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Jun 30, 201411:18 AMSmall Business, Big Ideas

with Jean Willard

New business repair regulations: When is a repair actually a repair?

(page 2 of 2)

Within this regulation, there is clarification on when a cost is actually an item that should be capitalized as a fixed asset. They have spelled out a betterment test and require that we look at whether the cost adapts the unit of property to a new or different use, rebuilds the property to a like-new state after the end of its life, or replaces parts/combinations of parts that comprise a major component.

This topic is too complicated to be fully explored in a blog post, but you really should be aware that there are some major regulations that have now been finalized in this area, and it is important to have written documentation of your company’s policies. Be sure to address this issue with your tax professional/accountant and review how you are handling such expenses in your financial records.

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