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IRS Extends Deadline to Claim Retirement Loss Deductions for Tangible Depreciable Property

09.23.2014

cost segregation_blueprints_real estateThe time for making a late partial disposition election has been extended for one year–taxpayers now have the 2014 tax year to review their fixed asset schedules to identify opportunities to take losses on disposed structural components.

On September 18, the IRS released an advanced copy of Rev. Proc. 2014-54, which explains that all taxpayers will be expected to comply with the final disposition regulations beginning with their first tax year that begins on or after January 1, 2014.

The revenue procedure provides guidance regarding changes in method of accounting for dispositions of tangible depreciable property under proposed regulations issued on September 13, 2013.

Following are some of the other changes included in Rev. Proc. 2014-54:

  • Removing section 6.19 (lessor improvements abandoned at termination of lease) because it is obsolete
  • Revising section 6.29 (disposition of a building or structural component) to provide that this measure does not apply to any demolition of a structure to which section 280B and Reg. section 1.280B-1 apply
  • Revising sections 6.32 (general asset account elections), 6.34 (revocation of a general asset account election), and 6.35 (partial dispositions of tangible depreciable assets to which the IRS’s adjustment pertains) to allow these changes in method of accounting to be made under Reg. section 1.168(i)-1 or 1.168(i)-8
  • Revising section 6.33 (late partial disposition election) to allow a late partial disposition election under Reg. section 1.168(i)-8 to be treated as a change in method of accounting for a limited period of time
  • Revising section 6.37 (permissible to permissible method of accounting for depreciation of Modified Accelerated Cost Recovery System (MACRS) property) to provide additional changes in method of accounting that are consistent with Reg. section 1.168(i)-1 or 1.168(i)-8
  • Revising section 10.11 (tangible property) to clarify that this section of the Appendix does not apply to amounts paid or incurred for certain materials and supplies that the taxpayer has elected to capitalize and depreciate under Reg. section 1.162-3(d) or 1.162-3T(d)
  • Modifying the Appendix of Rev. Proc. 2011-14 by adding sections 6.38 through 6.40 to provide additional changes in method of accounting that are consistent with Reg. section 1.168(i)-1 or 1.168(i)-8
  • Providing charts that summarize the changes in methods of accounting that may be made under Rev. Proc. 2011-14 for dispositions of MACRS property

Have you renovated an existing building or machine and removed older components to meet the needs of new ones? You might have prior year retirements that are still being depreciated, which you can write off on your 2014 tax returns.

Haggerty_Rob (2)For help maximizing these deductions, contact Rob Haggerty at 314.983.1311 or rhaggerty@bswllc.com

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