Is an expenditure associated with tangible property deductible or must it be capitalized? Learn the rules for treatment of amounts paid to acquire, produce, repair, or improve tangible property and proper accounting for dispositions of property subject to depreciation. The capitalization regulations provide objective standards and bright-line rules intended to simplify compliance with the capitalization provisions contained in section 263(a) of the Internal Revenue Code. This program highlights issues involving what must be capitalized, what can be treated as a repair and items related to depreciation of fixed assets.