That's right Y'all this is another one of those quite game changers for owners of tangible property concerned about keeping the IRS at bay by actually adhering to the specific US Tax Code and subsequent IRS Revenue Procedures.
My apologies for being so brazen but I more than most appreciate the fact the the IRS compliance and enforcement functions demonstrated segregated profiling beyond reproach in these regards and that in deference to flaccid attempts at enforcement historically to date a 'hide your head in the sand' approach stood more than a coin toss chance of being successful as up until recently the IRS has been a day late and a dollar short assessing tax within the time frame allowed by statute.
However with the full blown implementation of the IRS' new modernized e-filing (MeF) system it is just a matter of time before the duck and cover strategy in these regards will be effectively addressed. So BEWARE!.
I also believe that the most efficient way to protect yourself against the IRS is to know the tax code, understand the procedures and stand your ground. With that IRS Revenue Procedure 2014-17 does an excellent job clarifying the tax implicated nuances associated with disposing of tangible property and IRS Revenue Procedure 2014-16 is the second part of the “repair regulations” that will provide guidance for those of you who acquire, produce or improve tangible property. Particularly significant is the fact that these documents provide guidance for automatic change procedures regarding:
- Depreciation of leasehold improvements;
- Changing from a permissible to another permissible method of accounting for depreciation of MACRS property;
- Disposition of a building or structural component; and
- Dispositions of certain tangible assets previously depreciated
So if you want to drill down, the linked revenue procedures above are where you need to go. Everything else on the internet regarding repair v. improvement it seems is for the most part conjecture. Stick with these procedures and you will be fine. Also, lean on your tax practitioner to make sure (s)he understands them. As always feel welcome to hit me up with a specific questions.