# Exhaustion, wear and tear, obsolescence, amortization, and depletion for periods since February 13, 1913 (temporary).
**AGENCY:**
Internal Revenue Service (IRS), Treasury.
**ACTION:**
Technical amendments.
**SUMMARY:**
This document contains amendments to temporary regulations relating to guidance regarding deduction and capitalization of expenditures related to tangible property. These amendments change the applicability dates of the temporary regulations to taxable years beginning on or after January 1, 2014, while permitting taxpayers to choose to apply the temporary regulations for taxable years beginning on or after January 1, 2012. The amendments to the temporary regulations will affect all taxpayers that acquire, produce, or improve tangible property.
**DATES:**
These amendments are effective December 17, 2012.
**FOR FURTHER INFORMATION CONTACT:**
Concerning §§ 1.162-3T, 1.162-4T, 1.162-11T, 1.263(a)-1T, 1.263(a)-2T, 1.263(a)-3T, and 1.263(a)-6T, Merrill D. Feldstein or Alan S. Williams, Office of Associate Chief Counsel (Income Tax & Accounting), (202) 622-4950 (not a toll-free call); Concerning §§ 1.165-2T, 1.167(a)-4T, 1.167(a)-7T, 1.167(a)-8T, 1.168(i)-1T, 1.168(i)-7T, 1.168(i)-8T, 1.263A-1T, and 1.1016-3T, Kathleen Reed or Patrick Clinton, Office Associate Chief Counsel (Income Tax & Accounting), (202) 622-4930 (not a toll-free call).
**SUPPLEMENTARY INFORMATION:**
**Background**
The temporary regulations that are the subject of these amendments are under sections 162, 165, 167,168, 263, 263A, and 1016 of the Internal Revenue Code. The temporary regulations (TD 9564) were published in the *Federal Register* on Tuesday, December 27, 2011 (76 FR 81060). Because the temporary regulations are applicable to taxable years beginning on or after January 1, 2012, the IRS and the Treasury Department are concerned that taxpayers are expending resources to comply with temporary regulations that may not be consistent with forthcoming final regulations. For more information about the temporary regulations and these amendments, see Notice 2012-73, which is in IRB 2012-51.
Taxpayers choosing to apply the provisions of the temporary regulations to taxable years beginning on or after January 1, 2012, may continue to rely on the procedures by which a taxpayer may obtain the automatic consent of the Commissioner of Internal Revenue to change its methods of accounting provided in Revenue Procedures 2012-19 (2012-14 IRB 689), and 2012-20 (2012-14 IRB 700), both of which are available at IRS.gov.
**Need for Amendments**
For the reasons discussed, the IRS and the Treasury Department have decided to amend the applicability dates of the temporary regulations.
**List of Subjects in 26 CFR Part 1**
Income taxes, Reporting and recordkeeping requirements.
**Amendments of Publication**
Accordingly, 26 CFR part 1 is amended by making the following technical amendments.
**26 CFR Part 1**
**PART 1—INCOME TAXES**
*Paragraph 1.* The authority citation for part 1 continues to read as follows:
**Authority:**
26 U.S.C. 7805 * * *
Section 1.168(i)-1T also issued under 26 U.S.C. 168(i)(4). * * *
**26 CFR Part 1**
*Par. 2.* Section 1.162-3T is amended by revising paragraph (j) to read as follows:
§ 1.162-3T
(j) *Effective/applicability date* —(1) *In general.* This section generally applies to amounts paid or incurred (to acquire or produce property) in taxable years beginning on or after January 1, 2014. However, a taxpayer may apply paragraph (e) of this section (the optional method of accounting for rotable and temporary spare parts) to taxable years beginning on or after January 1, 2014. Section 1.162-3 as contained in 26 CFR part 1 edition revised as of April 1, 2011, applies to taxable years beginning before January 1, 2014.
(2) *Optional early application.* Except for paragraph (e) of this section, a taxpayer may choose to apply this section to amounts paid or incurred (to acquire or produce property) in taxable years beginning on or after January 1, 2012. A taxpayer may choose to apply paragraph (e) of this section (the optional method of accounting for rotable and temporary spare parts) to taxable years beginning on or after January 1, 2012.
**26 CFR Part 1**
*Par. 3.* Section 1.162-4T is amended by revising paragraph (c) to read as follows:
§ 1.162-4T
(c) *Effective/applicability date* —(1) *In general.* This section applies to taxable years beginning on or after January 1, 2014. Section 1.162-4 as contained in 26 CFR part 1 edition revised as of April 1, 2011, applies to taxable years beginning before January 1, 2014.
(2) *Optional early application.* A taxpayer may choose to apply this section to taxable years beginning on or after January 1, 2012.
**26 CFR Part 1**
*Par. 4.* Section 1.162-11T is amended by revising paragraph (c) to read as follows:
§ 1.162-11T
(c) *Effective/applicability date* —(1) *In general.* This section applies to taxable years beginning on or after January 1, 2014. Section 1.162-11 as contained in 26 CFR part 1 edition revised as of April 1, 2011, applies to taxable years beginning before January 1, 2014.
