The SHST states:
You are not required to capitalize as an improvement, and therefore may
be permitted to deduct, the costs of work performed on owned or leased
buildings, e.g., repairs, maintenance, improvements or similar costs,
that fall into the safe harbor election for small taxpayers.
Among the conditions is the following:
The total amount paid during the taxable year for repairs, maintenance,
improvements, or similar activities performed on such building property
doesn't exceed the lesser of-
- Two percent of the unadjusted basis of the eligible building property; or
- $10,000 (for questions about how to calculate the unadjusted
basis, refer to "Figuring the Unadjusted Basis of Your Property" in Publication 946
Two questions:
1) Does the unadjusted basis in this context exclude the land? (edit: yes, land is excluded, see similar question here:
https://ttlc.intuit.com/questions/3182323)
2) Let's say the 2% limit is $8000. If I install a $10,000 central air conditioner, but pay the contractor for it over three years ($3333 / yr), does that meet the SHST requirement (assuming no other repair/maintenance/improvement expenses)?
