The IRS has created new procedures to allow businesses with less than $10 million in assets or annual gross receipts to apply the final tangible property regulations prospectively beginning with the first tax year on or after Jan. 1, 2014, and to make their method changes for that year without filing a Form 3115.
The new procedures could substantially lower the burden to implement the final regulations for taxpayers that qualify as small businesses. Many of them may be less reluctant to take advantage of tax savings opportunities prospectively offered by the final rules. It is important to note that these small businesses must still implement the regulations, and there are still many required changes and annual elections. Using the simplified procedures will preclude them from using an opportunity to accelerate deductions on certain costs capitalized in prior years.
Tax Flash 2015-03 contains details.
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