(2) *Optional early application.* A taxpayer may choose to apply this section to taxable years beginning on or after January 1, 2012.
**26 CFR Part 1**
*Par. 5.* Section 1.165-2T is amended by revising paragraph (d) to read as follows:
§ 1.165-2T
(d) *Effective/applicability date* —(1) *In general.* This section applies to taxable years beginning on or after January 1, 2014. Section 1.165-2 as contained in 26 CFR part 1 edition revised as of April 1, 2011, applies to taxable years beginning before January 1, 2014.
(2) *Optional early application.* A taxpayer may choose to apply this section to taxable years beginning on or after January 1, 2012.
**26 CFR Part 1**
*Par. 6.* Section 1.167(a)-4T is amended by:
1. Revising paragraph (b)(1).
2. Revising the heading and introductory text to paragraph (b)(2).
The revisions read as follows:
§ 1.167(a)-4T
(b) * * *
(1) *In general.* Except as provided in paragraphs (b)(2) and (b)(3) of this section, this section applies to taxable years beginning on or after January 1, 2014.
(2) *Application of this section to leasehold improvements placed in service after December 31, 1986, in taxable years beginning before January 1, 2014.* For leasehold improvements placed in service after December 31, 1986, in taxable years beginning before January 1, 2014, a taxpayer may—
**26 CFR Part 1**
*Par. 7.* Section 1.167(a)-7T is amended by revising paragraph (f) to read as follows:
§ 1.167(a)-7T
(f) *Effective/applicability date* —(1) *In general.* This section applies to taxable years beginning on or after January 1, 2014. Section 1.167(a)-7 as contained in 26 CFR part 1 edition revised as of April 1, 2011, applies to taxable years beginning before January 1, 2014.
(2) *Optional early application.* A taxpayer may choose to apply this section to taxable years beginning on or after January 1, 2012.
**26 CFR Part 1**
*Par. 8.* Section 1.167(a)-8T is amended by revising paragraph (h) to read as follows:
§ 1.167(a)-8T
(h) *Effective/applicability date* —(1) *In general.* This section applies to taxable years beginning on or after January 1, 2014. Section 1.167(a)-8 as contained in 26 CFR part 1 edition revised as of April 1, 2011, applies to taxable years beginning before January 1, 2014.
(2) *Optional early application.* A taxpayer may choose to apply this section to taxable years beginning on or after January 1, 2012.
**26 CFR Part 1**
*Par. 9.* Section 1.168(i)-1T is amended by:
1. Revising paragraph (m)(1).
2. Redesignating paragraph (m)(3) as paragraph (m)(4).
3. Redesignating paragraph (m)(2) as paragraph (m)(3) and adding new paragraph (m)(2).
4. In redesignated paragraph (m)(3), last sentence, the language “paragraph (m)(2)” is removed and “paragraph (m)(3)” is added in its place.
The revision and addition read as follows:
§ 1.168(i)-1T
(m) * * *
(1) *In general.* This section applies to taxable years beginning on or after January 1, 2014. Section 1.168(i)-1 as contained in 26 CFR part 1 edition revised as of April 1, 2011, applies to taxable years beginning before January 1, 2014.
(2) *Optional early application.* A taxpayer may choose to apply this section to taxable years beginning on or after January 1, 2012.
**26 CFR Part 1**
*Par. 10.* Section 1.168(i)-7T is amended by:
1. Revising paragraph (e)(1).
2. Redesignating paragraph (e)(3) as paragraph (e)(4).
3. Redesignating paragraph (e)(2) as paragraph (e)(3) and adding new paragraph (e)(2).
The revision and addition read as follows:
§ 1.168(i)-7T
(e) * * *
(1) *In general.* This section applies to taxable years beginning on or after January 1, 2014.
(2) *Optional early application.* A taxpayer may choose to apply this section to taxable years beginning on or after January 1, 2012.
**26 CFR Part 1**
*Par. 11.* Section 1.168(i)-8T is amended by:
1. Revising paragraph (i)(1).
2. Redesignating paragraph (i)(3) as paragraph (i)(4).
3. Redesignating paragraph (i)(2) as paragraph (i)(3) and adding new paragraph (i)(2).
The revision and addition read as follows:
§ 1.168(i)-8T
(i) * * *
(1) *In general.* This section applies to taxable years beginning on or after January 1, 2014.
(2) *Optional early application.* A taxpayer may choose to apply this section to taxable years beginning on or after January 1, 2012.
**26 CFR Part 1**
*Par. 12.* Section 1.263(a)-0T is amended by:
1. Adding new entries in the table of contents for § 1.263(a)-1T(g)(1) and (g)(2).
2. Adding new entries in the table of contents for § 1.263(a)-2T(k)(1) and (k)(2).
3. Adding new entries in the table of contents for § 1.263(a)-3T(p)(1) and (p)(2).
The additions read as follows:
§ 1.263(a)-0T
§ 1.263(a)-1T
(g) * * *
(1) In general.
(2) Optional early application.
