Business Alert: Final "repair" rules in effect

Final IRS rules known as the "repair regulations" are effective for your 2014 tax return. The rules clarify which costs should be capitalized and which can be expensed when your business buys, makes, maintains, or improves assets.

Here are three ways your business can be affected.

1. Accounting policies. You'll need to update your accounting policies to reflect how you treat expenses for repairs, materials, and supplies, and the acquisition of assets. Having a written policy in place will help keep you in compliance with the rules.

2. Elections. The final regulations include six elections. You'll want to review them to learn if they are beneficial to you. For example, by choosing the "de minimis safe harbor election," you can opt to expense the cost of property below a specific dollar amount.

3. Form 3115. You may want to file Form 3115, Application for Change in Accounting Method, with your 2014 federal income tax return to revise certain decisions you made regarding the treatment of tangible property in prior years. Alternatively, under simplified rules recently issued by the IRS, certain small businesses have the option of applying the repair regulations to 2014 and future years without filing Form 3115.

The final repair regulations will affect almost every business. Please schedule an appointment so we can help you determine how to apply the rules.