Spring 2013 issue of Horizons

CONSTRUCTION

Impact of New Tangible Property Law on Construction Companies by Chris Coleman, CPA

T he new tangible property regulations contained within the American Taxpayer Relief Act of 2012 provide the most dramatic change in tax law in the area of expenditure capitalization to affect for-profit businesses since the overhaul of the Internal Revenue Code in 1986. It does not matter what form of business one is in, whether a “C” corporation, an “S” corporation, a partnership, an LLC, a sole proprietorship (Schedule C on individual return), or a rental (Schedule E on individual return); these new rules and requirements will apply.

Taxpayers will be required to file one or more Form(s) 3115 for each accounting method change for each separate entity, or trade or business. For example, an individual filing Form 1040 with three rental entities housed in LLCs will be required to file three (or more) separate Form(s) 3115. Please note that these regulations also provide potential opportunities. Taxpayers may be able to expense greater amounts for certain repairs, materials and supplies, and “de minimis” amounts.

www.RubinBrown.com | page 27