Repair Regulations Materials and Supplies

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Repair Regulations“Materials and Supplies”Solving the Mystery

Kristy MaitreTax SpecialistCenter for Agricultural Law and TaxationJuly 21, 2015

Four Issues

• In the first category, we have “incidental materials and supplies;” those items with a cost of less than $200 that are so small and insignificant, it is impossible to trace when they are consumed by the business. These expenses may be deducted immediately upon purchase

• Next, we have “non‐incidental materials and supplies,” these are items, again with a value of less than $200, that are a bit more substantial, and can trace when they are being used for the business. The regulations provide that these materials and supplies may only be deducted when they are consumed

• Next we have election to apply the de minimus safe harbor rule• Finally, we have “rotable and emergency spare parts,” which are much

bigger, more costly supplies, generally well in excess of $200, that are used to avoid production or business downtime by keeping them on hand and using them to replace a damaged part until the part may be permanently replaced. These materials and supplies often go from asset to asset throughout their life; as a result, as a general rule no deduction is permitted until the item is finally disposed of, but there is an exception

Why?

• Under Section 263, any time a client purchases an asset the life of which extends beyond one year, they must capitalize the cost of the asset and depreciate it over its appropriate useful life ‐ clear stance

• What has not been clear was how to treat costs made to repair an asset The guidance provides that if the expenditure either– 1) increased the value of the asset, or – 2) extended the useful life of the asset,– It was required to be capitalize as part of the asset rather than

deduct it as a repair

• The IRS grew weary of the abuses and the negotiations during audits

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Repair Regulations

• On September 19, 2013, IRS published final regulations for when an expense can be deducted as a repair and when it needs to be capitalized as a depreciable asset

• The final regulations replaced the temporary regulations from December 2011 and make several significant changes

• The final regulations are generally effective for taxable years beginning on or after January 1, 2014

• There are transitional rules for anyone who adopted the 2011 temporary regulations for taxable years beginning after January 1, 2012 and prior to January 1, 2014

The Options

• (1)Generally, an item that costs $200 or less or has an economic useful life of 12 months or less qualifies as a material or supply

• Once qualified as a material or supply, the client can receive more favorable treatment of a current deduction when the item is used or consumed, instead of having to capitalize the cost

• (2)The regulations provide an election to substitute a taxpayer’s capitalization threshold in certain circumstances for the $200 limit under the de minimis rules (§162)

• The election is made annually, and the threshold amounts depend upon whether:– There is a capitalization policy in place at the beginning of the year

(must be reviewed) and– Whether the taxpayer has an applicable financial statement (AFS)

• If a taxpayer has an (AFS), the maximum threshold is $5,000• If the taxpayer does not, the threshold cannot exceed $500 (§263)

§162

• Section 162 of the Internal Revenue Code (IRC) allows businesses to deduct all the ordinary and necessary expenses incurred during the taxable year in carrying on your trade or business, including the costs of certain materials, supplies, repairs, and maintenance

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§263

• But there are some key changes worth mentioning as it related to materials and supplies– The final regulations adopted a revised and simplified de

minimis rule, eliminating the ceiling rule and replacing it with a safe harbor

– Simplify the application of the De minimis safe harbor of §1.263(a)‐1(f) to materials and supplies

– This allows expensing only if the amount paid does not exceed $5,000 per invoice, or per item based on the invoice and the client has an Applicable Financial Statement (AFS)

– This safe harbor was not extend to taxpayers without an AFS– Instead, the final regulations added a de minimis safe harbor for

taxpayers without audited financials of $500 per invoice, or per item

Elections

• The final tangible property regulations also contain several simplifying provisions that are elective and prospective in application

• The election to apply the de minimis safe harbor in § 1.263(a)‐1(f)

• The election to utilize the safe harbor for small taxpayers in § 1.263(a)‐3(h)

• The election to capitalize repair and maintenance costs in § 1.263(a)‐3(n))

• These annual elections do not require a taxpayer to change its method of accounting

Audit Protection

• A small business taxpayer choosing the option of calculating a § 481(a) adjustment that takes into account only amounts paid or incurred, and dispositions, in taxable years beginning on or after January 1, 2014, does not receive audit protection under section of Rev. Proc. 2015‐13 (or any successor) for taxable years beginning prior to January 1, 2014

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Differences between the Final Regulations and the Temporary Regulations

• The vast majority of the provisions in the final regulations remained unchanged from the temporary regulations– The final regulations expand the definition of materials and supplies to include property that has an acquisition or production cost of $200 or less (increased from $100 in the temporary regulations)

– Clarifies the application of the optional method of accounting for rotable and temporary spare parts

– The final regulations also define standby emergency spare parts and limit the application of the election to capitalize materials and supplies to only rotable, temporary, and standby emergency spare parts

Definitions

• Unit of property

• Economic useful life

• Applicable Financial Statement

• Coordination with other provisions

• Written Capitalization policy

• Material and Supply

• Rotable and Temporary Spare Parts

• Small business taxpayers

Unit of Property

• Starting point for implementing the new repair regulations• The unit‐of‐property must be identified before the client can

determine whether the expenditure can be deducted or must be capitalized

• Once the unit of property has been determined, the client applies the improvement standards under the regulations to determine if the expenditure improves the property and requires capitalization– In general, a unit of property includes all components that are

“functionally interdependent” (i.e., the placing in service of one component depends upon the placing in service of another component

• An additional rule provides that if the taxpayer breaks down the unit of property into smaller components with different depreciation lives, then the smaller components are the units of property

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Unit of Property

• In general, a unit of property includes all components that are “functionally interdependent” (i.e., the placing in service of one component depends upon the placing in service of another component)

• An example: a client generally cannot place an tractor into service without tires; therefore, the tractor and tires may be a unit of property

• An additional rule provides that if the taxpayer breaks down the unit of property into smaller components with different depreciation lives, then the smaller components are the units of property

• An example: if the taxpayer treats the tractor tires under a different modified accelerated cost recovery system (MACRS) class than the tractor, the tires are a separate unit of property from the tractor

Economic Useful Life

• The economic useful life of a unit of property is not necessarily the useful life inherent in the property

• But is the period over which the property may reasonably be expected to be useful to the taxpayer or,

• If the taxpayer is engaged in a trade or business or an activity for the production of income, the period over which the property may reasonably be expected to be useful to the taxpayer in its trade or business or for the production of income

• Regulation §1.167(a)‐1(b) provides information about factors to be considered in determining this period

Definition of an Applicable Financial Statement

• The taxpayer’s applicable financial statement requirements are, in descending priority—– A financial statement required to be filed with the Securities and Exchange Commission (SEC) (the 10–K or the Annual Statement to shareholders);

– A certified audited financial statement that is accompanied by the report of an independent certified public accountant (or in the case of a foreign entity, by the report of a similarly qualified independent professional), that is used for—

