R1 Concepts Flashcards
1
Q
When would a business’ property expenses acquired for resale (inventory) not be capitalized into the asset?
A
When the taxpayer’s average gross receipts for the preceding 3 YEARS do not exceed $10,000,000 AKA small retailers and wholesalers
- Small contractor & home construction contractors (that are also small contractors) don’t have to use the percentage of completion method to calculate income. They can elect to use the completed contract method.
- Also, instead having to use all of the rules under the Uniform Capitalization Rules for expensing, they just must capitalize interest if the debt is incurred or continued to finance the construction or production is greater than $1,000,000 and is expected to last longer than 12 months, property that will take longer than 2 years to produce.
