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Guidance – 2010 Section 179 Expense Rev. Proc. 2010-24

By Stacie Clifford Kitts, CPA

Golly, I am so busy that I haven’t  been paying attention to the latest announcements.

I am trying to catch up beginning with this one. Revenue Procedure 2010-24 – update on direct expensing of certain depreciable assets.  For those of you who are not CPA’s, accountants, or tax preparers in general,  direct expensing means that you can take an immediate deduction for tax purposes the cost of certain assets that you would otherwise need to capitalize and depreciate over a number of years.  This is important information in the planning process when you are considering  cash flow and income tax requirements.

For 2010,

.. the HIRE Act changes the $125,000 amount and the $500,000 amount to $250,000 and $800,000, respectively, for taxable years beginning in 2010.

Section 201 of the Act also provides that these amounts will not be adjusted for inflation for taxable years beginning in 2010.

A complete copy of the Revenue Procedure is provided below.

Rev. Proc. 2010-24

SECTION 1. PURPOSE

This revenue procedure modifies the inflation adjusted amounts in Rev. Proc. 2009-50, 2009-45 I.R.B. 617, that apply to taxpayers who elect to expense certain

depreciable assets under § 179 of the Internal Revenue Code. This modification reflects statutory changes enacted subsequent to the publication of Rev. Proc. 2009-50.

SECTION 2. BACKGROUND

Prior to the enactment of the Hiring Incentives to Restore Employment Act of 2010, Pub. L. No.111-147, 124 Stat. 71 (2010) (the HIRE Act), § 179(b)(1) prescribed a

$125,000 limitation (the $125,000 amount) on the aggregate cost of § 179 property that could be treated as an expense for taxable years beginning after 2006 and before 2011.

For those same taxable years, § 179(b)(2) provided that the $125,000 amount is reduced by the amount by which the cost of § 179 property placed in service during the

taxable year exceeds $500,000 (the $500,000 amount). Both the $125,000 amount and the $500,000 amount were adjusted for inflation annually under § 179(b)(5). For

taxable years beginning in 2010, section 3.20 of Rev. Proc. 2009-50 provides that the $125,000 amount and the $500,000 amount, adjusted for inflation, are $134,000 and

$530,000, respectively.

Section 102 of the Economic Stimulus Act of 2008, Pub. L. No.110-185, 122 Stat. 613 (2008), changed the $125,000 amount and the $500,000 amount to $250,000 and

$800,000, respectively, for taxable years beginning in 2008 and 2009, and also provided that these amounts will not be adjusted for inflation.

Similarly, § 201 of the HIRE Act changes the $125,000 amount and the $500,000 amount to $250,000 and $800,000, respectively, for taxable years beginning in 2010.

Section 201 of the Act also provides that these amounts will not be adjusted for inflation for taxable years beginning in 2010.

SECTION 3. APPLICATION

To reflect the statutory changes made to § 179 by § 201 of the HIRE Act, section 3.20 of Rev. Proc. 2009-50 is modified to read as follows:

.20 Election to Expense Certain Depreciable Assets. For taxable years beginning in 2010, under § 179(b)(1) the aggregate cost of any § 179 property a

taxpayer may elect to treat as an expense cannot exceed $250,000. Under § 179(b)(2), the $250,000 limitation is reduced (but not below zero) by the amount by which the cost

of § 179 property placed in service during the 2010 taxable year exceeds $800,000.

SECTION 4. EFFECT ON OTHER DOCUMENTS

Section 3.20 of Rev. Proc. 2009-50 is modified and superseded.

SECTION 5. EFFECTIVE DATE

This revenue procedure is effective for taxable years beginning in 2010.

SECTION 6. DRAFTING INFORMATION

The principal author of this revenue procedure is Patrick M. Clinton of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information

regarding this revenue procedure contact Patrick M. Clinton on (202) 622-4930 (not a toll-free call).

Guidance: This Notice Provides an Extension of Time to Pay For Spouses of Military Members Working In Specified Areas

Notice 2010-30 provides an extension of time to pay tax until October 15, 2010 to civilian spouses of military service members working in American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, or the U.S. Virgin Islands (“U.S. territory”) but claiming residence or domicile for tax purposes in a State or the District of Columbia pursuant to the Military Spouses Residency Relief Act (“MSRRA”).  In addition, this notice provides procedures for filing claims for refund of federal income taxes to civilian spouses of military service members working in a State or the District of Columbia but claiming residence or domicile for tax purposes in a U.S. territory under MSRRA.

Notice 2010-30 will be published in Internal Revenue Bulletin 2010-18 on May 3, 2010.

Guidance Regarding Change of Address

Revenue Procedure 2010-16 explains how the Internal Revenue Service is informed of a change of address.

Revenue Procedure 2010-16 will be in Internal Revenue Bulletin 2010-19, dated May 10, 2010.

Guidance: This Regulation Provides Notice of Public Hearing About Preparer Identifying Numbers

REG-134235-08 provides notice of public hearing on a notice of proposed rulemaking providing guidance to tax return preparers on furnishing an identifying number on tax returns and claims for refund of tax that they prepare.

Guidance: More on Reporting Uncertain Tax Positions – Better Read This One!

Announcement 2010-30 releases the draft schedule, Schedule UTP, accompanied by draft instructions that provide a further explanation of the Service’s proposal requiring reporting of uncertain tax positions, and invites public comment on the draft schedule and instructions.

Announcement 2010-30 will be in IRB 2010-19, dated May 10, 2010. 

Links:

Announcement 2010-30 releases the draft schedule, Schedule UTP, accompanied by draft instructions that provide a further explanation of the Service’s proposal requiring reporting of uncertain tax positions, and invites public comment on the draft schedule and instructions.

Announcement 2010-30 will be in IRB 2010-19, dated May 10, 2010.

Comments Invited For Guidance Priorty List

Notice 2010-43, the Department of Treasury and IRS invite public comments on recommendations for items that should be included on the 2010–2011 Guidance Priority List. Taxpayers may submit recommendations for guidance at any time during the year. Recommendations submitted by June 30, 2010, will be reviewed for possible inclusion on the original 2010-2011 Guidance Priority List. Recommendations received after June 30, 2010, will be reviewed for inclusion in the next periodic update.

Notice 2010-43 will appear in IRB 2010-22, dated June 1, 2010.

Guidance: Notice that Form 3115 Application for Change in Accounting Method Has Been Revised

Announcement 2010-32 informs taxpayers and practitioners that the IRS has revised Form 3115, Application for Change in Accounting Method, and its instructions.  The Form 3115 (Rev. December 2009) replaces the December 2003 version.  This announcement also provides a transition period and transition guidance.

Announcement 2010-32 will appear in IRB 2010-19 dated May 10, 2010.

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