FROM THE OFFICE OF PUBLIC AFFAIRS
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December 30, 2003js-1069
Today, the Treasury Department issued proposed, temporary, and final regulations to clarify which changes in depreciation are changes in method of accounting. These regulations and a revenue procedure also issued today will provide certainty for taxpayers and reduce controversy.
In recent years, uncertainty has existed regarding whether a change in the period of recovery of depreciable property was a change in method of accounting. The regulations provide that a change in the period of recovery specifically assigned by the Code, the regulations, or other published guidance is a change in method of accounting. The regulations also provide, however, that a change in the useful life of depreciable property is not a change in method of accounting if the useful life of the property is not specifically assigned by the Code, the regulations, or other published guidance. In addition, the regulations provide that a change in depreciation method or convention is a change in method of accounting.
Previously, the IRS issued guidance to permit a taxpayer who had claimed less than the depreciation allowable for its property to change its method of determining depreciation for the property. This guidance has enabled many taxpayers who had claimed less than the depreciation allowable to claim the full depreciation allowable. Today, the IRS and Treasury Department issued a revenue procedure to permit a taxpayer to make this change after the disposition of the depreciable property. As a result, a taxpayer who has claimed less than the depreciation allowable for its property will no longer risk permanently losing an allowable depreciation deduction.
The texts of the proposed, temporary, final regulations and the revenue procedure are attached. They will be published in the Federal Register in the next few days and are subject to minor technical changes.
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