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IRS releases final regulations on allocation of inventory costs

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Tax Hot Topics newsletterThe IRS has released final regulations (TD 9843) under the uniform capitalization rules in Section 263A that broadly impact basic definitions relied on by all taxpayers with inventory and modify certain simplified methods. The regulations finalize proposed regulations commonly referred to as the “negative additional Section 263A regulations.” The final regulations are effective for taxable years beginning on or after Nov. 20, 2018, but may be applied to the taxpayer’s first taxable year ending on or after Nov. 20, 2018. The IRS concurrently issued Rev. Proc. 2018-56, which provides automatic consent to change certain methods of accounting to comply with the new regulations.

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Sharon Kay
Partner, Accounting Methods
Washington National Tax Office
T +1 202 861 4140

John Suttora
Managing Director
Washington National Tax Office
T +1 202 521 1523

Tom Stockdale
Director, Strategic Federal Tax Solutions
T +1 312 602 8785

Caleb Cordonnier
Manager, Accounting Methods
Washington National Tax Office
T +1 202 521 1555

Debbie Shi
Manager, Accounting Methods
Washington National Tax Office
T +1 202 521 1501

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