§ 1.263(a)-2T
(k) * * *
(1) In general.
(2) Optional early application.
§ 1.263(a)-3T
(p) * * *
(1) In general.
(2) Optional early application.
**26 CFR Part 1**
§ 1.263(a)-1T
*Par. 13.* Section 1.263(a)-1T is amended by revising paragraph (g) to read as follows:
§ 1.263(a)-1T
(g) *Effective/applicability date* —(1) *In general.* This section applies to taxable years beginning on or after January 1, 2014. Section 1.263(a)-1 as contained in 26 CFR part 1 edition revised as of April 1, 2011, applies to taxable years beginning before January 1, 2014.
(2) *Optional early application.* A taxpayer may choose to apply this section to taxable years beginning on or after January 1, 2012.
**26 CFR Part 1**
*Par. 14.* Section 1.263(a)-2T is amended by revising paragraph (k) to read as follows:
§ 1.263(a)-2T
(k) *Effective/applicability date* —(1) *In general.* Except for paragraphs (f)(2)(iii), (f)(2)(iv), (f)(3)(ii), and (g) of this section, this section generally applies to taxable years beginning on or after January 1, 2014. Paragraphs (f)(2)(iii), (f)(2)(iv), (f)(3)(ii), and (g) of this section apply to amounts paid or incurred (to acquire or produce property) in taxable years beginning on or after January 1, 2014. Section 1.263(a)-2 as contained in 26 CFR part 1 edition revised as of April 1, 2011, applies to taxable years beginning before January 1, 2014.
(2) *Optional early application.* Except for paragraphs (f)(2)(iii), (f)(2)(iv), (f)(3)(ii), and (g) of this section, a taxpayer may choose to apply this section to taxable years beginning on or after January 1, 2012. A taxpayer may choose to apply paragraphs (f)(2)(iii), (f)(2)(iv), (f)(3)(ii), and (g) of this section to amounts paid or incurred (to acquire or produce property) in taxable years beginning on or after January 1, 2012.
**26 CFR Part 1**
*Par. 15.* Section 1.263(a)-3T is amended by revising paragraph (p) to read as follows:
§ 1.263(a)-3T
(p) *Effective/applicability date* —(1) *In general.* This section applies to taxable years beginning on or after January 1, 2014. Section 1.263(a)-3 as contained in 26 CFR part 1 edition revised as of April 1, 2011, applies to taxable years beginning before January 1, 2014.
(2) *Optional early application.* A taxpayer may choose to apply this section to taxable years beginning on or after January 1, 2012.
**26 CFR Part 1**
*Par. 16.* Section 1.263(a)-6T is amended by revising paragraph (c) to read as follows:
§ 1.263(a)-6T
(c) *Effective/applicability date* —(1) *In general.* This section applies to taxable years beginning on or after January 1, 2014. Section 1.263(a)-3 as contained in 26 CFR part 1 edition revised as of April 1, 2011, applies to taxable years beginning before January 1, 2014. For the effective dates of the enumerated election provisions, see those Internal Revenue Code sections and the regulations thereunder.
(2) *Optional early application.* A taxpayer may choose to apply this section to taxable years beginning on or after January 1, 2012.
**26 CFR Part 1**
*Par. 17.* Section 1.263A-1T is amended by:
1. Revising paragraph (m)(2).
2. Redesignating paragraph (m)(3) as paragraph (n).
The revision reads as follows:
§ 1.263A-1T
(m) * * *
(2) Paragraph (b)(14), the introductory phrase of paragraph (c)(4), the last sentence of paragraphs (e)(2)(i)(A) and (e)(2)(ii)(E), paragraph (l), and paragraph (m)(2) of this section apply to amounts paid or incurred (to acquire or produce property) in taxable years beginning on or after January 1, 2014. Section 1.263A-1 as contained in 26 CFR part 1 edition revised as of April 1, 2011, applies to taxable years beginning before January 1, 2014. A taxpayer may choose to apply paragraph (b)(14), the introductory text of paragraph (c)(4), the last sentence of paragraphs (e)(2)(i)(A) and (e)(2)(ii)(E), and paragraph (l) of this section to amounts paid or incurred (to acquire or produce property) in taxable years beginning on or after January 1, 2012.
**26 CFR Part 1**
*Par. 18.* Section 1.1016-3T is amended by revising paragraph (j)(3) to read as follows:
§ 1.1016-3T
(j) * * *
(3) *Application of § 1.1016-3T(a)(1)(ii)* —(i) *In general.* Paragraph (a)(1)(ii) of this section applies to taxable years beginning on or after January 1, 2014. Section 1.1016-3(a)(1)(ii) as contained in 26 CFR part 1 edition revised as of April 1, 2011, applies to taxable years beginning before January 1, 2014.
(ii) *Optional early application.* A taxpayer may choose to apply paragraph (a)(1)(ii) of this section to taxable years beginning on or after January 1, 2012.
Guy R. Traynor,
Federal Register Liaison, Publication & Regulation Branch, Legal Processing Division, Associate Chief Counsel, Procedure & Administration.