• (1) Credit purposes; • (2) Reporting to shareholders, partners, or similar persons; or • (3) Any other substantial non‐tax purpose; or

– A financial statement (other than a tax return) required to be provided to the federal or a state government or any federal or state agency (other than the SEC or the Internal Revenue Service)

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Coordination with other Provisions of the Internal Revenue Code

• Nothing in this section changes the treatment of any amount that is specifically provided for under any provision of the Internal Revenue Code (Code) or regulations other than section 162(a) or section 212 and the regulations under those sections– § 1.263(a)‐3, requires taxpayers to capitalize amounts paid to improve tangible property

– §263A and their regulations require taxpayers to capitalize the direct and allocable indirect costs, including the cost of materials and supplies, of property produced by the taxpayer and property acquired for resale

– § 1.471‐1, requires taxpayers to include in inventory certain materials and supplies

Written Capitalization PolicyThe $500/$5,000 issue

• In order to take advantage of certain provisions in the final regulations, taxpayers will need to adopt or update a written capitalization policy for non‐tax purposes

• This capitalization policy needs to be in effect for the first taxable year beginning on or after January 1, 2014– Assuming the capitalization policy is properly in place by January 1, the safe

harbor election is then made annually at the time the taxpayer files its tax return for the year

• To qualify for the safe harbor election, an organization must have a written accounting policy in place on the first day of the tax year calling for:– The expensing amounts paid for property less than a specified amount, and/or– The expensing payments for property with an economic life of 12 months or

less.

• An organization with an “applicable financial statement” may rely on the final regulations’ safe harbor to expense an item in accordance with the organization’s written capitalization policy utilized in preparing its financial statements, provided the amount paid for tangible property does not exceed $5,000 per item

Written Capitalization Policy

• In addition, the safe harbor also applies to a financial accounting policy that expenses amounts paid for property with an economic useful life of 12 months or less, provided the costs don’t exceed the $5,000 threshold

• An organization which does not have an applicable financial statement, but has adopted an accounting procedures based on a specified amount or a useful life of 12 months or less in place at the beginning of the year does not need a written policy and may rely on the de minimis safe harbor as long as the costs do not exceed $500 per item

• Organizations that do not have a written capitalization policy in place may still deduct expenditures for tangible property costing $200 or less

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Accounting Capitalization Policy for Clients with and without an Applicable Financial StatementPer Regulation §1.263(a)‐1(f)(4)

Keep it Simple

Qualified Small Business Taxpayer

• The guidance applies to taxpayers with total assets of less than $10 million OR average annual gross receipts of $10 million or less for the prior three tax years

• The tests are applied at the trade or business level

• For example, a C corporation holding company with two single‐member limited liability companies (LLCs) applies the tests at the single‐member LLC level

Treasury Decision 9636

• Final tangible property regulations

• Decisions were guided by decades of often conflicting case law, as well as administrative rulings on specific factual situations

• IRS took all that into account in drafting the final regulations

• In addition, many comments relating to the regulations were also considered and some were adopted in the final regulations

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Where to start?

• Start with the concept that all tangible property that is not inventory must be capitalized and depreciated unless there is an exception

• The regulations provide an exception for items that qualify as materials and supplies

Evaluate: Materials and Supply

• Does the expenditure qualify for treatment under the de minimus safe harbor rule?

• Is the expenditure a UOP with a cost of $200 or less?

• Is the expenditure have an economic useful life of 12 months or less?

• Is the expenditure, fuel lubricants and similar items that generally will be consumed in 12 months or less in clients operation?

• Does the expenditure a component acquired to maintain, repair or improve a UOP?

1.162‐3 Materials and Supplies

• The regulation provides a definition of :

– Materials and Supplies

– The proper tax year for deduction,

– Allows an election to capitalize materials and supplies

– Contains special rules for rotable spare parts

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Final Regulations

• The final regulations require that the de minimis safe harbor be applied to all eligible materials and supplies – Other than rotable, temporary, and standby emergency spare parts subject to the election to capitalize

– Or rotable and temporary spare parts subject to the optional method of accounting for such parts) if the taxpayer elects the de minimis safe harbor under §1.263(a)‐1(f)

• Taxpayers that do not elect the de minimis safe harbor provided in the final regulations for the taxable year must treat their amounts paid for materials and supplies in accordance with the rules provided in §1.162‐3

§ 1.162‐3 Materials and Supplies

• (1) Non‐incidental materials and supplies– Are deductible in the taxable year in which the materials and

supplies are first used in the taxpayer's operations or are consumed in the taxpayer's operations

• (2) Incidental materials and supplies– Amounts paid to acquire or produce incidental materials and

supplies that are carried on hand and for which no record of consumption is kept or of which physical inventories at the beginning and end of the taxable year are not taken, are deductible in the taxable year in which these amounts are paid, provided taxable income is clearly reflected

• (3) Use or consumption of rotable and temporary spare parts

• Rotable and temporary spare parts are first used in the taxpayer's operations or are consumed in the taxpayer's operations in the taxable year in which the taxpayer disposes of the parts

What is a Material and Supply?

• Materials and supplies means tangible property that is used or consumed in the taxpayer's operations that is not inventory and that—– Is a component acquired to maintain, repair, or improve a unit of tangible

property owned, leased, or serviced by the client and that is not acquired as part of any single unit of tangible property;

– Consists of fuel, lubricants, water, and similar items, reasonably expected to be consumed in 12 months or less, beginning when used in the taxpayer's operations;

– Is a unit of property that has an economic useful life of 12 months or less, beginning when the property is used or consumed in the taxpayer's operations;

– Is a unit of property that has an acquisition cost or production cost of $200 or less or

– Is identified in published guidance in the Federal Register or in the Internal Revenue Bulletin as materials and supplies for which treatment is permitted under this section

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Property that Cost $200 or Less

• Any item of tangible personal property you buy to use in your business that is not inventory and that costs $200 or less is currently deductible as materials and supplies

• The cost for Non‐Incidental materials and supplies may be deducted in the year the item is used or consumed

• The cost for Incidental materials and supplies may be deducted in the tax year on which the amounts are paid – no record of consumption or inventory is kept

Change in Accounting Method • If your business was in existence before 2014 and you didn’t have a policy in place of

currently deducting items that qualify as materials and supplies that exactly matched the requirements of the new IRS regulations (which you likely didn’t), your adoption of the rule in 2014 and later is considered to be a change in your method of accounting

• Ordinarily, you must obtain IRS permission for such a change by filing IRS Form 3115, Application for Change in Accounting Method

• However, the IRS has enacted special optional relief from this requirement for “smaller” taxpayers– This includes all taxpayers with (1) assets under $10 million (as of the first day of the tax year) or (2) less than

