New IRS Guidance Clarifies Capitalization of Tangible Property
If your business has fixed assets, this new guidance will mean a change to your accounting.
Last December, the IRS issued new guidance about the rules that govern capitalization of tangible property. Under the new guidance, it's likely that all taxpayers who use fixed assets in their business will need to make a change in their accounting method to stay in compliance. Most taxpayers will need a Section 481(a) adjustment; however, taxpayers will also be able to obtain automatic consent from the IRS to switch to a new method of accounting provided in the regulations. The changes will only affect expenditures made on or after January 1, 2012.