering allowing companies to choose which year they adopt the new guidelines. Some fixed asset software
offerings will update themselves automatically - including Sage FAS Fixed Asset Accounting Software
- making the process easier for businesses.