Pub. 4 2015 Issue 1

The CommunityBanker 18 The New Tangible Property Regulations and the Impact on Banks T By David W. Henning, CPA, CGMA he Tangible Property Regulations (TPRs), while years in the making, are now coming to the forefront in the form of final regulations that are effective for tax years beginning on or after January 1, 2014. While the rules are voluminous, most of these rule changes affect tax depreciation calculations and specifically real estate depreciation rules. Unfortu- nately, the IRS has required the majority of the TPRs to be implemented retroactively and via the filing of numerous additional special tax forms for tax year 2014. These rules not only affect how depreciation will be accounted for going forward but also require businesses to retroactively analyze their tax depreciation schedules and apply the changes to old assets as well. In most cases, these will be favorable adjustments; however, the filing of one or more Form 3115, Application for Change in Accounting Method, will be required. Upon first glance, these regulations do not appear to have a major impact for banks. Most of the changes are indeed tax changes and will not have a current impact on the financials other than a change in deferred tax assets/lia- bilities and related income tax receivable/payable balances. In many cases, the required adjustments are taxpayer favorable and will allow for entities to remove long term tax assets and turn them into current year tax deductions. However, the biggest fear, and possibly the largest effect on the financials, occurs when these changes are ignored. If BY THE NUMBERS