Written Capitalization Policy

As we continue to address various areas of the Repair Regulations, which became effective January 1, 2014, it is important to stress again the importance for all taxpayers to adopt or update a written capitalization policy for non-tax purposes. In order to take advantage of certain provisions in the final regulations, and as good business practice, a written policy is required.

The written capitalization policy should include the following:

1. Amounts paid for property costing less than a specified amount that will be deducted on the financial statements (internal books and records if no financial statements are issued).
2. Amounts paid for assets that have an economic useful life of 12 months or less that will be deducted on the financial statements (internal books and records if no financial statements are issued).

Please contact a KOS advisor today if you would like to discuss your current capitalization policy and how these regulations apply to you.