[Federal Register Volume 77, Number 242 (Monday, December 17, 2012)]
[Rules and Regulations]
[Pages 74583-74586]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-30252]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9564]
RIN 1545-BJ93


Guidance Regarding Deduction and Capitalization of Expenditures 
Related to Tangible Property

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Technical amendments.

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SUMMARY: This document contains amendments to temporary regulations 
relating to guidance regarding deduction and capitalization of 
expenditures related to tangible property. These amendments change the 
applicability dates of the temporary regulations to taxable years 
beginning on or after January 1, 2014, while permitting taxpayers to 
choose to apply the temporary regulations for taxable years beginning 
on or after January 1, 2012. The amendments to the temporary 
regulations will affect all taxpayers that acquire, produce, or improve 
tangible property.

DATES: These amendments are effective December 17, 2012.

FOR FURTHER INFORMATION CONTACT: Concerning Sec. Sec.  1.162-3T, 1.162-
4T, 1.162-11T, 1.263(a)-1T, 1.263(a)-2T, 1.263(a)-3T, and 1.263(a)-6T, 
Merrill D.

[[Page 74584]]

Feldstein or Alan S. Williams, Office of Associate Chief Counsel 
(Income Tax & Accounting), (202) 622-4950 (not a toll-free call); 
Concerning Sec. Sec.  1.165-2T, 1.167(a)-4T, 1.167(a)-7T, 1.167(a)-8T, 
1.168(i)-1T, 1.168(i)-7T, 1.168(i)-8T, 1.263A-1T, and 1.1016-3T, 
Kathleen Reed or Patrick Clinton, Office Associate Chief Counsel 
(Income Tax & Accounting), (202) 622-4930 (not a toll-free call).

SUPPLEMENTARY INFORMATION:

Background

    The temporary regulations that are the subject of these amendments 
are under sections 162, 165, 167,168, 263, 263A, and 1016 of the 
Internal Revenue Code. The temporary regulations (TD 9564) were 
published in the Federal Register on Tuesday, December 27, 2011 (76 FR 
81060). Because the temporary regulations are applicable to taxable 
years beginning on or after January 1, 2012, the IRS and the Treasury 
Department are concerned that taxpayers are expending resources to 
comply with temporary regulations that may not be consistent with 
forthcoming final regulations. For more information about the temporary 
regulations and these amendments, see Notice 2012-73, which is in IRB 
2012-51.
    Taxpayers choosing to apply the provisions of the temporary 
regulations to taxable years beginning on or after January 1, 2012, may 
continue to rely on the procedures by which a taxpayer may obtain the 
automatic consent of the Commissioner of Internal Revenue to change its 
methods of accounting provided in Revenue Procedures 2012-19 (2012-14 
IRB 689), and 2012-20 (2012-14 IRB 700), both of which are available at 
IRS.gov.

Need for Amendments

    For the reasons discussed, the IRS and the Treasury Department have 
decided to amend the applicability dates of the temporary regulations.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Amendments of Publication

    Accordingly, 26 CFR part 1 is amended by making the following 
technical amendments.

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 continues to read as 
follows:

    Authority:  26 U.S.C. 7805 * * *
    Section 1.168(i)-1T also issued under 26 U.S.C. 168(i)(4). * * *


0
Par. 2. Section 1.162-3T is amended by revising paragraph (j) to read 
as follows:


Sec.  1.162-3T  Materials and supplies (temporary).

* * * * *
    (j) Effective/applicability date--(1) In general. This section 
generally applies to amounts paid or incurred (to acquire or produce 
property) in taxable years beginning on or after January 1, 2014. 
However, a taxpayer may apply paragraph (e) of this section (the 
optional method of accounting for rotable and temporary spare parts) to 
taxable years beginning on or after January 1, 2014. Section 1.162-3 as 
contained in 26 CFR part 1 edition revised as of April 1, 2011, applies 
to taxable years beginning before January 1, 2014.
    (2) Optional early application. Except for paragraph (e) of this 
section, a taxpayer may choose to apply this section to amounts paid or 
incurred (to acquire or produce property) in taxable years beginning on 
or after January 1, 2012. A taxpayer may choose to apply paragraph (e) 
of this section (the optional method of accounting for rotable and 
temporary spare parts) to taxable years beginning on or after January 
1, 2012.
* * * * *

0
Par. 3. Section 1.162-4T is amended by revising paragraph (c) to read 
as follows:


Sec.  1.162-4T  Repairs (temporary).

