That is correct, but that is not the only way to expense an asset.
De Minimis Safe Harbor Election
This
election for items $2,500 or less is called the De
Minimis Safe Harbor Election. This election is an option you can take
each year that lets you write off items $2,500 or less as expenses instead of assets. Expenses typically reduce your income by a larger amount
than depreciating an asset over multiple years does. This means you could get a
bigger refund.
If
you decide to take this option, a form called De
Minimis Safe Harbor Election will show up in your tax return. This
election will apply to all your
businesses, rental properties or farms.
Here
are the rules you need to meet to take this election:
- You don't have
an applicable financial statement (most people don't).
- You have a
consistent process for how you record expenses and assets.
- You record these items as
expenses on your books/records.
- The cost of each item as shown on
your receipt is $2,500 or less