$10 million in annual gross receipts for each distinct business they own

• Under IRS Revenue Procedure 2015‐20, such taxpayers may elect to apply the materials and supplies deduction in 2014 and later without filing Form 3115 or making any other filing

• You simply treat such expenses as deductible materials and supplies in your books and records

• By electing this relief, a taxpayer does not apply any part of the IRS repair regulations (of which the materials and supplies deduction is a part) to years before 2014

Interaction with de Minimis Safe Harbor

• The IRS regulations also contain a new de minimis safe harbor that permits business owners to deduct tangible personal property that costs no more than $500 for businesses that have no AFS or $5,000 for larger businesses that have AFS

• If you elect to use the de minimis safe harbor, you must apply it to amounts paid for all materials and supplies that meet the requirements for deduction under the safe harbor

• Thus, if you use the de minimis safe harbor, you can largely ignore the other materials and supplies deduction

• This is to your advantage since the $500 de minimis safe harbor for most businesses is larger than the $200 materials and supplies limit

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Change Gears

• Discussed the $200 issue

• Briefly discussed the $500/$5,000 issue

Election to Capitalize and Depreciate certain Materials and Supplies

• The client may elect to treat as a capital expenditure and to treat as an asset the cost of any – Rotable spare part– Temporary spare part, or– Standby emergency spare part

• The election applies to amounts paid during the taxable year to acquire or produce any rotable, temporary, or standby emergency spare parts

• Any property for which this election is made shall not be treated as a material or a supply

Election to capitalize certain Materials and Supplies

• The final regulations also clarify the procedure for a client that wants to revoke the election to capitalize and depreciate certain materials and supplies

• The client may revoke this election by filing a request for a letter ruling and obtaining the consent of the Commissioner of Internal Revenue to revoke this election

• The Commissioner may grant a request to revoke this election if the client acted reasonably and in good faith, and the revocation will not prejudice the interests of the Government

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How to Make the Election

• A client makes the election by capitalizing the amounts paid to acquire or produce a rotable, temporary, or standby emergency spare part in the taxable year the amounts are paid and by beginning to recover the costs when the asset is placed in service for the purposes of determining depreciation

• A client must make this election on its timely filed original Federal tax return (including extensions) for the taxable year the asset is placed in service by the taxpayer for purposes of determining depreciation

S Corporation or Partnership

• In the case of an S corporation or a partnership, the election is made by the S corporation or partnership, and not by the shareholders or partners

• The client may make an election for each rotable, temporary, or standby emergency spare part that qualifies for the election

• The client may revoke an election only by filing a request for a private letter ruling and obtaining the Commissioner’s consent to revoke the election

• The Commissioner may grant a request to revoke this election if the taxpayer acted reasonably and in good faith and the revocation will not prejudice the interests of the Government

• An election may not be made or revoked through the filing of an application for change in accounting method or, before obtaining the Commissioner’s consent to make the late election or to revoke the election, by filing an amended Federal tax return

Rotable and Temporary Spare Parts

• Rotable spare parts are materials and supplies that are acquired for:– Installation on a unit of property– Removable from that unit of property– Generally repaired or improved, and– Either reinstalled on the same or other property or – Stored for later installation

• Temporary spare parts are materials and supplies that are used temporarily until a new or repaired part can be installed and then are removed and stored for later installation

• Deductible in the year used or consumed

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Standby Emergency Spare Parts

• Materials and supplies that are:– Acquired when particular machinery or equipment is acquired – Set aside for use as replacements to avoid substantial operational time loss

caused by emergencies due to particular machinery or equipment failure;– Located at or near the site of the installed related machinery or equipment

so as to be readily available when needed;– Directly related to the particular machinery or piece of equipment they

serve;– Normally expensive;– Only available on special order and not readily available from a vendor or

manufacturer;– Not subject to normal periodic replacement;– Not interchangeable in other machines or equipment;– Not acquired in quantity and– Not repaired and reused

Election to Capitalize and Depreciate certain Materials and Supplies §1.162‐1(d)

• A taxpayer may elect to treat as a capital expenditure and to treat as an asset subject to the allowance for depreciation the cost of any rotable spare part, temporary spare part, or standby emergency spare part as defined in paragraph (c)(3) or (c)(4) of this section

• (3) Standby emergency spare parts. Standby emergency spare parts are materials and supplies under paragraph (c)(1)(i) of this section that are—

– (i) Acquired when particular machinery or equipment is acquired (or later acquired and set aside for use in particular machinery or equipment);

– (ii) Set aside for use as replacements to avoid substantial operational time loss caused by emergencies due to particular machinery or equipment failure;

– (iii) Located at or near the site of the installed related machinery or equipment so as to be readily available when needed;

– (iv) Directly related to the particular machinery or piece of equipment they serve;

– (v) Normally expensive;

– (vi) Only available on special order and not readily available from a vendor or manufacturer;

– (vii) Not subject to normal periodic replacement;

– (viii) Not interchangeable in other machines or equipment;

– (ix) [Reserved]

– (x) Not acquired in quantity (generally only one is on hand for each piece of machinery or equipment); and

– (xi) Not repaired and reused.

– period.

Election to Capitalize and Depreciate certain Materials and Supplies §1.162‐1(d)

• (4) Economic useful life– (i) General rule. The economic useful life of a unit of property is not necessarily the useful life inherent in the property but is the period over which the property may reasonably be expected to be useful to the taxpayer or, if the taxpayer is engaged in a trade or business or an activity for the production of income, the period over which the property may reasonably be expected to be useful to the taxpayer in its trade or business or for the production of income, as applicable. See § 1.167(a)‐1(b) for the factors to be considered in determining this

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The Exception

• Except as specified in paragraph (d)(2) of this section, an election made under this paragraph (d) applies to amounts paid during the taxable year to acquire or produce any rotable, temporary, or standby emergency spare part to which paragraph (a) of this section would apply (but for the election under this paragraph (d)).

• Any property for which this election is made shall not be treated as a material or a supply– Exceptions:– A taxpayer may not elect to capitalize and depreciate under paragraph (d) of this section any

amount paid to acquire or produce a rotable, temporary, or standby emergency spare part defined in paragraph (c)(3) or (c)(4) of this section if—

– (i) The rotable, temporary, or standby emergency spare part is intended to be used as a component of a unit of property under paragraph (c)(1)(iii), (iv), or (v) of this section;

• (iii) Is a unit of property as determined under§ 1.263(a)‐3(e) that has an economic useful life of 12 months or less, beginning when the property is used or consumed in the taxpayer's operations;

• (iv) Is a unit of property as determined under§ 1.263(a)‐3(e) that has an acquisition cost or production cost (as determined under section 263A) of $200 or less (or other amount as identified in published guidance in the Federal Register or in the Internal Revenue Bulletin (see § 601.601(d)(2)(ii)(b) of this chapter); or

• (v) Is identified in published guidance in the Federal Register or in the Internal Revenue Bulletin (see §601.601(d)(2)(ii)(b) of this chapter) as materials and supplies for which treatment is permitted under this section.

