Expense or Capitalize? (Completed)

Date: Friday, January 15, 2021
Instructor: Jennifer Kowal
Begin Time:  9:00am Pacific Time
10:00am Mountain Time
11:00am Central Time
12:00pm Eastern Time
CPE Credit:  2 hours for CPAs
2 hours Federal Tax Related for EAs and OTRPs
2 hours Federal Tax Law for CTEC

Understanding whether an expense should be capitalized or immediately deducted as an expense is a tax question faced by nearly every business. Taxpayers are often required to capitalize otherwise deductible transactional expenses such as legal fees and appraisals, and even more complicated rules apply to manufacturers and producers of tangible property in determining cost of goods sold.

This course covers the general tax rules requiring the capitalization of expenses that create an asset with a useful life that extends substantially beyond the taxable year, the rules for capitalizing transaction costs, and the section 263A regulations that apply to manufacturers and producers of tangible property. It also covers how the change in accounting method rules apply to deducted expenses that should be capitalized.

Who Should Attend
Tax practitioners at all levels who provide advice and return preparation on expenditures that may potentially be capitalized.

Topics Covered

  • Tax rules on capitalizing expenses with benefit that extends substantially beyond taxable year
  • Capitalization of costs relating to acquisition of tangible and intangible assets
  • Application of regulations under section 263A to manufacturers and producers of tangible property, and effect on cost of goods sold
  • "New" section 263A "repair regulations."
  • Applicability of change in accounting method rules to capitalization vs. expensing questions

Learning Objectives

  • Explain general rules determining when expenses should be capitalized
  • Identify rules that require capitalization of transaction costs into basis of acquired assets
  • Differentiate how section 263A requires capitalization of expenses into cost of goods sold
  • Recognize how new "repair regulations" apply in common scenarios

Level
Intermediate

Instructional Method
Group: Internet-based

NASBA Field of Study
Taxes (2 hours)

Program Prerequisites
Basic familiarity with concept of capitalization of expenditures.

Advance Preparation
None

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