Business Tax: Do You Want to Expense Your Assets Consider the Section 179, or De minimis safe harbor Election to Expense Assets
Business Tax: Do You Want to Expense Your Assets
Consider the Section 179, or De minimis safe harbor Election to Expense Assets
Section 179 expensing can be a very powerful tax-planning tool for small- and medium-sized businesses acquiring capital assets. While it doesn’t change the amount of depreciation you can take over the life of a capital purchase, it can change the timing by allowing you to deduct your purchase in the first year you place it in service.
Review these details if you’re considering depreciating your business assets under Section 179:
Taking Section 179 for capital purchases can be useful, but it’s not for everyone. Using it for an immediate tax break means it’ll no longer be available for future years.
The de minimis safe harbor election
Under the final tangibles regulations, you may elect to apply a de minimis safe harbor to amounts paid to acquire or produce tangible property to the extent such amounts are deducted by you for financial accounting purposes or in keeping your books and records. If you have an applicable financial statement (AFS), you may use this safe harbor to deduct amounts paid for tangible property up to $5,000 per invoice or item (as substantiated by invoice). If you don't have an AFS, you may use the safe harbor to deduct amounts up to $2,500 ($500 prior to 1-1-2016) per invoice or item (as substantiated by invoice).
NOTE: Unlike the Section 179 Expense Election, you may expense items whether there is a profit or loss!
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