Automatic Consent for Changing Accounting Methods under the "Repair Regs."
[ILLUSTRATION OMITTED] The IRS recently issued Rev. Proc. 2014-16 describing the procedures to obtain automatic consent for changing to accounting methods required or permitted under the "repair" final regulations (T.D. 9636) and temporary regulations (T.D. 9564). The final regulations are effective for tax years beginning on or after Jan. 1, 2014, but taxpayers may generally apply them to tax years beginning on or after Jan. 1, 2012. Taxpayers may apply the temporary repair regulations issued in 2011 to tax years beginning on or after Jan. 1, 2012, and before Jan. 1, 2014. Rev. Proc. 2014-16 supersedes Rev. Proc. 2012-19, which was released following the issuance of the temporary regulations. Rev. Proc. 2014-16 also updates Rev. Proc. 2011-14 to include procedures to obtain automatic consent for certain changes in accounting methods involving acquisitions, production, and improvements of tangible property. Rev. Proc. 2014-16 does not address dispositions; they are addressed in a separate revenue procedure. Section 3.02 of Rev. Proc. 2014-16 adds new Section 10.11 to the appendix of Rev. Proc. 2011-14 to permit automatic consent for changes to: * Deducting amounts paid or incurred to acquire or produce nonincidental materials and supplies for the first year in which the materials or supplies are used or consumed in the taxpayer's operations (Regs. Secs. 1.1623(a)(1) and 1.162-3(c)(1)); * Deducting amounts to acquire or produce incidental materials and supplies in the tax year in which they are paid or incurred (Regs. Secs. 1.162-3(a)(2) and 1.1623(c)(1)); * Deducting amounts paid or incurred to acquire or produce nonincidental ratable and temporary spare parts in the tax year in which the taxpayer disposes of the parts (Regs. Secs. 1.162-3(a)(3) and 1.162-3(c)(2)); * Using the optional method of accounting for ratable and temporary spare parts (Regs. Sec. 1.162-3(e)); or * Deducting amounts paid or incurred for repairs and maintenance, including a change in the classification of a unit of property, or, in the case of a building, a change in identifying the building structure or building systems (Regs. Secs. 1.162-4 and 1.263(a)-3(e)). The appendix revisions also apply to: * Capitalizing amounts paid or incurred for improvements to tangible property, including a change in the classification of a unit of property or, for a building, a change in identifying the building structure or building systems (Regs. Sec. 1.263(a)-3); * By dealers in property, deducting amounts paid or incurred for commissions and other transaction costs that facilitate the sale of property (Regs. Sec. 1.263(a)-l(e)(2)); * By nondealers in property, capitalizing amounts paid or incurred for commissions and other costs that facilitate the sale of property (Regs. Sec. 1.263(a)-l(e)); * Capitalizing amounts paid or incurred to acquire or produce property, and, if depreciable, to depreciating such property under Sec. 167 or 168 (Regs. Sec. 1.263(a)-2)); or * Deducting amounts paid or incurred in the process of investigating or pursuing the acquisition of real property (Regs. …