* * * * *
    (c) Effective/applicability date--(1) In general. This section 
applies to taxable years beginning on or after January 1, 2014. Section 
1.162-4 as contained in 26 CFR part 1 edition revised as of April 1, 
2011, applies to taxable years beginning before January 1, 2014.
    (2) Optional early application. A taxpayer may choose to apply this 
section to taxable years beginning on or after January 1, 2012.
* * * * *

0
Par. 4. Section 1.162-11T is amended by revising paragraph (c) to read 
as follows:


Sec.  1.162-11T  Rentals (temporary).

* * * * *
    (c) Effective/applicability date--(1) In general. This section 
applies to taxable years beginning on or after January 1, 2014. Section 
1.162-11 as contained in 26 CFR part 1 edition revised as of April 1, 
2011, applies to taxable years beginning before January 1, 2014.
    (2) Optional early application. A taxpayer may choose to apply this 
section to taxable years beginning on or after January 1, 2012.
* * * * *

0
Par. 5. Section 1.165-2T is amended by revising paragraph (d) to read 
as follows:


Sec.  1.165-2T  Obsolescence of nondepreciable property (temporary).

* * * * *
    (d) Effective/applicability date--(1) In general. This section 
applies to taxable years beginning on or after January 1, 2014. Section 
1.165-2 as contained in 26 CFR part 1 edition revised as of April 1, 
2011, applies to taxable years beginning before January 1, 2014.
    (2) Optional early application. A taxpayer may choose to apply this 
section to taxable years beginning on or after January 1, 2012.
* * * * *

0
Par. 6. Section 1.167(a)-4T is amended by:
0
1. Revising paragraph (b)(1).
0
2. Revising the heading and introductory text to paragraph (b)(2).
    The revisions read as follows:


Sec.  1.167(a)-4T  Leased property (temporary).

* * * * *
    (b) * * *
    (1) In general. Except as provided in paragraphs (b)(2) and (b)(3) 
of this section, this section applies to taxable years beginning on or 
after January 1, 2014.
    (2) Application of this section to leasehold improvements placed in 
service after December 31, 1986, in taxable years beginning before 
January 1, 2014. For leasehold improvements placed in service after 
December 31, 1986, in taxable years beginning before January 1, 2014, a 
taxpayer may--
* * * * *

0
Par. 7. Section 1.167(a)-7T is amended by revising paragraph (f) to 
read as follows:


Sec.  1.167(a)-7T  Accounting for depreciable property (temporary).

* * * * *
    (f) Effective/applicability date--(1) In general. This section 
applies to taxable years beginning on or after January 1, 2014. Section 
1.167(a)-7 as contained in 26 CFR part 1 edition revised as of April 1, 
2011, applies to taxable years beginning before January 1, 2014.
    (2) Optional early application. A taxpayer may choose to apply this 
section to taxable years beginning on or after January 1, 2012.
* * * * *

0
Par. 8. Section 1.167(a)-8T is amended by revising paragraph (h) to 
read as follows:

[[Page 74585]]

Sec.  1.167(a)-8T  Retirements (temporary).

* * * * *
    (h) Effective/applicability date--(1) In general. This section 
applies to taxable years beginning on or after January 1, 2014. Section 
1.167(a)-8 as contained in 26 CFR part 1 edition revised as of April 1, 
2011, applies to taxable years beginning before January 1, 2014.
    (2) Optional early application. A taxpayer may choose to apply this 
section to taxable years beginning on or after January 1, 2012.
* * * * *

0
Par. 9. Section 1.168(i)-1T is amended by:
0
1. Revising paragraph (m)(1).
0
2. Redesignating paragraph (m)(3) as paragraph (m)(4).
0
3. Redesignating paragraph (m)(2) as paragraph (m)(3) and adding new 
paragraph (m)(2).
0
4. In redesignated paragraph (m)(3), last sentence, the language 
``paragraph (m)(2)'' is removed and ``paragraph (m)(3)'' is added in 
its place.
    The revision and addition read as follows:


Sec.  1.168(i)-1T  General asset accounts (temporary).