The Exception

• (2) Exceptions– (ii) The rotable, temporary, or standby emergency spare part is intended to be used as a component of a property described in paragraph (c)(1)(i) and the taxpayer cannot or has not elected to capitalize and depreciate that property under this paragraph (d);

• (c) Definitions• (1) Materials and supplies. For purposes of this section, materials and supplies means tangible property that is used or consumed in the taxpayer's operations that is not inventory and that—

• (i) Is a component acquired to maintain, repair, or improve a unit of tangible property (as determined under§ 1.263(a)‐3(e)) owned, leased, or serviced by the taxpayer and that is not acquired as part of any single unit of tangible property;

The Exception

• (2) Exceptions

– (iii) The amount is paid to acquire or produce a rotable or temporary spare part and the taxpayer uses the optional method of accounting for rotable and temporary spare parts under paragraph (e) to of this section

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Optional Method of Accounting for Rotable and Temporary Spare Parts

• A client that uses the optional method for rotable parts must use this method for all of its pools of rotable and temporary spare parts used in the same trade or business and for which it uses this method for its books and records

• Thus, the client taxpayer generally is not required to use the optional method for those pools of rotable or temporary spare parts for which it does not use the optional method in its books and records for the trade or business

• However, if the client chooses to use the optional method for any pool of rotable or temporary spare parts for which the taxpayer does not use the optional method in its books and records for the trade or business, then the taxpayer must use the optional method for all its pools of rotable and temporary spare parts in that trade or business

• The optional method for rotable parts is a method of accounting under section 446(a)

• The client must apply the rules to each rotable or temporary spare part upon the clients initial installation, removal, repair, maintenance or improvement, reinstallation, and disposal of each part

Description of Optional Method for Rotable Parts

• Upon initial installation– The client must deduct the amount paid to acquire or produce the part in the taxable year that the

part is first installed on a unit of property for use in the taxpayer’s operations

• Removal from unit of property– In each taxable year in which the part is removed from a unit of property to which it was initially or

subsequently installed, the taxpayer must—• Include in gross income the fair market value of the part; and• Include in the basis of the part the fair market value of the part included in income and the amount paid to

remove the part from the unit of property

• Repair, maintenance, or improvement of part– The client may not currently deduct and must include in the basis of the part any amounts paid to

maintain, repair, or improve the part in the taxable year these amounts are paid

• Reinstallation of part– The client must deduct the amounts paid to reinstall the part and those amounts included in the basis

of the part , to the extent that those amounts have not been previously deducted, in the taxable year that the part is reinstalled on a unit of property

• Disposal of the part– The client must deduct the amounts included in the basis of the part to the extent that those amounts

have not been previously deducted in the taxable year in which the part is disposed of by the taxpayer

Review

• The optional method of accounting does not apply to standby emergency parts §162‐3(d)(iii)

• Remember – A rotable spare part is a material or supply which is installed on a unit of property, removed from the property, repaired or improved, and either reinstalled on the same or other property or stored for later installation

• Temporary spare parts are components used temporarily until a new or repaired part can be installed and then are removed and stored for later installation

• Standby emergency spare parts are parts acquired for a particular machine and set aside to avoid substantial operational time loss – Standby spare parts are usually expensive, and they are not subject

to periodic replacement, acquired in quantity, repaired or reused.

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Review ‐ Exceptions

• A client may not elect to capitalize and depreciate any amount paid to acquire or produce a rotable, temporary, or standby emergency spare part if—– The rotable, temporary, or standby emergency spare part is intended

to be used as a component of a unit of property that has an economic useful life of 12 months or less, beginning when the property is used or consumed in the taxpayer’s operations;

– The rotable, temporary, or standby emergency spare part is intended to be used as a component of a property acquired to maintain, repair, or improve a unit of tangible property, owned, leased, or serviced by the client and that is not acquired as part of any single unit of tangible property; and the client cannot or has not elected to capitalize and depreciate that property

– The amount is paid to acquire or produce a rotable or temporary spare part and the taxpayer uses the optional method of accounting for rotable and temporary spare parts

Sale or Disposition of Materials and Supplies

• Any asset for which the client makes the election to capitalize and depreciate shall not be treated as a material or supply, and the recognition and character of the gain or loss for such depreciable asset are determined under other applicable provisions of the Code

Example ANon‐Rotable components

• Arthur owns a fleet of aircraft that it operates in his business• In 2014 Arthur purchases a stock of spare parts, which it uses to

maintain and repair the aircraft• He keeps a record of consumption of these spare parts• In 2015 Arthur uses the spare parts for the repair and maintenance

of one of the aircraft• Assume each aircraft is a unit of property and that spare parts are

not rotable or temporary spare parts • Assume these repair and maintenance activities do not improve

the aircraft • These parts are materials and supplies because they are

components acquired and used to maintain and repair Arthur’s aircraft

• The amounts that Arthur paid for the spare parts in 2014 are deductible in 2015, the taxable year in which the spare parts are first used to repair and maintain the aircraft

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Example BRotable spare parts disposal method

• Betty operates a fleet of specialized vehicles that it uses in its service business

• Assume that each vehicle is a unit of property • At the time that it acquires a new type of vehicle, Betty also

acquires a substantial number of rotable spare parts that it will keep on hand to quickly replace similar parts in the vehicles as those parts break down or wear out

• These rotable parts are removable from the vehicles and are repaired so that they can be reinstalled on the same or similar vehicles

• In 2014, Betty acquires several vehicles and a number of rotable spare parts to be used as replacement parts in these vehicles

• In 2015, Betty repairs several vehicles by using these rotable spare parts to replace worn or damaged parts

Example BRotable spare parts disposal method

• In 2016, Betty removes these rotable spare parts from its vehicles, repairs the parts, and reinstalls them on other similar vehicle

• In 2018, Betty can no longer use the rotable parts it acquired in 2014 and disposes of them as scrap

• Assume that Betty does not improve any of the rotable spare parts, the rotable spare parts acquired in 2014 are materials and supplies

• Rotable spare parts are generally used or consumed in the taxable year in which the taxpayer disposes of the parts

• Therefore, the amounts that Betty paid for the rotable spare parts in 2014 are deductible in 2018, the taxable year in which Betty disposes of the parts

Example C ‐ Rotable spare parts; Application of Optional Method of Accounting

• Clyde operates a fleet of specialized vehicles that it uses in its service business

• Assume that each vehicle is a unit of property • At the time that Clyde acquires a new type of vehicle,

he also acquires a substantial number of rotable spare parts that he will keep on hand to replace similar parts in the vehicles as those parts break down or wear out

