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On Friday February 28th, the IRS issued Revenue Procedure 2014-17.  This procedure has two important changes which are only available for a limited time:

 

  1. Late Partial Disposition Election—The Partial Disposition Election is part of the Proposed Regulations, and originally only applied to current year disposals for tax years beginning in 2014.  The IRS is now allowing this Election to be used for both current and prior year disposals for tax years beginning in 2012. <p">However, the application of the Election to prior year dispositions is only available for tax years beginning in 2012 and 2013!  In other words, the IRS is giving taxpayers a small window of opportunity to write off any replaced items that were incurred in previous tax years. EXAMPLE—Taxpayer buys a building in 2000. In 2010, they replace the original roof, and capitalize the replaced roof.  The taxpayer has been depreciating 2 roofs since 2010.  The taxpayer can make a Late Partial Disposition Election on their 2013 tax return to write off the removed original roof.  This Late Election cannot be made after 2013!
  2. Unwinding GAA elections—taxpayers who made GAA elections on previous returns can now revoke these election.  What happened? The IRS’s proposed GAA rules, which are expected to be effective for tax years beginning in 2014, will no longer allow for partial dispositions, which is a reversal of the previous Temporary Regulations.  Therefore, many taxpayers who placed buildings in GAAs to take advantage of the Temporary rules will need to revoke this election by the due date of their 2014 tax returns.

It’s tax season and everyone is overwhelmed. However, this has not stopped the IRS from issuing over 120 pages of new Procedures (with more to come) regarding the Tangible Property Regulations – and some of these changes affect your client’s 2013 tax returns.

For help with the complexities of the new changes, contact our friends at MS Consultants. Contact them to learn more about:

  • Making a Late Partial Disposition Election
  • The new Form 3115 – Reduced Filing Requirement for Small Taxpayers
  • Unwinding a GAA election – with filled in Form 3115 templates

Contact Jeff Hiatt at 508-878-4846 or by e-mail at This email address is being protected from spambots. You need JavaScript enabled to view it. to find out how you can take advantage of these new regulations.