Simplify, simplify, simplify – Increase in the de minimis safe harbor for tangible property helps small businesses

Description

Abstract: In late 2015, IRS Notice 2015-82 increased the de minimis safe harbor for deducting (rather than capitalizing) the amounts paid to acquire, produce or improve tangible property. The increase is from $500 to $2,500 per item for small businesses that don’t have “applicable financial statements.” This article explains the new notice’s benefits and requirements, suggesting that businesses that don’t have applicable financial statements will want to revisit their policies for capitalizing purchases of tangible property, in light of the new rule. A sidebar notes that, for businesses with applicable financial statements, the safe harbor remains unchanged.