Proposed regulations: Interest capitalization requirements for improvements to designated property

Type
:
Obligation
Tax Area
:
Corporate Income Tax
Status
:
Proposal
Qualification
:
Various
Implemented date
:
NA
Country
:
United States
Date added
14 May
,
2024
Docxster’s Summary

The proposed regulations provide guidance on the interest capitalization requirements for designated property. The proposed regulations also provide guidance on the treatment of certain debt instruments as designated property. The proposed regulations would apply to taxable years beginning on or after the date of publication of the Treasury decision adopting these rules as final regulations.

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Article

The U.S. Treasury Department and IRS today released proposed regulations (REG-133850-13) that would:

  • Remove the “associated property rule” and similar rules from Treas. Reg. § 1.263A-11(e)(1)(ii) and (iii) relating to the interest capitalization requirements for improvements that constitute the production of “designated property” under section 263A(f)
  • Modify the definition of “improvement” under Treas. Reg. to § 1.263A-11(f) to clarify that Treas. Reg. § 1.263A-11(f) applies only to property purchased and further produced before it is placed in service
  • Amend Treas. Reg. § 1.263A-8(d)(3) to update the definition of “improvement” so that it is consistent with the modified definition of “improvement,” including the exceptions, safe harbors, and elections provided under Treas. Reg. § 1.263(a)-3

The proposed regulations are proposed to apply to tax years beginning after the date the final regulations are published in the Federal Register. However, taxpayers may choose to apply the proposed regulations for tax years beginning after May 15, 2024, and on or before the date the final regulations are published in the Federal Register.

Comments and requests for a public hearing on the proposed regulations are due by July 15, 2024. 

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Source :
KPMG
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