Section 263a

Section 263a requires taxpayers to capitalize direct and indirect costs properly allocable to real or tangible personal property produced by the taxpayer as well as real property and personal property described in section 1221 a 1 acquired by the taxpayer for resale.

Section 263a. The unicap rules apply to those who in the course of their trade or business. Section 263a often referred to as the uniform capitalization rules or unicap requires taxpayers to capitalize direct and indirect costs properly allocable to real or tangible personal property produced or acquired for resale by the taxpayer. 263a b 2 property acquired for resale real or personal property described in section 1221 a 1 which is acquired by the taxpayer for resale.

Section 263a is a section of the us tax code that contains the uniform capitalization or unicap rules which describe how cost types and their amounts are to be capitalized or expensed long term instead of expensed in the current tax period. The regulations under 1 263a 1 through 1 263a 6 provide guidance to taxpayers that are required to capitalize certain costs under section 263a. The section 263a regulations are expected to impact nearly all taxpayers with inventory that are subject to unicap.

Law and analysis section 263a of the internal revenue code provides that producers of real or tangible personal property must capitalize the direct costs and a proper share of the indirect costs of such property. These regulations generally apply to all costs required to be capitalized under section 263a except for interest that must be capitalized under section 263a f and the regulations thereunder. Irc section 263a details the uniform capitalization unicap rules that require certain costs normally expensed to be capitalized as part of inventory for tax purposes.

Section 263a of the internal revenue code of 1986 as added by this section and the amendment made by subsection b 1 repealing section 189 of this title shall not apply to interest costs which are allocable to any property. Section 263a is significant for the real estate industry and it is specifically important for land developers and large homebuilders whose average annual gross receipts are more than 10 million and contracts are in excess of two years.