Under current law, taxpayers have a variety of options for deducting some or all of the cost of property used in business rather than depreciating it over a period of years. Here’s a quick overview of three of them:
De Minimis Expensing Safe Harbor
Taxpayers with “applicable financial statements” (such as a certified audited financial statement) can deduct up to $5,000 per invoice or item for certain tangible property costs to the extent they deduct them for financial reporting or bookkeeping purposes. Those without applicable financial statements can deduct up to $2,500. Certain exceptions apply.
This safe harbor avoids the need to determine whether low-cost items are deductible or must be capitalized, as well as the need to depreciate large numbers of small-dollar capital asset purchases. It does not, however, preclude the deduction […]