• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Facebook
  • Instagram
  • LinkedIn
  • Twitter
  • YouTube
Big Ideas for Small Business logo

Barbara Weltman

Big Ideas for Small Business, Inc.

Whitepaper download

Subscribe and download our eBook, "150+ Tax Deductions for Small Business A to Z."

This field is hidden when viewing the form
Get the:

  • Home
  • About Us
  • Big Ideas For Your Business
    • Idea Of The Day ®
    • SMB Legal
    • SMB Taxes
    • SMB Financial
    • Small Business
    • Newsletter Archive
  • Services
  • Books
  • Blog
  • Multimedia
    • Videos
    • Radio Shows/Podcasts
  • Be a Guest Blogger

Writing Off Tangible Property Purchases the Easy Way

December 3, 2015 / By Barbara Weltman

Blog_12-3-15_WritingOff_dreamstime_xsUsually, when you acquire any tangible property expected to last more than a year, you must recover the cost through depreciation allowances claimed over a number of years. You may be able to elect to expense the cost (up to a set dollar limit), although there are restrictions on this Sec. 179 deduction. Or you may be able to write-off the cost using an IRS-created de minimis safe harbor.

Background

In 2013, the IRS finalized the so-called “repair” regulations that included an optional de minimis safe harbor designed to ease compliance for businesses. Under this safe harbor, rather than capitalizing costs or treating them as materials and supplies, businesses can elect to treat them as ordinary and necessary business expenses (i.e., currently deductible).

The regulations imposes a dollar amount for the de minimis safe harbor that depended on whether a business had an applicable financial statement (AFS), such as an SEC filing, audited financial statement.

  • With an AFS: $5,000 per item or invoice
  • Without an AFS: $500 per item or invoice

The IRS received more than 150 comments to the regulations saying that the $500 limit was too low to effectively reduce the administrative burden of complying with the regulations’ requirements, and the IRS responded favorably to these comments.

The IRS recently announced that effective January 1, 2016, businesses without an AFS have a dollar limit of $2,500 per item or invoice.

Making the safe harbor election

In order to use this option, you must have a policy for your books and records reflecting the de minimis rule. (Businesses with an AFS must have a written accounting procedure in place at the start of the year in order to use the de minimis safe harbor.) And you must apply the de minimis safe harbor to all expenditures meeting the criteria for the election in the taxable year.

The election is made by attaching a statement titled “Section 1.263(a)-1(f) de minimis safe harbor election” to the timely filed original federal tax return including extensions for the taxable year in which the de minimis amounts are paid. The statement should include your name, address, and taxpayer identification number, as well as a statement that you are making the de minimis safe harbor election. This is not a change in accounting method that requires notification to the IRS.

Conclusion

If your business buys tangible property other than supplies and you think this tax-favored rule may be helpful to you, discuss the matter with your tax advisor now. Doing this will help ensure that you use the appropriate treatment for these items in your books and records at the start of the year.

Primary Sidebar

Categories

  • General Business (500)
  • Guest Blog (111)
  • Homepage (15)
  • Small Business (995)
  • SMB Financial (326)
  • SMB Legal (66)
  • SMB Taxes (325)

Barbara’s Recent Posts

  • How Important Is Higher Education for Small Business Owners June 11, 2025
  • Business Planning in a Period of Uncertainty June 10, 2025
  • 9 Smart Financial Decisions for Business Owners in Retirement June 6, 2025
  • Preview of Tax Changes this Year: Actions to Take Now June 5, 2025
  • Becoming Penniless: What Does this Mean for Your Business? June 3, 2025
  • Scale Your Business by Stepping Up IP Protection May 29, 2025
  • Disasters Happen: It’s Important to Be Prepared Now May 27, 2025
  • How Work Order Software Transforms Small Business Operations May 26, 2025
  • The Numbers Are Up for Sole Proprietorships May 22, 2025
  • New Business or Project Crowdfunding: What To Know May 20, 2025
  • Old-School Estimating vs. Smart Solutions: What’s Really Holding You Back? May 19, 2025
  • Employees Getting Called to Public Service: What to Know May 15, 2025
Awarded Top 100 Small Business Blog medal (link will open in a new window or tab)
Marquis Who's Who 2023 Badge
Top Small Business Blogs (Link will open in a new window or tab.)
8 Financial blogs small business Owners Need to Read. Invoice home.  (link will open in a new window or tab)
Best Small Business Blog, Expertido.org
Top 50 Small Business Blogs 2018
Best Small Business Blogs
BizHumm Top 100 Business Blog Award to Barbara Weltman
FitsSmallBusiness.com: Award for Best Small Business Blog 2017 (link will open in a new window or tab)
FitsSmallBusiness.com: Award for Best Small Business Blog 2016 (link will open in a new window or tab)

Footer

Big Ideas for Small Business logo

Small business ideas, business tax news and small business consulting from Barbara Weltman to provide business owners with the information they need to succeed. Visit our small business blog, Idea of The Day®, small business books and articles on small business taxes, small business finance and small business legal advice.

Contact Us

[email protected]

(772) 492-9593

gacor maxwin situs slot thailand terpercaya situs slot gacor situs gacor akun pro thailand slot bandar togel terpercaya

Latest Tweets

bigideas4sb Big Ideas for Small Business® @bigideas4sb ·
June 10

McDonald's To Offer Customers Snapchat+ Subscriptions https://bit.ly/4n1wQPS

Reply on Twitter 1932550924699865116 Retweet on Twitter 1932550924699865116 Like on Twitter 1932550924699865116 Twitter 1932550924699865116
bigideas4sb Big Ideas for Small Business® @bigideas4sb ·
June 10

An ever riskier world economy https://on.ft.com/4kZN8Xu #smallbusiness #risks #business #uncertainty

Reply on Twitter 1932535859842073006 Retweet on Twitter 1932535859842073006 1 Like on Twitter 1932535859842073006 1 Twitter 1932535859842073006
bigideas4sb Big Ideas for Small Business® @bigideas4sb ·
June 10

Becoming Penniless: What Does this Mean for Your Business? https://bit.ly/43RBqHM #pennies #currency #legislation #business

Reply on Twitter 1932492001414369627 Retweet on Twitter 1932492001414369627 3 Like on Twitter 1932492001414369627 2 Twitter 1932492001414369627
Load More

Copyright © 2008–2025 Big Ideas for Small Business, Inc  |  Designed by Hudson Fusion

  • Privacy Policy
  • Sitemap