Section 263A UNICAP rules force many businesses to capitalize indirect costs they could otherwise deduct. We help qualified businesses opt out — generating significant additional tax savings.
Section 263A of the Internal Revenue Code (UNICAP — Uniform Capitalization) requires certain taxpayers to capitalize direct and indirect costs into the basis of property they produce or acquire for resale. However, many real estate businesses and smaller contractors qualify for exemptions that allow them to bypass these rules entirely — deducting costs that competitors must capitalize. Innovate Real Estate identifies whether you qualify for an exemption and implements the accounting method change to put those deductions back in your pocket.
Our process is thorough, IRS-compliant, and built around your schedule.
We review your gross receipts, entity structure, and activity type to determine if you qualify for a UNICAP small business exemption.
We catalog all indirect costs currently being capitalized under UNICAP that could be expensed under an exemption.
A Form 3115 accounting method change is filed with your tax return to adopt the exemption — with full IRS blessing.
A 481(a) adjustment captures all previously over-capitalized costs as a current-year deduction.
What you gain by working with Innovate Real Estate on 263a unicap exemption.
Convert capitalized indirect costs to current-year deductions the moment you qualify.
Recapture years of over-capitalized costs in a single tax year via 481(a) adjustment.
Eliminate the complex UNICAP allocation calculations from your books going forward.
Stacks with cost segregation and bonus depreciation for a comprehensive tax savings strategy.
The method change is prospective with a catch-up — no need to re-file prior years.
The exemption is explicitly written into the tax code — not a gray area.
Submit your property details and we'll prepare a free estimate of your potential tax savings — no obligation.
Request Free ProposalUNICAP requires certain businesses to add indirect costs (overhead, administrative, interest) to the capitalized cost of property rather than expensing them currently.
Real estate developers and contractors with gross receipts under the threshold who have been dutifully capitalizing UNICAP costs without reviewing their eligibility for the exemption.
No — Congress explicitly wrote the small business exemption into Section 263A(b). It's one of the most straightforward elections available.
Let our team analyze your property and show you exactly how much you could be saving.