* * * * *
    (m) * * *
    (1) In general. This section applies to taxable years beginning on 
or after January 1, 2014. Section 1.168(i)-1 as contained in 26 CFR 
part 1 edition revised as of April 1, 2011, applies to taxable years 
beginning before January 1, 2014.
    (2) Optional early application. A taxpayer may choose to apply this 
section to taxable years beginning on or after January 1, 2012.
* * * * *

0
Par. 10. Section 1.168(i)-7T is amended by:
0
1. Revising paragraph (e)(1).
0
2. Redesignating paragraph (e)(3) as paragraph (e)(4).
0
3. Redesignating paragraph (e)(2) as paragraph (e)(3) and adding new 
paragraph (e)(2).
    The revision and addition read as follows:


Sec.  1.168(i)-7T  Accounting for MACRS property (temporary).

* * * * *
    (e) * * *
    (1) In general. This section applies to taxable years beginning on 
or after January 1, 2014.
    (2) Optional early application. A taxpayer may choose to apply this 
section to taxable years beginning on or after January 1, 2012.
* * * * *

0
Par. 11. Section 1.168(i)-8T is amended by:
0
1. Revising paragraph (i)(1).
0
2. Redesignating paragraph (i)(3) as paragraph (i)(4).
0
3. Redesignating paragraph (i)(2) as paragraph (i)(3) and adding new 
paragraph (i)(2).
    The revision and addition read as follows:


Sec.  1.168(i)-8T  Dispositions of MACRS property (temporary).

* * * * *
    (i) * * *
    (1) In general. This section applies to taxable years beginning on 
or after January 1, 2014.
    (2) Optional early application. A taxpayer may choose to apply this 
section to taxable years beginning on or after January 1, 2012.
* * * * *

0
Par. 12. Section 1.263(a)-0T is amended by:
0
1. Adding new entries in the table of contents for Sec.  1.263(a)-
1T(g)(1) and (g)(2).
0
2. Adding new entries in the table of contents for Sec.  1.263(a)-
2T(k)(1) and (k)(2).
0
3. Adding new entries in the table of contents for Sec.  1.263(a)-
3T(p)(1) and (p)(2).
    The additions read as follows:


Sec.  1.263(a)-0T  Table of Contents (temporary).

* * * * *


Sec.  1.263(a)-1T  Capital expenditures; In general (temporary).

* * * * *
    (g) * * *
    (1) In general.
    (2) Optional early application.
* * * * *


Sec.  1.263(a)-2T  Amounts paid to acquire or produce tangible property 
(temporary).

* * * * *
    (k) * * *
    (1) In general.
    (2) Optional early application.
* * * * *


Sec.  1.263(a)-3T  Amounts paid to improve tangible property 
(temporary).

* * * * *
    (p) * * *
    (1) In general.
    (2) Optional early application.
* * * * *


Sec.  1.263(a)-1T  [Amended]

0
Par. 13. Section 1.263(a)-1T is amended by revising paragraph (g) to 
read as follows:


Sec.  1.263(a)-1T  Capital expenditures: In general (temporary).

* * * * *
    (g) Effective/applicability date--(1) In general. This section 
applies to taxable years beginning on or after January 1, 2014. Section 
1.263(a)-1 as contained in 26 CFR part 1 edition revised as of April 1, 
2011, applies to taxable years beginning before January 1, 2014.
    (2) Optional early application. A taxpayer may choose to apply this 
section to taxable years beginning on or after January 1, 2012.
* * * * *

0
Par. 14. Section 1.263(a)-2T is amended by revising paragraph (k) to 
read as follows:


Sec.  1.263(a)-2T  Amounts paid to acquire or produce tangible property 
(temporary).

