Favorable Changes for Taxpayers Regarding Repairs and Maintenance
In prior years the IRS's position was that significant amounts spent on tangible property should be capitalized rather than treated as a repair and expensed. The theory was that as a property deteriorated, even through normal wear and tear, costs to bring the property back to its ordinarily efficient operating condition were to be capitalized as an improvement to the property. The new regulations allow taxpayers to expense amounts that are considered costs for repairs and maintenance. Only costs that result in a "Betterment", "Adaption" for a new use, or a "Restoration" are required to be capitalized. Additional information regarding the tangible property regulations can be found on the FAQs page in the Tangible Property Regulations section on our website.