As you may recall, last year the IRS issued new mandatory regulations changing when taxpayers can deduct materials and supplies and how taxpayers can differentiate between repairs and improvements. Those regulations allowed you to rely on a de minimis safe harbor and deduct expenditures that were below $500 IF you adopted an appropriate accounting policy.
After much discussion and lobbying, the IRS has now increased the de minimis limit to $2,500, effective with the 2015 tax year. You are entitled to elect any amount up to $2,500 only IF you adopt an appropriate accounting policy.
Click here to download a sample accounting policy containing the appropriate language to comply with the new regulations. To adopt this policy, fill in your entity name at the top and the dollar amount elected, up to the $2,500 limit. Please provide a copy to us and also retain a copy in your company records.
If you have any questions about your current situation or wish to review your options in making this election, please contact your HSMC Orizon tax professional.