Pub. 4 2015-2016 Issue 2

Fall 2015 15 When opportunity presents itself, will you be ready? WWW.MOSSADAMS .COM/AUTOMOT I VE Accounting, auditing, and consulting services offered through Moss Adams LLP. Strategic advisory and investment banking services offered through Moss Adams Capital LLC. Whether you’re looking to merge, sell your dealership, or acquire one, having the right navigator can make all the difference. We’ve helped thousands of businesses protect value, evaluate strategic alternatives, and prepare for the unexpected. Put our knowledge to work for you. For the past couple of years, small businesses and tax professionals have petitioned the IRS for some form of relief from the compliance burden, particularly for provisions that must be applied retrospectively. On February 13, 2015, the IRS responded with Rev. Proc. 2015-20, which simplifies procedures for complying with the tangible property regulations for qualifying small taxpayers. These procedures are available for any business with total assets of less than $10 million or average gross receipts for the preceding three tax years of $10million or less. They allow the new regulations to be applied on a prospective basis only—for the 2014 tax year and onward. Additionally, they don’t require the filing of any accounting method change to bring a taxpayer into compliance. While the relief is welcome news to many, those that plan to take advantage of it need to fully understand the implications of doing so. First, the relief isn’t an exemption from the tangible property regulations in general. Additionally, any benefit from capitalized repairs or partial dispositions in tax years prior to 2014 may not be claimed. Finally, audit protection for tax years prior to 2014 isn’t received. California Conformity The state has confirmed that it will follow the provisions in the federal tangible property regulations, any federal accounting method changes filed pursuant to those regulations, and the small taxpayer relief provided by Rev. Proc. 2015-20. Final Thoughts The recent tangible property regulations are here to stay and affect decisions made by dealerships each and every day. Although no one- size-fits-all approach to implementation exists, a taxpayer’s objectives will drive this process. At a minimum, compliance is required. However, a taxpayer may need to work with their tax advisor to determine what tax deferral and/or savings opportunities exist and whether it makes sense to pursue these. Significant effort will go into the 2014 tax year to ensure compliance is reached, all appropriate elections and accounting method changes are filed, and material opportunities have been addressed. Going forward, taxpayers will need a sufficient understanding of the regulations andmay want to reevaluate their current processes to streamline compliance and better identify opportunities. Kristen Yergler, CPA, Tax SeniorManager, provides corporate taxation services to a variety of clients, focusing primarily on accountingmethods, including the recently issued tangible property regulations, and accounting for income taxes (ASC 740), including uncertain tax positions and valuation allowances. (949) 623-4151 or kristen.yergler@mossadams.com Dustin Marciniak, CPA, Tax Senior Manager, provides tax consulting and compliance services, focusing on complex business transaction planning, and tax strategy implementation for closely held businesses and their owners. (949) 221-4063 or dustin.marciniak@mossadams.com Sid Tobiason, CPA, Tax Partner, has practiced accounting since 1978. He advises clients on federal income tax, estate tax, entity structure, the purchase and sale of businesses, ownership transition, and succession planning. (858) 627-1448 or sid.tobiason@mossadams.com