DCN help form 3115

[mactoolsix]

I think I've spent far too many hours reading Rev. Procs. & regs.!

Client has a Late Partial Disposition, requiring Form 3115, which in turn is requiring the filing of a protective 3115 for everything else (since TP will not be applying the ruling from Rev. Proc. 2015-20.)

As I understand it, Routine Maintenance Safe Harbor is an election. No DCN or 3115 required.

However, if the client has routine maintenance in prior years, do I need to include an accounting method change for routine maintenance.
If so, what DCN applies - I have read them all, and see nothing about routine maintenance on a building. (DCN 171 does not apply to a building)

Thanks!
Mike

[Lion]

I really notice only the most common, per the experts I've been reading. But, maybe...

#184 Adopting the definition of repair and maintenance or a change to capitalizing amounts for improvements to tangible property. (Preserves the ability for the routine maintenance safe harbor.)

Also, check the filled out Form 3115 example's in Lisa Ihm's booklet:

http://brasstax.com/3115%20Booklet.htm

[mactoolsix]

I really notice only the most common, per the experts I've been reading. But, maybe...

#184 Adopting the definition of repair and maintenance or a change to capitalizing amounts for improvements to tangible property. (Preserves the ability for the routine maintenance safe harbor.)

Also, check the filled out Form 3115 example's in Lisa Ihm's booklet:
http://brasstax.com/3115%20Booklet.htm

Hi Rita,
I've leaning to 184.
I did check the brass tax book, but did't find DCN reference for routine maintenance.

Thanks,
Mike

[Lion]

Lisa suggests "In Part 1 of the Form 3115, on Line 1, Check the (b) "Other" box and as a "Description" type in "ALL CODES 184-193 PER NEW REGS"." And, "Anywhere that your software requires you to type in an explanation simply type "TO COMPLY WITH NEW REGS"."

I guess 162 is also a possibility. Per the instructions "A change to deducting amounts paid or incurred for repair and maintenance or..."

[mactoolsix]

Lisa suggests "In Part 1 of the Form 3115, on Line 1, Check the (b) "Other" box and as a "Description" type in "ALL CODES 184-193 PER NEW REGS"." And, "Anywhere that your software requires you to type in an explanation simply type "TO COMPLY WITH NEW REGS"."

I guess 162 is also a possibility. Per the instructions "A change to deducting amounts paid or incurred for repair and maintenance or..."

I like the 162 suggestion . . . except notice the Scope limitation - Scope limitations of 4.02 do not apply if change is for first or
second taxable year beginning after 12/31/11. So if the taxpayer has a RM in 2012, this won't protect him. Wow, how many hoops do we need to jump through?

I'm going with 184.

A recent seminar - I believe it was Spidell - recommended against "ALL CODES 184-193 PER NEW REGS" as that includes DCN 185 Change to the regulatory accounting method. However, I don't like the idea of listing each code (8 or 9 of them) to cover most taxpayers.

thanks again!

Mike

[TaxGuyBill]

The Routine Maintenance Safe Harbor isn't even an election. It's just a built-in safe harbor. If it was an election, there wouldn't really need to be a 3115.


Anyways, I agree with #184.


Revenue Procedure 2012-19 added change #171 Revenue Procedure 2011-14 (the all-purpose 3115 Revenue Procedure) to by adding Section 3.19 to the "appendix".

Change #171 was based on the Temporary Regulations, which did not include buildings at all. The final Regulations took that same Safe Harbor and added Buildings.

Revenue Procedure 2014-16 superseded 2012-19 and changed section 3.19 to "reserved", in effect, deleting change #171 (and therefore any change specifically for the Routine Maintenance Safe Harbor).

Revenue Procedure 2015-14 is the current 'all-purpose' 3115 Revenue Procedure. It references §1.263(a)-3(i) [the Routine Maintenance Safe Harbor] in §10.11 (Tangible Property/the Capitalization Regulations) which covers change numbers 184-193.


In other words, your choices are 184-193. Number 184 seems to be the best fit.

http://www.irs.gov/pub/irs-drop/rp-15-14.pdf#page=205

[mactoolsix]

Bill,

Thanks for that excellent explanation!

I've been wondering about 171 and you cleared that up too.

Mike

[TaxGuyBill]

However, if the client has routine maintenance in prior years, do I need to include an accounting method change for routine maintenance.

I just re-read your post. What do you mean that the client "has routine maintenance in prior years"? If they have already been deducting things that way, it's not really a change, and no 3115 would be needed, would it?

[mactoolsix]

I just re-read your post. What do you mean that the client "has routine maintenance in prior years"? If they have already been deducting things that way, it's not really a change, and no 3115 would be needed, would it?

Last Spidell webinar sent this out with the Q&A follow-up:

The RMSH does require a change in accounting method. The routine maintenance safe harbor is found in Treas. Regs. §1.263(a)-3(i).
For transactions prior to 1/1/14 - All changes to comply with the provisions of Treas. Regs. §1.263(a)-3 require a change in accounting method except:
Treas. Regs. §1.263(a)-3(h) – Safe harbor for small taxpayers
Treas. Regs. §1.263(a)-3(n) – Election to capitalize repair and maintenance costs

If we have a client that had capitalized expenses which can now be considered Routine Maintenance we may want to do a 3115.

Reading the Rev Proc 2015-20, looks like if you do a 3115 for say a late disposition, then you will need to do a protective 3115 to comply with all the other regs.

[TaxGuyBill]

Now I understand. I thought you were saying that they have been deducting the expenses, and will still be deduction the expenses (not a "change"). If they were previously capitalizing them, I agree you need the 3115.