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Addressing Head on the Form 3115 Controversy Under the New Repair/Capitalization Regulations

In addressing the Treasury’s new repair/capitalization regulations under Code Sections 164, 168 and 263, many practitioners overlooked that the regulations required affected taxpayers to file a change in the method of accounting method (Form 3115) unless exempted:

[E]xcept as otherwise stated, a change to comply with the final regulations is a change in method of accounting to which the provisions of sections 446 and 481 and the accompanying regulations apply.   (Preamble to TD 9636 Guidance Regarding Deduction and Capitalization of Expenditures Related to Tangible Personal Property)

While recently issued Rev. Proc. 2015-20 provides relief, the rules are complicated.

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