Repairs and Change of Accounting Method: Not Quite to the End of the Road

Abstract

<p>The sentiment was widespread, when Rev. Proc. 2015-201 was issued on February 15, 2015, that the long-running saga of the line drawn between deductible repairs on the one hand and capitalized expenditures on the other had about come to a close with an unexpected link forged with change of accounting methods.2 The long-running battle between taxpayers and the Internal Revenue Service dating from the taxpayer victory in 2000 in Ingram Industries , Inc. and Subs. v. Commissioner3 and the 2005 Court of Appeals decision in FedEx Corp. v. United States,4 through the issuance of proposed regulations in 2006, 2008, the temporary regulations in 20115 and the final regulations in 2013 seemed to be coming to a close.6 That array of developments was followed by a blizzard of six revenue procedures.7 It became clear that the Internal Revenue Service, even with nearly a decade of pushing tax reform in this area, was ill-prepared to provide clear, unambiguous guidance to taxpayers and tax practitioners.</p>