Leading Business Valuation Firm Gettry Marcus, CPA Discusses the New Tangible Property Regulations That Save Money

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On January 5, 2015, as part of its Always Looking Deeper initiative, the New York-based accounting firm Gettry Marcus CPA, P.C. comments on the Internal Revenue Service's recently-promulgated final tangible property regulations, which were nearly ten years in the making.

The new rules will ultimately mean more deductions for many taxpayers, said Kevin Leifer, Tax Director at Gettry Marcus, but the complexity of the regulations is baffling to many. “There's a lot of subjectivity in this, because whether or not an expenditure is considered deductible is determined by carefully assessing the specific circumstances of the expenditure in question,” said Leifer.

Leifer added that the amount of interpretation required means that for each individual expenditure, there are now more chances of arriving at a position that is favorable to taxpayers, but that if the income tax return is subsequently audited, it could open the door to IRS challenges.

Under the new regulations, taxpayers generally must capitalize amounts paid to acquire or produce tangible property, according to Leifer. Amounts paid to acquire or produce tangible property include all direct and indirect costs, including "inherently facilitative expenditures" (costs that facilitate the acquisition or production of tangible property - the regulations list eleven of them).

Another major change in the regulations, according to Leifer, relates to “units of property” or UOPs. The definition of a UOP, under the new rules, includes each building and its structural components. Building systems like HVAC, plumbing, fire/alarm systems, electrical, escalators and elevators are all considered separate UOPs. If an expenditure constitutes a betterment, adaptation or restoration of an UOP, that expenditure must be capitalized.

Complying with the new regulations will be tremendously burdensome and time-consuming for most businesses and individuals, says Leifer. “If you want to optimize your deductions and make sure you are fully compliant, we can assist in analyzing your fixed asset schedules and in complying with the required filings and elections. The new regulations may seem dizzying at first blush, but the good news is that there is the possibility that the time spent will achieve significant tax savings for you.”

About Gettry Marcus:

Gettry Marcus CPA, P.C. is a Top 200 firm nationally with offices in Woodbury, Long Island and New York City. We provide accounting, tax, and consulting services to commercial businesses, high net worth individuals and various industries which include Real Estate and Health Care. We have one of the premier and most credentialed Business Valuation and Litigation Groups in the New York Area.

Our experience in diverse industries and a highly talented and experienced professional staff gives us the ability to share valuable insights into our clients’ businesses, to better understand their goals and problems and to help them attain the vision they have for their company.

Gettry Marcus is "Always Looking Deeper" to build value for our clients. Always Looking Deeper is our promise to you that we will find meaningful answers and solutions to critical business and personal issues. It means that Gettry Marcus is invested in contributing to the success of our clients. It defines our corporate culture.

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Fayellen Dietchweiler
Gettry Marcus CPA, P.C
+1 (516) 364-3390 Ext: 225
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