Calling All Tax Payers

By Garrett Shinn, CPA

Has your tax advisor brought you up to speed on the new IRS regulations regarding the capitalization and deduction of tangible personal property?

These changes apply to 2014 tax returns, so hopefully you’ve at least heard of them by now. The mandatory changes affect how repairs, maintenance, and other expenses can be deducted.

Taxpayers who change an accounting method are typically required to file a Form 3115 – formally known as an “Application for Change in Accounting Method”- even when the change is required; however, the IRS waived this requirement for small business taxpayers.

You may be thinking, “Great! One less form that I’m required to file.” But here’s something you may not know: whether or not you file the Form 3115 in regards to complying with the new tangible personal property regulations can have varying implications. For example, a taxpayer who files Form 3115 gains increased protection from IRS audit than a taxpayer who chooses not to file Form 3115. This is true even when both taxpayers are making the same change in accounting method in order to comply with the new rules. Perhaps even more advantageous than audit protection, whether or not you file a Form 3115 could generate a substantial tax savings or cost. Curious how these implications may affect your small business or real estate investments?

For more information, contact a Shinn & Co professional.