Here is the IRS' guidance on de minimis:
Effective for taxable years beginning on or after January 1, 2016, the Internal Revenue Service in Notice 2015-82 increased the de minimis safe harbor threshold from $500 to $2500 per invoice or item for taxpayers without applicable financial statements. In addition, the IRS will provide audit protection to eligible businesses by not challenging the use of the $2,500 threshold for tax years ending before January 1, 2016 if the taxpayer otherwise satisfies the requirements of Treasury Regulation § 1.263(a)-1(f)(1)(ii).
Here is the entire cite from the IRS:
What is 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).
The requirements of the safe harbor election for small taxpayers are:
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
Hope this helps
TaxGuyBill, I'm interested in more details on why the "safe Harbor for Small Taxpayers" is completely separate from the "De Minimis election", given the many references to the "De Minimis Safe Harbor" election. Thanks!
If you qualify for the De Minimis Election (and actually make the election) , it allows you to deduct items up to $2500.
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If you qualify for the Safe Harbor Election for Small Taxpayers (including the 2%/$10,000 limit for all repairs, maintenance, and improvements) and actually make that election, you can deduct ALL amounts, regardless of cost.
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