Tangible property regulations “safe harbors” for cable system owners

Tangible property regulations “safe harbors”

The IRS issued industry-specific guidance (Rev. Proc. 2015-12) that includes safe harbors that cable system owners may use in lieu of the fact-intensive tangible property regulations.

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The guidance in Rev. Proc. 2015-12 is not mandatory, but instead provides two alternative safe harbors—a “network asset maintenance allowance” and a “unit of property” method—that taxpayers within the scope of the guidance may use in determining whether costs incurred in connection with cable network assets may be deducted as routine repairs and maintenance, or instead must be capitalized under section 263(a) and recovered through depreciation.

A report from KPMG LLP reviews the guidance and provides insights into the relative advantages of the new safe harbors compared with the tangible property regulations. Each taxpayer would need to carefully weigh its own situation against the options available in the revenue procedure.


Read the January 2015 report [PDF 189 KB] prepared by KPMG LLP: What’s News in Tax: Cable System Operators: New Safe Harbors for Applying the Tangible Property Regulations

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