• These rotable parts are removable from the vehicles and are repaired so that they can be reinstalled on the same or similar vehicles

• Clyde uses the optional method of accounting for all its rotable and temporary spare parts

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• In 2014,Clyde acquires several vehicles and a number of rotable spare parts to be used as replacement parts in these vehicles

• In 2015, Clyde repairs several vehicles and uses the 2014 (First Year) rotable parts to replace worn or damaged parts – THIS IS THE FIRST YEAR THE PARTS ARE USED

• In 2016, Clyde pays amounts to remove these 2014 (First Year) rotable parts from its vehicles

• In 2017, Clyde pays amounts to maintain, repair, or improve the 2014 (First Year) rotable parts

• In 2018, Clyde pays amounts to reinstall the 2014 (First Year) rotable parts on other similar vehicles

• In 2021, Clyde removes the 2014 rotable parts from these vehicles and stores these parts for possible later use

• In 2022, Clyde disposes of the 2014 rotable parts

Table


• Clyde must deduct the amounts paid to acquire and install the 2014 rotable parts in 2015, the taxable year in which the rotable parts are first installed by Clyde in his vehicles

• In 2016, when Clyde removes the 2014 rotable parts from its vehicles, he must include in gross income the fair market value of each part

• Also, in 2016, Clyde must include in the basis of each 2014 rotable part: the fair market value of the rotable part and the amount paid to remove the rotable part from the vehicle

• In 2017, Clyde must include in the basis of each 2014 rotable part the amounts paid to maintain, repair, or improve each rotable part

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• In 2018, the year that Clyde reinstalls the 2014 rotable parts (as repaired or improved) in other vehicles, Clyde must deduct the reinstallation costs and the amounts previously included in the basis of each part

• In 2021, the year that Clyde removes the 2014 rotable parts from the vehicles, he must include in income the fair market value of each rotable part removed

• Also in 2021, Clyde must include in the basis of each part the fair market value of that part and the amount paid to remove each rotable part from the vehicle

• In 2022, the year that Clyde disposes of the 2014 rotable parts, he may deduct the amounts remaining in the basis of each rotable part

Table of History

Example D ‐ Rotable part acquired as part of a single unit of property; not a material or supply

• David operates a fleet of aircraft• In 2014, David acquires a new aircraft, which includes two new aircraft engines• The aircraft costs $500,000 and has an economic useful life of more than 12

months, beginning when it is placed in service• In 2018, after the aircraft is operated for several years in David’s business, he

removes the engines from the aircraft, repairs or improves the engines, and either reinstalls the engines on a similar aircraft or stores the engines for later reinstallation

• Assume the aircraft purchased in 2014, including its two engines, is a unit of property

• Because the engines were acquired as part of the aircraft, a single unit of property, the engines are not materials or supplies rotable or temporary spare parts

• Accordingly, David may not apply the rules of this section to the aircraft engines upon the original acquisition of the aircraft nor after the removal of the engines from the aircraft for use in the same or similar aircraft

• The unit of property is an asset and must be capitalized

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Example E ‐ Consumable Property

• Edward operates a fleet of aircraft that carries freight for its customers• Edward has several storage tanks on its premises, which hold jet fuel

for its aircraft• Assume that once the jet fuel is placed in the aircraft, the jet fuel is

reasonably expected to be consumed within 12 months or less• On December 31, 2014, Edward purchases a two‐year supply of jet fuel• In 2015, Edward uses a portion of the jet fuel purchased on December

31, 2014, to fuel the aircraft used in its business• The jet fuel purchased in 2014 is a material or supply because it is

reasonably expected to be consumed within 12 months or less from the time it is placed in the aircraft

• Edward may deduct in 2015 the amounts paid for the portion of jet fuel used in the operation of Edward’s aircraft in 2015

Example F ‐ Unit of property that costs $200 or less

• Frank operates a business that rents out a variety of small individual items to customers (rental items)

• Frank maintains a supply of rental items on hand• In 2014, Frank purchases a large quantity of rental items to use in the

rental business• Assume that each rental item is a unit of property and costs $200 or less• In 2015, Frank begins using all the rental items purchased in 2014 by

providing them to customers of its rental business• Frank does not sell or exchange these items on established retail markets

at any time after the items are used in the rental business• The rental items are materials and supplies, and the amounts that Frank

paid for the rental items in 2014 are deductible in 2015, the taxable year in which the rental items are first used in Frank’s business

Example G ‐ Unit of property that Costs $200 or less

• George provides billing services to his customers• In 2014, George pays amounts to purchase 50 scanners to be used

by his employees• Assume each scanner is a unit of property and costs less than $200• In 2014, George’s employees begin using 35 of the scanners, and

George stores the remaining 15 scanners for use in a later taxable year

• The scanners are materials and supplies • The amounts George paid for 35 of the scanners are deductible in

2014, the taxable year in which he first uses each of the scanners• The amounts that George paid for each of the remaining 15

scanners are deductible in the taxable year in which each machine is first used in the business

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Example G – Part 2Materials and supplies that

cost less than $200; de minimis safe harbor • George’s scanners qualify for the de minimis safe

harbor under § 1.263(a)–1(f), and he properly elects to apply the de minimis safe harbor amounts paid in 2014

• George must apply the de minimis safe harbor under to amounts paid for the scanners, rather than treat these amounts as costs of materials and supplies

• In accordance with § 1.263(a)–1(f)(3)(iv), George may deduct the amounts paid for all 50 scanners under § 1.162–1 in the taxable year the amounts are paid

§263(a)

• §263(a) of the IRC requires businesses to capitalize the costs of acquiring, producing, and improving tangible property, regardless of the size or the cost incurred

• The tax law has long required businesses to determine whether expenditures related to tangible property are currently deductible business expenses or non‐deductible capital expenditures

What is the de minimis Safe Harbor Election?

• Under the final regulations, the business may elect to apply a de minimis safe harbor to amounts paid to acquire or produce tangible property to the extent such amounts are deducted for financial accounting purposes or in keeping books and records

• If the client has an applicable financial statement (AFS), you may use this safe harbor to deduct amounts paid for tangible property up to $5,000 per invoice or item

• If the client does not have an AFS, you may use the safe harbor to deduct amounts up to $500 per item or invoice

• These limitations are for purposes of determining whether particular expenses qualify under the safe harbor; they aren't intended as a ceiling on the amount you can deduct as business expenses under the IRC

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Why the Change?

• Neither the Internal Revenue Code nor prior regulations included a de minimis safe harbor exception to capitalization

• The business was required to determine whether each expenditure for tangible property, regardless of amount, was required to be capitalized

• The de minimis safe harbor election eliminates the burden of determining whether every small‐dollar expenditure for the acquisition or production of property is properly deductible or capitalizable

• If the business elects to use the de minimis safe harbor, they don't have to capitalize the cost of qualifying de minimis acquisitions or improvements

What is the de minimis Safe Harbor Election?

