The following information was released by Associated Equipment Distributors (AED):
On Jan. 6, the IRS issued a notice seeking comments on dual-use property as it considers issuing new guidance to reduce disputes between equipment dealers and the agency.
Specifically, the IRS wants to know whether construction and agricultural equipment held simultaneously for sale or lease to customers (dual use property) by a dealer in such equipment is properly treated as inventoriable property or as a depreciable property. The notice also asks for comments about when dual-use property may be eligible for like-kind exchange (LKE) treatment.
When an item of equipment is put in the dirt by a rental customer, it suffers significant wear and tear and should be eligible for cost recovery for tax purposes. AED believes that the tax treatment of equipment held for rent should be based on all the facts and circumstances applicable to their rental business.
AED will closely analyze the IRS request and will submit comments on this important notice. All comments are due June 16.
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Copyright 2013 States News Service
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Tags: Income Tax, IRS
