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Abstract: 

The long awaited, final Section 263 regulations were issued on December 30, 2003. Those regulations, in general, provide guidance for tax treatment of costs that provide benefits to the taxpayer beyond the end of the tax year, including loan origination costs, costs to be accounted for under the twelve-month rule, amounts paid in connection with the acquisition of a trade or business, the 3½ month rule, and expenditures to be accounted for under the recurring item exception. The regulations, have now been clarified by Rev. Proc. 2004-23 (March 24, 2004), Rev. Proc. 2004-57 (September 1, 2004), Rev. Proc. 2005- 9 (December 13, 2004) and most recently by Rev. Proc. 2006-12 (December 22, 2005).At present it appears that Rev. Proc. 2006-12 will be the last word on the accounting method changes that are required under the Section 263 regulations issued in January 2004, but only time will tell.

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Affiliations:  1: Perry-Smith LLP.