IRS: Tangible Property Dispositions No Longer Allow ‘Phantom Assets'

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New guidance on automatic changes for proposed rules on disposition of tangible property will no longer allow general asset account elections to create “phantom assets,” an Internal Revenue Service official said as the guidance was released.
Though much of Revenue Procedure 2014-17 includes the same changes provided in Rev. Proc. 2012-20, the agency has also made some substantial modifications, Kathleen Reed, Chief of Branch 7 within the Office of Chief Counsel, Income Tax and Accounting, said Feb. 28. Reed spoke on a panel at the 2014 tax law conference sponsored by the Federal Bar Association Section on Taxation in Washington.
The IRS and Treasury Department issued the much anticipated guidance Feb. 28 to help taxpayers unwind positions taken under the old tangible property rules, the temporary regulations and forthcoming final rules on dispositions of tangible property.
The agencies issued final rules (T.D. 9636) in September 2013 on how taxpayers may deduct or capitalize expenses for maintaining, fixing and replacing tangible property (179 DTR GG-1, 9/16/13). At that time, the IRS also issued reproposed rules on tangible property dispositions (REG-110732-13).