A Holiday Gift from the IRS: New Repairs Regulations

Can the IRS and Treasury celebrate the spirit of the holiday season? This has long been a question that has divided observers. It seems to have been answered in the affirmative this past December 23, when the Government released long-awaited temporary and proposed regulations to clarify the difficult distinctions between currently deductible business repairs and capital improvements.

In general, taxpayers must capitalize amounts paid or incurred for: (1) permanent improvements or betterments which increase the value of property; (2) restoration of property; or (3) adapting property to a new or different use. But amounts paid for incidental repairs and maintenance are deductible business expenses. It is not always easy to distinguish between the two. (more…)