Uniform Capitalization Rule

[jmc]

Does Uniform Capitalization Rule apply to a business that receives designs, does color separation, print designs on paper/materials, then sell the product to a wholesaler/retailer? IRC 263A applies to costs incurred because of PRODUCTION or RESALE activities. I do not think that they are categorized as a manufacturer.

[OldJack]

I do not think your business would be subject to the capitalization rules as you would most likely fit the exceptions. See the quote below from pub 535.

Uniform capitalization rules.
You may be subject to the uniform capitalization
rules if you do any of the following, unless the
property is produced for your use other than
in a business or an activity carried on for profit.

1. Produce real property or tangible personal
property. For this purpose, tangible personal
property includes a film, sound recording,
video tape, book, or similar
property.

2. Acquire property for resale. However,
these rules do not apply to the following property.

(1). Personal property you acquire for resale if
your average annual gross receipts are
$10 million or less for the 3 prior tax years.

(2). Property you produce if you meet either of
the following conditions.
a. Your indirect costs of producing the
property are $200,000 or less.
b. You use the cash method of accounting
and do not account for inventories.

[jmc]

Uniform Capitalization Rule

Thanks for confirming.