• However, de minimis amounts you pay for tangible property may be subject to capitalization under §263A

de minimis Safe Harbor

• The de minimis safe harbor provided is intended as a new administrative convenience

• Clients are permitted to deduct small dollar expenditures for the acquisition or production of new property or for the improvement of existing property, which otherwise must be capitalized under the Code

• The de minimis safe harbor does not limit a taxpayer’s ability to deduct otherwise deductible repair or maintenance costs that exceed the amount subject to the safe harbor

• The safe harbor merely establishes a minimum threshold below which all qualifying amounts are considered deductible

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de minimis Safe Harbor

• Consistent with longstanding law, a client may continue to deduct all otherwise deductible repair or maintenance costs, regardless of amount

• In addition, the existence of the de minimis safe harbor does not mean that a taxpayer cannot establish a de minimis deduction threshold in excess of the safe harbor amount, provided the taxpayer can demonstrate that a higher threshold clearly reflects the taxpayer’s income

• In conjunction with section 179, which also allows small business taxpayers to immediately expense certain otherwise capital expenditures, the de minimis safe harbor provides significant tax simplification to small businesses

Example H ‐ De minimis Safe Harbor; Client without AFS

• In 2014, Henry purchases 10 printers at $250 each for a total cost of $2,500 as indicated by the invoice

• Assume that each printer is a unit of property• Henry does not have an AFS• Henry has accounting procedures in place at the beginning of 2014 to

expense amounts paid for property costing less than $500, and he treats the amounts paid for the printers as an expense on its books and records

• The amounts paid for the printers meet the requirements for the de minimis safe harbor

• If Henry elects to apply the de minimis safe harbor in 2014 he may not capitalize the amounts paid for the 10 printers or any other amounts meeting the criteria for the de minimis safe harbor under

• Instead, Henry may deduct these amounts under § 1.162–1 in the taxable year the amounts are paid provided the amounts otherwise constitute deductible ordinary and necessary expenses incurred in carrying on a trade or business

Example J ‐ de minimis Safe HarborClient with AFS

• Jarod is a member of a consolidated group for Federal income tax purposes• Jarod’s financial results are reported on the consolidated applicable

financial statements for the affiliated group• The affiliated group has a written accounting policy at the beginning of

2014, to expense amounts paid for property costing $5,000 or less• In 2014, Jarod pays $6,250,000 to purchase 1,250 computers at $5,000

each• He receives an invoice from its supplier indicating the total amount due

($6,250,000) and the price per item ($5,000)• Assume that each computer is a unit of property• The amounts paid for the computers meet the requirements for the de

minimis safe harbor• If Jarod elects to apply the de minimis safe harbor he may not capitalize the

amounts paid for the 1,250 computers or any other amounts meeting the criteria for the de minimis safe harbor

• Jarod may deduct these amounts under § 1.162–1 in the taxable year the amounts are paid provided the amounts otherwise constitute deductible ordinary and necessary expenses incurred in carrying on a trade or business

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Example K ‐ de minimis Safe HarborAdditional Invoice Costs

• Karen is a member of a consolidated group for Federal income tax purposes• Karen’s financial results are reported on the consolidated applicable financial statements for the

affiliated group• The affiliated group has a written accounting policy at the beginning of 2014 to expense amounts

paid for property costing less than $5,000• In 2014, Karen pays $45,000 for the purchase and installation of wireless routers in each of its 10

office locations• Assume that each wireless router is a unit of property • Karen receives an invoice from its supplier indicating the total amount due ($45,000), including

the material price per item ($2,500), and total delivery and installation ($20,000)• Karen allocates the additional invoice costs to the materials on a pro rata basis, bringing the cost

of each router to $4,500 ($2,500 materials + $2,000 labor and overhead)• The amounts paid for each router, including the allocable additional invoice costs, meet the

requirements for the de minimis safe harbor • If Karen elects to apply the de minimis safe harbor the group may not capitalize the amounts paid

for the 10 routers (including the additional invoice costs) or any other amounts meeting the criteria for the de minimis safe harbor

• Instead, Karen may deduct these amounts under § 1.162–1 in the taxable year the amounts are paid provided the amounts otherwise constitute deductible ordinary and necessary expenses incurred in carrying on a trade or business

Example L ‐de minims Safe Harbor Non‐ Invoice Additional Costs

• Lisa is a corporation that provides consulting services to its customers• Lisa does not have an AFS, but has accounting procedures in place at the

beginning of 2014 to expense amounts paid for property costing $500 or less• In 2014, Lisa pays $600 to an interior designer to shop for, evaluate, and make

recommendations regarding purchasing new furniture for the businesses conference room

• As a result of the interior designer’s recommendations, Lisa acquires a conference table for $500 and 10 chairs for $300 each

• In 2014, Lisa receives an invoice from the interior designer for $600 for his services, and Lisa receives a separate invoice from the furniture supplier indicating a total amount due of $500 for the table and $300 for each chair

• For 2014, Lisa treats the amount paid for the table and each chair as an expense on its books and records, and elects to use the de minimis safe harbor for amounts paid for tangible property that qualify under the safe harbor

• The amount paid to the interior designer is a cost of facilitating the acquisition of the table and chairs

Example L ‐de minims Safe Harbor Non‐ Invoice Additional Costs

• Lisa is not required to include in the cost of tangible property the additional costs of acquiring such property if these costs are not included in the same invoice as the tangible property

• Thus, Lisa is not required to include a pro rata allocation of the amount paid to the interior designer to determine the application of the de minimis safe harbor to the table and the chairs

• Accordingly, the amounts paid by Lisa for the table and each chair meet the requirements for the de minimis safe harbor

• She may not capitalize the amounts paid for the table or each chair • In addition, Lisa is not required to capitalize the amounts paid to the

interior designer as a cost that facilitates the acquisition of tangible property

• Instead, Lisa will deduct the amounts paid for the table, chairs, and interior designer under § 1.162–1 in the taxable year the amounts are paid provided the amounts otherwise constitute deductible ordinary and necessary expenses incurred in carrying on a trade or business

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Example M ‐ de minimis Safe harbor; 12‐month Economic Useful Life

• Matthew operates a restaurant• In 2014, Matthew purchases 10 hand‐ held point‐of‐service

devices at $300 each for a total cost of $3,000 as indicated by invoice

• Matthew also purchases 3 tablet computers at $500 each for a total cost of $1,500 as indicated by invoice

• Assume each point‐of‐service device and each tablet computer has an economic useful life of 12 months or less, beginning when they are used in the business

• Assume that each device and each tablet is a unit of property • Matthew has accounting procedures in place at the beginning of

2014 to expense amounts paid for property costing $300 or less and to expense amounts paid for property with an economic useful life of 12 months or less

