Accounting Method Changes for Capitalizing Intangible Assets
In December, 2003, the IRS issued final regulations on the capitalization of expenditures to acquire or create intangible assets. Then in 2004, the IRS provided a general capitalization rule for certain categories of intangible assets. The regulations affected Regs.1.167(a)-3, 1.263(a), and 1.446-5. To comply with these regulations, many taxpayers needed to make a change to their method of accounting. This caused the IRS to issue Revenue Procedure 2006-12 to provide guidance as to how taxpayers can apply for automatic consent to a change in accounting method to follow these regulations.
Read more »
American Recovery and Reinvestment Act of 2009 - Effect on Fixed Assets Management
In passing the American Recovery and Reinvestment Act of 2009, Congress hopes to strengthen the economy by "creating jobs, cutting taxes and investing in our country's future." The Act seeks to do so by a combination of investments and tax cuts. President Obama signed the American Recovery and Reinvestment Act of 2009 into law on February 17, 2009. This article will look at the principal provisions of the Act that affect fixed assets management. Most, but not all, of the tax provisions described below are temporary, usually effective only for 2009 or sometimes for 2009 and 2010.
Read more »
Bonus Depreciation
There is an additional depreciation deduction allowed on qualifying property in the year it is placed in service. The deduction is 50% of the asset's unadjusted depreciable basis and it reduces the asset's basis on which other depreciation may then be claimed. This additional deduction is termed "additional first-year depreciation" or "bonus depreciation." The rules governing bonus depreciation can be found in IRS Code Section 168(k). This article will answer all of your questions about this deduction.
Read more »
Capitalizing Intangible Assets: Final Regulations
On January 5, 2004, the IRS issued final regulations on the capitalization of expenditures to acquire or create intangible assets. The IRS has been working on further clarification of this issue for intangible assets for more than a year. In December 2002, it issued proposed regulations to give guidance as to which expenditures relating to intangibles should be capitalized. Now these regulations, with some changes, have been finalized. They affect Regs.1.167(a)-3, 1.263(a), and 1.446-5.
Read more »
Changing the Use of MACRS Property
Regulations have been issued for depreciating MACRS property when its use changes but the taxpayer who owns the property remains the same.
Read more »
Correct Handling of Goodwill
Goodwill is a valuable asset of any business. When acquiring an existing business, goodwill often represents a significant component of the purchase price.
Read more »
Defining Section 1245 Property
A common misconception is that Section 1245 property consists only of personal property. This is simply not true. While Section 1245 property does include all types of personal property, it also includes certain types of real property.
Read more »
Depreciation and Accounting Method Changes
In December 2006, the IRS provided additional guidance on accounting method changes that affect depreciation. It issued final and temporary regulations, as well as a new Revenue Procedure 2007-16. Their purpose was to provide taxpayers with more certainty when handling depreciation changes and, therefore, to decrease the risk of tax controversy when such changes are made.
Read more »
Depreciation for State Tax Returns
Whenever Congress passes a new tax law, each state must assess how adopting the federal law will affect state revenue. The states do not always choose to follow federal law or, when they do, may choose to only follow it partially. This is especially true when federal changes are made to the way we depreciate assets because the amount of allowable depreciation expense can have a major impact on taxable income. As a result, state depreciation rules are often different from federal depreciation rules.
Read more »
Depreciation Recapture
Depreciation recapture should be thought of as recapturing a tax benefit that has been accessed and used and now we must recapture it (i.e., pay all or part of it back) because the asset is being disposed.
Read more »
