IRS Repair Regulations Brought Huge Wins! AND, There is Still Time to Win More

IRS Repair Regulations have provided Anders clients astounding tax savings in the past year. Firm wide, our tax experts were able to uncover over $8,000,000 in additional tax deductions related to the Repair Regulations for our clients.  These additional tax deductions resulted in nearly $3,000,000 in Federal and State tax savings for those clients.  No tax law change in recent history has lead to these levels of tax savings.

At Anders, we have invested countless hours and dollars to ensure we were, and continue to be, at the forefront of the IRS Repair Regulations.  Our investment provided an in-depth Repair Regulations educational effort which included presentations, seminars, articles, and our blog series.

More importantly, many of our clients have been benefactors of our investment.  As several of our blogs and articles highlighted, the Repair Regulations could afford significant tax savings to many taxpayers. For a few examples of these potential savings, check out our earlier blog on the Partial Asset Disposition Election.

While every taxpayer was required to comply with the new regulations, not every taxpayer was a fit for the repair regulations study. This was due to perhaps the taxpayer’s industry, size of the business, and/or age of the business.  With this in mind, we reviewed every client’s individual tax situation to determine if Repair Regulations savings were available, and implemented a repair study for those who would benefit.

It is important to highlight that the Repair Regulations did not just benefit big businesses.  In fact, many small and midsize businesses, along with many small to mid-size real estate investors, reaped very large tax savings compared to the size of their business/real estate holdings.

In many cases, a large amount of the savings for 2014 tax returns related to pre-2014 transactions in which a special aspect of the law allowed taxpayers a one year opportunity to accumulate tax write-offs from multiple prior years – such as the write-off of old structural components of buildings, like roofs for example.  Essentially, this was a one-time tax deduction catch-up.

Even though celebrating these Repair Regulations wins is important, more important is highlighting that THERE IS STILL TIME for taxpayers to take advantage of the potential Repair Regulations tax savings related to pre-2014 transactions.  However, TIME IS RUNNING OUT.

The deadline to take advantage of potential tax deductions related to pre-2014 and 2014 transactions fall into three categories:

September 15, 2015 Deadline: This deadline applies to 2014 Partnership, S-Corporation, and C-Corporation tax returns that were properly extended for filing with the IRS.

October 15, 2015 Deadline: This deadline applies to 2014 individual income tax returns that were properly extended for filing with the IRS.  Individuals that may benefit from this are those with businesses reported on their individual tax return such as:

  • Sole proprietors reporting their income on Schedule C
  • Farmers reporting their income on Schedule F
  • Rental property owners reporting their income on Schedule E
  • Farm rental property owners reporting their income on Form 4835

180 Days from Original Filing Deadline: This deadline applies to 2014 tax returns that were filed by their respective due dates, BUT did NOT tax advantage of the Repair Regulations.   For these tax returns, an amended tax return can be filed by 180 days from the original filing date to take advantage of the potential tax savings related to pre-2014 and 2014 transactions.

This deadline is slightly confusing since different types of 2014 tax returns could be filed at different dates. The two most common dates associated with the 180 day rule are:

September 15, 2015 Deadline: This would apply to S-Corporation and C-Corporation tax returns which were originally due March 16, 2015.  If those two types of tax returns were filed on the original due date, then the 180 day repair regulation due date is September 15, 2015.

October 15, 2015 Deadline: This would apply to Partnership and Individual tax returns which were originally due April 15, 2015.  If those two types of tax returns were filed on the original due date, then the 180 day repair regulation due date is October 15, 2015.

As the first part of the 2014 tax filing season has proved, there are HUGE tax savings available in the IRS Repair Regulations.  While many think the time has passed to take advantage of the Repair Regulations, there is still time to take advantage of them.  HOWEVER, time is running out soon.

Contact an Anders advisor to learn more about the potential tax benefits and to determine if you or your business still has time to benefit from the Repair Regulations.