TAP: Repair vs. Capital Expenditure

General Description:

The objective of the Tax Accounting Series is for the participant to acquire a basic understanding as to how the various tax accounting rules apply in determining when an item is taxable or deductible and in what year an item is taxable and deductible. This course specifically addresses when items may be treated as a deductible repair expense or a capital expenditure.

Learning Objective:

After completing this course the participant will be able to:

• Define "routine maintenance" for real and personal property as well as the sale harbor election.
• Describe the options for the treatment of materials and supplies.
• Apply the 2% test for building improvements and the safe harbor election of Reg. §1.263(a)-3(h).
• Apply the $2,500 or $5,000 de minimis test and the safe harbor election.
• Apply the BAR test: Is the improvement a Betterment, Adapting the property to a new or different use, or Restoration of the property?
• Apply the "unit of property" rules.
• Illustrate the disposition rules and calculate the remaining adjusted basis of the property that has been disposed.
• Discuss the financial conformity election requirement and the relevance of an Applicable Financial Statement.
• Discuss how the Tax Cuts and Jobs Act affects leasehold improvements (qualified ­improvement property) and the property eligible for both the §179 deduction and bonus depreciation.

Instructors:

Mark A. Vogel is a retired professor and director of the University of Denver Graduate Tax Program, where for 38 years he taught courses in individual, fiduciary, tax accounting, partnership, and corporate taxation. He is the author of Divorce Taxation Guide (John Wiley & Sons) and Individual Taxation (Shepards/McGraw-Hill). He received a J.D. and LL.M. in Taxation from the University of Denver College of Law and an undergraduate accounting degree from the University of Notre Dame. He is also a CPA licensed in Illinois.

Related Courses: