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I N D E V E L O P M E N T 2 0 1 5 9 S P O N S O R P A I D P R O F I L E www.schencksc.com SCHENCK SC Tangible property regulations: What you need to know By Corey Kolbe, Schenck SC O ne of the most contentious issues between the IRS and taxpayers is the issue of capital expenditures — what must be capitalized (carried on the balance sheet) and what can be expensed. What is changing? In September 2013, the IRS issued final regulations on this issue. While they are not perfect and will still be subject to interpretation by taxpayers and the IRS, they do provide some much needed guidance. The regulations are very comprehensive and drastically change the rules in terms of what can be expensed and what must be capitalized when it comes to fixed asset purchases, repairs and maintenance and materials and supplies. What needs to be done? The new regulations require taxpayers to adopt the new accounting methods provided in the regulations. This means that you may be required to file one or more Forms 3115, Application for Change in Accounting Method, with your 2014 income tax returns to comply with the regulations. Interestingly, because some parts of the regulations are retroactive, it will also be important to review all your prior years' expenditures (whether capitalized or expensed) under the new rules to determine whether the item should remain capitalized or if it can be expensed. The new regulations will be favorable for many taxpayers In many ways, the new rules are more liberal than the old rules. As a result, some items that were previously capitalized must now be expensed. This may result in tax deductions for many taxpayers — and in some cases, these will be significant. These new regulations will require some significant changes to your business' accounting procedures. We can help take you through this process. Corey Kolbe, CPA, CFP®, MST, is a tax shareholder at Schenck SC and leader of the firm's Real Estate & Construction industry team. His experience includes income tax planning and compliance for closely-held businesses as well as multi-state and consolidated corporations. If you have questions regarding the tangible property regulations, please contact Corey at (920) 996-1132 or (800) 236-2246. SPONSORED CONTENT UNION SQUARE APARTMENTS Appleton Projected completion date: Sept. 1, 2015 Developer: Commonwealth Development Corp. F ond du Lac-based Commonwealth Development Corp. is building this 50-unit apartment and townhome project near Wisconsin Avenue in Appleton with help from the city and state. On two acres, the former industrial plot is between Commercial and Winnebago streets. The Union Square Apartments, located at 500 E. Winnebago St., will be built as a WHEDA (Wisconsin Housing and Economic Development Authority) tax credit project in Appleton's newest tax incremental financing district. Construction began in the fall of 2014 for the apartments; townhomes will be built this spring. Two- and three-bedroom units will be available for rent by low- and moderate-income qualifying tenants in September. Marissa Downs, senior vice president downs@commonwealthco.net commonwealthco.net/development