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IRS practice unit: Section 263A computation for producers

IRS practice unit: Section 263A computation

The IRS Large Business and International (LB&I) division publicly released a “practice unit”—part of a series of IRS examiner “job aides” and training materials intended to describe for IRS agents leading practices about tax concepts in general and specific types of transactions.

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The title of this “process unit” (as referred to by the IRS) is: Producer’s 263A Computation

This guidance concerns application of the uniform capitalization of costs under section 263A for a taxpayer that is a producer and suggests audit techniques when examining a producer’s section 263A computation. The IRS provided the following words of caution:

This Practice Unit focuses on the simplified production method and does not cover the final IRC 263A Treasury Regulations that are effective November 20, 2018. The final treasury regulations still contain the simplified production method. The definitions and methods in the new regulations will be covered in another Practice Unit.

Read this practice unit on the IRS practice unit webpage (posting date of February 25, 2021).

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