Posts Tagged ‘deductions’

Roofing Capitalization vs. Repairs

December 29, 2010

I was thoroughly pleased last week, when an accountant told me that our customers could be writing off as an expense the cost for replacing their roofs.  I knew that repairs could be written off as an expense.  I was under the understanding that new roofs had to be depreciated over 39 or 49 years or some other outrageously long time that would be well past most roofs useful lives.  Now, if you have a slate roof installed, it should last much, much longer.  But most commercial/industrial buildings go with your typical roofing system, which may come with a  15 or 20 year warranty(others are available, but not typical).

So, I thought great news!  Someone has finally wised up in our government and made some adjustments.  The National Roofing Contractors Association (NRCA) has been trying to get this changed for years.   But I wanted to look into it a little further.  I asked Norm (my controller) to do a little bit or research.  He went to a fairly well authenticated source  IRS.gov. where he dug up this little guide

http://www.irs.gov/businesses/article/0,,id=231440,00.html

After thoroughly reading this, I had to read it again. (OK , I really had to read it several more times and ask hey what do you think this means?)

On page 5 after reading the requirements, I thought oh yeah they can definitely expense this. (Good news)

Then I got to page 13 again and saw “….some taxpayers claimed deductions for installing new roofs,……” (ummm OK)

“…..the courts have utilized inconsistent approaches.”  (Now that’s not very helpful)

It goes on to cite two specific cases that seem the same to me, but in one (Oberman Mfg. Co. v. Commissioner) expensing was approved and in the other (Tsakopoulos v. Commissioner) it was determined to be a Capital Expenditure.

How anyone can figure out these IRS regulations is beyond me.  My best advice is to rely on your trusted professionals, but hey, it may be worth looking into!