Example M ‐ de minimis Safe harbor; 12‐month Economic Useful Life

• Thus, Matthew expenses the amounts paid for the hand‐held devices on its books and records because each device costs $300

• He also expenses the amounts paid for the tablet computers on its books and records because the computers have an economic useful life of 12 months of less, beginning when they are used

• The amounts paid for the hand‐held devices and the tablet computers meet the requirements for the de minimis safe harbor

• If Matthew elects to apply the de minimis safe harbor for 2014 he may not capitalize the amounts paid for the hand‐held devices, the tablet computers, or any other amounts meeting the criteria for the de minimis safe harbor

• Instead, he may deduct the amounts paid for the hand‐held devices and tablet computers under § 1.162–1 in the taxable year the amounts are paid provided the amounts otherwise constitute deductible ordinary and necessary business expenses incurred in carrying on a trade or business

Example M ‐ de minimis Safe harbor; 12‐month Economic Useful Life, Part 2• De minimis safe harbor; limitation• Assume the facts as detailed in Example M

except Matthew purchases the 3 tablet computers at $600 each for a total cost of $1,800

• The amounts paid for the tablet computers do not meet the de minimis rule safe harbor under because the cost of each computer exceeds $500

• Therefore, the amounts paid for the tablet computers may not be deducted under the safe harbor

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Example N – de minimus Safe Harbor ‐Limitation

• Nick is a corporation that provides consulting services to its customers

• Nick has an AFS and a written accounting policy at the beginning of the taxable year to expense amounts paid for property costing $5,000 or less

• In 2014, Nick purchases 1,000 computers at $500 each for a total cost of $500,000

• Assume that each computer is a unit of property and is not a material or supply under § 1.162–3

• In addition, Nick purchases 200 office chairs at $100 each for a total cost of $20,000 and 250 customized briefcases at $80 each for a total cost of $20,000

• Assume that each office chair and each briefcase is a material or supply

Example N – de minimus Safe Harbor ‐Limitation

• Nick treats the amounts paid for the computers, office chairs, and briefcases as expenses on its AFS

• The amounts paid for computers, office chairs, and briefcases meet the requirements for the de minimis safe harbor

• If Nick elects to apply the de minimis safe harbor , he may not capitalize the amounts paid for the 1,000 computers, the 200 office chairs, and the 250 briefcases

• Nick may deduct the amounts paid for the computers, the office chairs, and the briefcases under § 1.162–1 in the taxable year the amounts are paid provided the amounts otherwise constitute deductible ordinary and necessary expenses incurred in carrying on a trade or business

Example O ‐ de minimis Safe Harbor; Coordination with Section 263A

• Opal is a member of a consolidated group for Federal income tax purposes

• The financial results are reported on the consolidated AFS for the affiliated group

• Opal’s affiliated group has a written accounting policy at the beginning of 2014, which is followed to expense amounts paid for property costing less than $1,000 or that has an economic useful life of 12 months or less

• In 2014, Opal acquires jigs, dies, molds, and patterns for use in the manufacture of Opal’s products

• Assume each jig, die, mold, and pattern is a unit of property and costs less than $1,000

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Example O ‐ de minimis Safe Harbor; Coordination with Section 263A

• In 2014, Opal begins using the jigs, dies, molds and patterns to manufacture its products

• Assume these items are materials and supplies under § 1.162–3(c)(1)(iii), and Opal elects to apply the de minimis safe harbor to amounts qualifying under the safe harbor in 2014

• The amounts paid for the jigs, dies, molds, and patterns may be subject to capitalization under section 263A if the amounts paid for these tangible properties comprise the direct or allocable indirect costs of other property produced by the taxpayer or property acquired for resale

Example P ‐ Acquisition of Personal Property that is a Material or Supply Coordination with

§ 1.162–3

• Paul operates a fleet of aircraft• In 2014, Paul acquires a stock of component parts, which it intends to

use to maintain and repair its aircraft• Assume that each component part is a material or supply under §

1.162–3(c)(1) and Paul does not make elections under § 1.162–3(d) to treat the materials and supplies as capital expenditures

• In 2015, Paul uses the component parts in the repair and maintenance of its aircraft

• Because the parts are materials and supplies under § 1.162–3, Paul is not required to capitalize the amounts paid for the parts

• Rather, to determine the treatment of these amounts, Paul must apply the rules under § 1.162–3, governing the treatment of materials and supplies

Simplified Procedure

• Revenue Procedure 2015‐20

• The new procedure allows small businesses to change a method of accounting under the final tangible property regulations on a prospective basis for the first taxable year beginning on or after Jan. 1, 2014

• In addition, for their first taxable year that begins on or after January 1, 2014, small business taxpayers are permitted to make certain tangible property changes without filing a Form 3115

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• To further ease the administrative burden faced by small business taxpayers in prospectively applying the final tangible property regulations beginning in 2014, this revenue procedure modifies certain procedures provided in Rev. Proc. 2015‐14 to permit small business taxpayers to make changes in methods of accounting with a §481(a) adjustment that takes into account only amounts paid or incurred, and dispositions, in taxable years beginning on or after January 1, 2014

• This modification means that, effectively, small business taxpayers making these changes in method of accounting for the first taxable year that begins on or after January 1, 2014, may elect to make the change on a cut‐off basis


• While some small business taxpayers may choose to file a Form 3115 in order to retain a clear record of a change in method of accounting or to make permissible concurrent automatic changes on the same form, other small business taxpayers may prefer the administrative convenience of being able to comply with the final tangible property regulations in their first taxable year that begins on or after January 1, 2014, solely through the filing of a federal tax return

Rev. Proc. 2015‐20

• The revenue procedure also requests comments on whether it is appropriate to increase the de minimis safe harbor limit provided in § 1.263(a)‐1(f)(1)(ii)(D) for a taxpayer without an applicable financial statement (AFS) to an amount greater than $500

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If the De minimis safe harbor is used, is the business required to Capitalize all expenses that exceed the $500 or $5,000 limitations?

