Dec 22, 2016 Notice 2017-6: Good News for Taxpayers Wanting to Benefit from the Tangible Property Regulations

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NOTICE 2017-6: GOOD NEWS FOR TAXPAYERS WANTING TO BENEFIT FROM THE TANGIBLE PROPERTY REGULATIONS

BACKGROUND

The IRS released Notice 2017-6, which better allows taxpayers to take advantage of the Tangible Property Regulations (TPRs). Taxpayers generally are not permitted to make an automatic method change if they made or requested a change for the same item during any of the five tax years ending with the year of change. This effectively prevents taxpayers from using the automatic change procedures to change the treatment of the same item more than once within a five-year period.

THE WAIVER

Rev. Proc. 2016‐29 waived the “5-year rule” for implementing TPR changes for any tax year beginning before January 1, 2016. Notice 2017-6 extends this waiver, which now applies to any tax year beginning before Jan. 1, 2017, effectively providing an additional year for taxpayers to comply with the TPRs. The applicable sections and Designated Change Numbers (DCNs) that Notice 2017-6 applies are as follows:

  • Section 6.14, relating to a change from a permissible to another permissible method of accounting for depreciation of MACRS property under § 1.168(i)-1, § 1.168(i)-7, and § 1.168(i)-8 (DCN) 7);
  • Section 6.15, relating to a change in method of accounting for dispositions of a building or structural component under § 1.168(i)-8 (DCN 205);
  • Section 6.16, relating to a change in method of accounting for dispositions of tangible depreciable assets (other than a building or its structural components) under § 1.168(i)-8 (DCN 206);
  • Section 6.17, relating to a change in method of accounting for dispositions of tangible depreciable assets in a general asset account under § 1.168(i)-1 (DCN 207); and
  • Section 11.08, relating to changes in methods of accounting for tangible property under the final tangible property regulations (DCN 184).

Click here to view Notice 2017-6.

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HOW CAN ICS TAX HELP?

ICS Tax has nationally-renowned experts in the Tangible Property Regulations that can assist with compliance-related issues as well as take advantage of several taxpayer-friendly provisions under the TPRs. For a free consultation, please contact an ICS Tax representative.

Author: Alexander Bagne, JD, CPA, MBA, CCSP. Contributing Author: Mike Piper, LEED AP