IRS Code and section numbers don’t sound like recreational reading for manufacturing industry professionals. Luckily, we’ve created a guide to explain why uniform capitalization rules (UNICAP) are important and how they impact your business. The details include:
- deductions for direct, indirect, and mixed service costs (and when they should be capitalized),
- how some manufacturing companies must observe UNICAP rules, while other companies are excluded from them,
- how to achieve full depreciation deductions for certain tangible personal property,
- which costs are normally deductible–but do not obtain deductibility through UNICAP, and
- methods to allocate direct and indirect costs (and the formula for percentage of costs for mixed service activities to allocate to UNICAP).
UNICAP is a significant IRS audit area, so download this CRInsight to help you navigate uniform capitalization rules, their exclusions, and ways you can allocate your costs.