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Annual Elections: What is an "Item" versus an "Improvement". De Minimis Safe Harbor versus the $200 rule?
Hello. These Annual Elections are detailed, intricate, and confusing. Need more context. We own a "fraction" or a "Percentage" of an apartment building through a DST investment, and the sponsor for the building has provided us with the 2021 financials that shows both the total numbers for the whole building and our portion of the total for our tax return. All numbers below are "our portion".
When TT starts out, it asks if we have purchased any items that cost $2,500 or less. So:
- Are Furniture, Fixtures & Equipment ITEMS? Costs $560 ($87 one month and $477 another month)
- Are Package Lockers an ITEM? Costs $356
If I try adding the $87 as an asset to depreciate, for the Furniture, Fixtures, and Equipment, TT then recommends I expense it because it is $200 or less. How is this different than the question regarding the $2,500 question. Is it that BOTH ITEMS & IMPROVEMENTS can be expensed if they are $200 or less? But only ITEMs from $201 to $2,500 can be expensed, not IMPROVEMENTS, through the De Minimis Safe Harbor?
Thanks for your help!