Tangible Property Regulations

Source: Guidance Regarding Deduction and Capitalization of Expenditures Related to Tangible Property

BackgroundExplanation of Provisions

I. Overview

II. Materials and Supplies Under §1.162-3A. Definition of materials and suppliesB. Election to capitalize certain materials and suppliesC. Optional method for rotable and temporary spare partsD. Materials and supplies under the de minimis safe harborE. Property treated as materials and supplies in published guidance

III. Repairs Under §1.162-4

IV. De Minimis Safe Harbor Under §§1.263(a)-1(f) and 1.162-3(f)A. De minimis safe harbor ceilingB. Taxpayers without an applicable financial statementC. Safe harbor electionD. Written accounting proceduresE. Application to consolidated group membersF. Transaction and other additional costsG. Materials and suppliesH. Coordination with section 263AI. Change in accounting procedures not change in method of accounting

V. Amounts Paid to Acquire or Produce Tangible Property Under §1.263(a)-2

VI. Amounts Paid to Improve Property Under §1.263(a)-3A. OverviewB. Determining the unit of propertyC. Unit of property for leasehold improvementsD. Special rules for determining improvement costs1. Costs incurred during an improvement2. Removal CostsE. Safe harbor for small taxpayersF. Safe harbor for routine maintenance1. Buildings2. Other Changes3. Reasonable Expectation that Activities Will be Performed More than Once4. Amounts Not Qualifying for the Routine Maintenance Safe HarborG. Betterments1. Overview2. Amelioration of Material Condition or Defect3. Material Addition or Increase in Productivity, Efficiency, Strength, Quality, or Output4. Application of Betterment Rule5. Retail Store Refresh or RemodelsH. Restorations1. Overview2. Replacement of a Major Component or Substantial Structural Parta. Definition of major component and substantial structural partb. General rule for major component and substantial structural partc. Major component and substantial structural part of buildings3. Casualty Loss Rule4. Salvage Value Exception5. Rebuild to Like-New ConditionI. Adaptation to a new or different use

VII. Optional Regulatory Accounting Method

VIII. Election to Capitalize Repair and Maintenance Costs

IX. Applicability Dates

X. Change in Method of Accounting

Special AnalysesStatement of Availability for IRS Documents

Adoption of Amendments to the Regulations