4807 West Seminary Avenue, Richmond, Virginia  23227
Menu

Update to Tangible Property Expensing Rules

From IRS.gov Newsroom:

"For Small Businesses: IRS Raises Tangible Property Expensing Threshold to $2,500."

"The Internal Revenue Service today simplified the paperwork and recordkeeping requirements for small businesses by raising from $500 to $2,500 the safe harbor threshold for deducting certain capital items.

The change affects businesses that do not maintain an applicable financial statement (audited financial statement). It applies to amounts spent to acquire, produce or improve tangible property that would normally qualify as a capital item.

The new $2,500 threshold applies to any such item substantiated by an invoice.

The new $2,500 threshold takes effect starting with tax year 2016. In addition, the IRS will provide audit protection to eligible businesses by not challenging use of the new $2,500 threshold in tax years prior to 2016."

Details are at Notice 2015-82 at IRS.gov

Note: An election statement must be filed with a timely return to utilize this "safe harbor." The business also must have a formal accounting policy in place at the the beginning of the tax year regarding such expenses. And there are other requirements...

As always, call or email me before taking any action on this or other information.