• No• Amounts paid for the acquisition or production of tangible

property that exceed the safe harbor limitations aren't subject to the De minimis safe harbor election

• Therefore, the safe harbor doesn't require you to capitalize all amounts paid for tangible property in excess of the applicable limitation

• If an amount doesn't qualify under the de minimis safe harbor, you should treat the amount under the normal rules that apply, i.e., currently deductible if paid for incidental materials and supplies or for repair and maintenance

• This treatment is proper regardless of whether the amount exceeds the applicable de minimis safe harbor limitation

Example M ‐ Election to Capitalize and Depreciate

• Mike in the mining business• Mike acquires certain temporary spare parts, which he keeps on

hand to avoid operational time loss in the event it must make temporary repairs to a unit of property that is subject to depreciation

• These parts are not used to improve property but rather the temporary spare parts are used until a new or repaired parts can be installed and then are removed and stored for later temporary installation

• Mike does not use the optional method of accounting • The temporary spare parts are considered materials and supplies • The amounts paid for the temporary spare parts are deductible in

the taxable year in which they are disposed of by Mike

Example M ‐ Election to Capitalize and Depreciate

• However, because it is unlikely that the temporary spare parts will be disposed of in the near future, Mike would prefer to treat the amounts paid for the spare parts as capital expenditures subject to depreciation

• Mike may elect to treat the cost of each temporary spare part as a capital expenditure and as an asset subject to an allowance for depreciation

• Mike makes this election by capitalizing the amounts paid for each spare part in the taxable year that he acquires the spare parts and by beginning to recover the costs of each part on its timely filed Federal tax return for the taxable year in which the part is placed in service for purposes of determining depreciation

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Example – N ‐ Election to apply de minimis safe harbor

• Nadine provides consulting services to her customers• In 2014, Nadine pays amounts to purchase 50 laptop

computers• Each laptop computer is a unit of property and costs $400,

and has an economic useful life of more than 12 months• Also in 2014, Nadine purchases 50 office chairs to be used by

her employees• Each office chair is a unit of property that costs $100• Nadine has an applicable financial statement and has a written

accounting policy at the beginning 2014 to expense amounts paid for units of property costing $500 or less

• Nadine treats amounts paid for property costing $500 or less as an expense on its applicable financial statement in 2014

Example N ‐Election to apply de minimis safe harbor

• The laptop computers are not materials or supplies • Therefore, the amounts Nadine pays for the computers must generally

be capitalized as amounts paid for the acquisition of tangible property• The office chairs are materials and supplies • Thus the amounts paid for the office chairs are deductible in the

taxable year in which they are first used in the business• If Nadine properly elects to apply the de minimis safe harbor to

amounts paid in 2014, then she must apply the de minimis safe harbor to amounts paid for the computers and the office chairs, rather than treat the office chairs as the costs of materials and supplies

• Under the de minimis safe harbor, Nadine may not capitalize the amounts paid for the computers nor treat the office chairs as materials and supplies

• Instead she may deduct the amounts paid for the computers and the office chairs in the taxable year paid

IRS LB&I 04‐0313‐001

• This memorandum provides direction to the field in examinations of the repair versus capitalization issue– Instructs employees to discontinue audits of costs to maintain, replace or improve tangible property

– Not to begin examining those issues for tax years beginning on or after December 31, 2012 and before 2014

– Examinations of tax years beginning on or after January 1, 2014 employees are to apply the regulations in effect and follow normal exam procedures

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IRS LB&I 04‐0313‐001What Does this Mean?

• IRS directs employees to “stand down” from audit activity for tax years beginning in 2012 and 2013 if the taxpayer did not file a Form 3115, Application for Change of Accounting Method

• The 2014 year remains untouched and normal exam procedures will apply

• The 2012 (LB&I‐4‐0312‐004) and 2013 directives apply to the treatment of costs incurred to maintain, replace or improve tangible property, and to correlative issues involving the disposition of property

• The directives do not apply to audits of issues for which the IRS has provided specific guidance

Draft of New Form 3115


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Scoop Dates for Post Filing Season

• August 5, 2015

• September 23, 2015

• October 21, 2015

July Webinars

• Preparing for an IRS Audit – July 22, Noon to 1:00 ‐Your client has been informed that they will be subject to and IRS audit. Tips on how to preparer, what information you should gather, pre‐audit analysis and other issues will be discussed.

• Issues Related to Estates, Procedures and Developments in Estate Tax Law – July 23, Noon to 1:00 ‐What’s new with Estates tax law? An overview of some of the recent estate issues and a review of typical estate tax issues that you face with your clients.

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ACA Week 2015Get ready for the 2016 filing season and ACA

• ACA Week October 19, 2015 – October 23, 2015– The Marketplace and Affordability: October 19, 2015 ‐Noon to 1 pm (CST) – 1 hour of CPE

– Exemptions and Shared Responsibility Payment: October 20, 2015 ‐ Noon to 1 pm (CST) – 1 hour of CPE

– Premium Tax Credit: October 21, 2015 ‐ Noon to 1 pm (CST) 1 hour of CPE

– Shared Allocations: October 22, 2015 – Noon to 2 pm(CST) 2 hours of CPE

– Employer Issues and Cadillac Tax: October 23, 2015 – Noon to 2 pm (CST) – 2 hours of CPE

ACA Week 2015

• Registration: – To register: https://goo.gl/RnW5nG

• Special Discount!! (must be pre‐registered for all 5 classes): $200 (7 hours of CPE)

• The Marketplace and Affordability: October 19, 2015 ‐ Noon to 1 pm (CST) – 1 hour of CPE ‐ $35

• Exemptions and Shared Responsibility Payment: October 20, 2015 ‐ Noon to 1 pm (CST) – 1 hour of CPE ‐ $35

• Premium Tax Credit: October 21, 2015 ‐ Noon to 1 pm (CST) – 1 hour of CPE ‐ $35

• Shared Allocations: October 22, 2015 – Noon to 2 pm (CST) – 2 hours of CPE ‐ $70

• Employer Issues and Cadillac Tax: October 23, 2015 – Noon to 2 pm (CST) – 2 hours of CPE ‐ $70

2015 Farm Tax Schools

• November 9, 2015 to December 15, 2015 • 8 Locations in Iowa• Registration and the Fall Brochure will be out in August

• The program is intended for tax professionals and is designed to provide up‐to‐date training on current tax law and regulations.

• The program stresses practical information to facilitate the filing of individual and small business returns, in addition to farm returns.

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2015 Farm Tax Schools‐ Dates and Locations

• Waterloo: Nov 9‐10• Sheldon: Nov. 10‐11• Red Oak: Nov. 11‐12• Ottumwa: Nov. 12‐13• Mason City: Nov. 16‐17• Maquoketa: Nov. 23‐24• Denison: Dec. 7‐8• Ames: Dec. 14‐15 – live as well as attendance via webinar available

CALT Website

http://www.calt.iastate.edu/

Tour of the CALT Website

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CALT Staff

Roger A. McEowenCALT Director and is a Leonard Dolezal Professor in Agricultural LawEmail: [email protected]: (515) 294‐4076Fax: (515) 294‐0700

Kristine A. TidgrenStaff AttorneyE‐mail: [email protected]: (515) 294‐6365Fax: (515) 294‐0700

CALT Staff

Kristy S. MaitreTax SpecialistE‐mail: [email protected]: (515) 296‐3810Fax: (515) 294‐0700

Tiffany KayserProgram AdministratorEmail: [email protected]: (515) 294‐5217Fax: (515) 294‐0700

Repair Regulations Materials and Supplies

Documents

Transcript of Repair Regulations Materials and Supplies