Repairs & Maintenance

Most depreciation schedules we examine are full of expenditures that should have been realized as annual expenses.  Surely, a long and documented history of confusion and conflict exists in the treatment of repair and improvement expenditures. 

The IRS admits emphatically, “a taxpayers’ particular facts and circumstances must be examined” and that the current regulations have a “subjective nature”.  Still, interpretation of the regulations remains necessary to reach compliance even though they are conflicted and confusing.  In fact, the IRS provides in the content of the regulations over 175 fact patterns or examples as an ineffective attempt to provide clarity.

RPTI cost segregation documents enable clients to better maintain compliance to the IRS Repair and Maintenance Regulations as follows:

1. Identify changes to a property that should be capitalized per Code Section 263, and document as consistent with the original asset classification and cost segregation study. 
2. Identify changes that qualify as repairs per Code Section 162.
3. Identify and retire for a tax benefit those property components that have been physically removed or replaced due to changes, thus eliminating undesirable stranded assets.