* * * * *
    (k) Effective/applicability date--(1) In general. Except for 
paragraphs (f)(2)(iii), (f)(2)(iv), (f)(3)(ii), and (g) of this 
section, this section generally applies to taxable years beginning on 
or after January 1, 2014. Paragraphs (f)(2)(iii), (f)(2)(iv), 
(f)(3)(ii), and (g) of this section apply to amounts paid or incurred 
(to acquire or produce property) in taxable years beginning on or after 
January 1, 2014. Section 1.263(a)-2 as contained in 26 CFR part 1 
edition revised as of April 1, 2011, applies to taxable years beginning 
before January 1, 2014.
    (2) Optional early application. Except for paragraphs (f)(2)(iii), 
(f)(2)(iv), (f)(3)(ii), and (g) of this section, a taxpayer may choose 
to apply this section to taxable years beginning on or after January 1, 
2012. A taxpayer may choose to apply paragraphs (f)(2)(iii), 
(f)(2)(iv), (f)(3)(ii), and (g) of this section to amounts paid or 
incurred (to acquire or produce property) in taxable years beginning on 
or after January 1, 2012.
* * * * *

0
Par. 15. Section 1.263(a)-3T is amended by revising paragraph (p) to 
read as follows:


Sec.  1.263(a)-3T  Amounts paid to improve tangible property 
(temporary).

* * * * *
    (p) Effective/applicability date--(1) In general. This section 
applies to taxable years beginning on or after January 1, 2014. Section 
1.263(a)-3 as contained in 26 CFR part 1 edition revised as of April 1, 
2011, applies to taxable years beginning before January 1, 2014.
    (2) Optional early application. A taxpayer may choose to apply this 
section to taxable years beginning on or after January 1, 2012.
* * * * *

[[Page 74586]]


0
Par. 16. Section 1.263(a)-6T is amended by revising paragraph (c) to 
read as follows:


Sec.  1.263(a)-6T  Election to deduct or capitalize certain 
expenditures (temporary).

* * * * *
    (c) Effective/applicability date--(1) In general. This section 
applies to taxable years beginning on or after January 1, 2014. Section 
1.263(a)-3 as contained in 26 CFR part 1 edition revised as of April 1, 
2011, applies to taxable years beginning before January 1, 2014. For 
the effective dates of the enumerated election provisions, see those 
Internal Revenue Code sections and the regulations thereunder.
    (2) Optional early application. A taxpayer may choose to apply this 
section to taxable years beginning on or after January 1, 2012.
* * * * *

0
Par. 17. Section 1.263A-1T is amended by:
0
1. Revising paragraph (m)(2).
0
2. Redesignating paragraph (m)(3) as paragraph (n).
    The revision reads as follows:


Sec.  1.263A-1T  Uniform capitalization of costs (temporary).

* * * * *
    (m) * * *
    (2) Paragraph (b)(14), the introductory phrase of paragraph (c)(4), 
the last sentence of paragraphs (e)(2)(i)(A) and (e)(2)(ii)(E), 
paragraph (l), and paragraph (m)(2) of this section apply to amounts 
paid or incurred (to acquire or produce property) in taxable years 
beginning on or after January 1, 2014. Section 1.263A-1 as contained in 
26 CFR part 1 edition revised as of April 1, 2011, applies to taxable 
years beginning before January 1, 2014. A taxpayer may choose to apply 
paragraph (b)(14), the introductory text of paragraph (c)(4), the last 
sentence of paragraphs (e)(2)(i)(A) and (e)(2)(ii)(E), and paragraph 
(l) of this section to amounts paid or incurred (to acquire or produce 
property) in taxable years beginning on or after January 1, 2012.
* * * * *

0
Par. 18. Section 1.1016-3T is amended by revising paragraph (j)(3) to 
read as follows:


Sec.  1.1016-3T  Exhaustion, wear and tear, obsolescence, amortization, 
and depletion for periods since February 13, 1913 (temporary).

* * * * *
    (j) * * *
    (3) Application of Sec.  1.1016-3T(a)(1)(ii)--(i) In general. 
Paragraph (a)(1)(ii) of this section applies to taxable years beginning 
on or after January 1, 2014. Section 1.1016-3(a)(1)(ii) as contained in 
26 CFR part 1 edition revised as of April 1, 2011, applies to taxable 
years beginning before January 1, 2014.
    (ii) Optional early application. A taxpayer may choose to apply 
paragraph (a)(1)(ii) of this section to taxable years beginning on or 
after January 1, 2012.
* * * * *

Guy R. Traynor,
Federal Register Liaison, Publication & Regulation Branch, Legal 
Processing Division, Associate Chief Counsel, Procedure & 
Administration.
[FR Doc. 2012-30252 Filed 12-14-12; 8:45 am]
BILLING CODE 4830-01-P