Tangible Property Regulation Review
We remain the recognized subject matter experts on the “Repair Regulations.” For more than a decade, MSC has provided detailed commentary to the IRS Chief Counsel’s office on proposed tangible property regulation changes — and we are even quoted in the official regulations.
MSC continues to lead the way in helping clients navigate these evolving rules.
Overview of Tangible Property Regulations
The Tangible Property Regulations (TPRs), finalized by the IRS in 2014, provide detailed guidance on how businesses must treat amounts paid to acquire, produce, improve, or maintain tangible property. These regulations apply to nearly all taxpayers who own or use tangible assets—particularly real estate owners, developers, and operators. The TPRs are not only a compliance requirement but also offer meaningful tax-saving opportunities when applied correctly. By analyzing expenditures under these rules, taxpayers can often reclassify capitalized costs as deductible repairs, write off retired building components, and make method changes to claim missed deductions.
Key Tax-Saving Opportunities Under the TPRs
- Repair vs. Capitalization Analysis Reclassify certain capitalized costs as currently deductible repairs using the TPR “improvement standards,” reducing taxable income in the current year.
- Partial Asset Dispositions (PADs) Write off the remaining basis of building components that have been replaced (e.g., roofing, HVAC systems), even if the original property is still in service.
- De Minimis Safe Harbor Election Immediately expense qualifying items (e.g., furniture, fixtures, small equipment) below a certain threshold—up to $5,000 per invoice/item for taxpayers with audited financials.
- Routine Maintenance Safe Harbor Deduct costs for recurring activities that keep a building or system in ordinary efficient operating condition.
- Change in Accounting Method (Form 3115) Retroactively apply the TPRs and recover missed deductions from prior years—potentially generating significant current-year tax benefits.
MSC specializes in applying the TPRs strategically to help property owners and businesses uncover deductions, optimize fixed asset treatment, and remain IRS-compliant—all while improving cash flow.
How MSC Can Help with Tangible Property Regulations
MSC specializes in applying Tangible Property Regulations (TPRs) strategically to help property owners, investors, and businesses uncover overlooked deductions, correctly classify expenditures, and optimize the treatment of fixed assets. By conducting detailed repair and capitalization analyses, identifying partial asset dispositions, and supporting Form 3115 filings, MSC ensures clients not only remain compliant with IRS guidelines but also take full advantage of available tax-saving opportunities. This proactive approach improves current-year cash flow, enhances long-term tax efficiency, and provides peace of mind during audits or financial reviews.
Our Promise:
Over 600 national and regional CPA firms trust MSC’s expertise to help navigate the complexities of cost segregation studies. We are fully committed to our clients’ success—providing partner-level guidance, in-depth audit support, and exceptional service throughout every phase of a project.
- Experience and Credentials: MSC has a proven 30-year track record, with engineering and tax expertise, and experience across various property types and industries.
- Audit Support: MSC stands behind their work and takes great pride in the quality they deliver. All MSC engagements include complimentary lifetime audit support.
- Comprehensive Analysis: MSC performs site visits and deliver thorough reports that go beyond just software-generated results.
- Integration with Tax Strategy: MSC collaborates with your CPA or tax advisor to align the study with your broader tax planning goals, including step-ups, 1031 exchanges, and repairs vs. capitalization considerations.
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Contact us today to find out how we can capture extraordinary tax benefits for all types of entities.