Updated: May 3
I get a lot of questions and, quite frankly, push-back from clients who want to deduct everything as a 'Repair'.
However, that is not always possible according to Reg Sec 1.263(a).
So here is a synopsis of what I have researched over the years, beginning from the initial change in 2014. Some may disagree and feel free to contact me with your disagreement because this is a moving target, in my humble opinion.
Maintenance - a periodic expense that keeps equipment or a unit of property in running order, just as it is supposed to operate.
Repairs - returns the unit of property to its proper functioning position unless it is a:
Betterment - corrects a condition that existed when the property was purchased or an addition - adding a protective cage on forklift - or materially increases the efficiency of the unit of property
Restoration - the unit of property is in such a state of disrepair it is no longer useable for its intended purpose, ie, the front-end loader on the back of the lot
Adaptation - changes the unit of property into a new or different use
then those Repairs must be capitalized and depreciated (or Special Bonus Depreciation applied or Section 179)
And there you have it ... what is so hard about this stuff?