CPEX
Should Client Expenditures be Capitalized or Expensed? A Guide to the New IRS Regulations

Date/Time: Tuesday, January 31, 2012, 1-3 p.m. Eastern Time

Several years after issuing proposed regulations, the IRS has issued temporary regulations relating to how Sections 162 and 263 apply to the acquisition, production, and improvement of tangible property. These regulations basically address the commonly encountered question: is an expenditure deductible, or must it be capitalized?

These important rules, which went into effect January 1, 2012, are critical for all tax practitioners to understand because they apply to a wide variety of transactions that business clients commonly enter into. All tax practitioners need to be familiar with these new rules. It is for this reason that this program, which covers these new rules and uses the IRS-provided examples as guides, is essential for both general tax practitioners and those with more specialized practices.

Major Topics:

• Tax treatment of incidental and nonincidental materials and supplies
• Electing to capitalize and depreciate rather than expense
• Rotable spare parts
• Applying the special de minimis rule allowing taxes to expense rather than capitalize
• Distinction between repair and capitalization
• Definition of capital expenditures
• Expenditures that facilitate and do not facilitate the acquisition of property
• Definition of a unit of property
• Special rules relating to lessors and lessees for improvements to leased property
• Direct and indirect costs of improving properties
• Activities treated as routine maintenance
• Rules relating to betterments and restorations of buildings

Learning Objectives:

• Understand how the new rules relating to expensing and capitalization work
• Applying the new rules by using some of the many examples the IRS has provided in the regulations as guides.
• Differentiate among the various tax treatments associated with materials and supplies, repairs, rentals, and leased property, amounts paid to acquire or produce tangible property, and amounts paid to improve property

Designed For: Tax practitioners advising clients as to whether client expenditure must be capitalized or may be expensed.

Presenters: Mike Tucker, CPA, Bob Lickwar, CPA

Level of knowledge: Advanced

CPE Credits: 2, Taxes

Prerequisite: An understanding of the tax rules relating to individual income tax

Advance Preparation: None

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