Equipment Expense

[fasteddie577]

Can I expense the full cost of used equipment purchased for a business?  This equipment was purchased in 2019 and was utilized in the business during the tax year. Also, if there are two purchases for equipment, could I expense one item and depreciate the second piece of equipment?  Thanks in advance. 

[Irene2805 · Accepted solution]

Yes to both items. You don't have to treat all equipment the same for depreciation purposes.  You can expense the first piece of equipment as long as the cost was $2,500 or less, using the de minimis election.  For the second piece of equipment, you can choose to depreciate it.

The instructions below are for TurboTax Home &  Business.  If you would like detailed instructions for TurboTax Self-Employed, please respond in this thread.

To take the De Minimis election please follow these steps:

Part 1.  Make the De Minimis election

1. Click on the Business tab > Continue > I'll choose what to work on
2. In the Business Income and Expenses section, click the Start/Update button.  
3. If you have already started adding information about your business, you will see the Here's the business info we have so far screen.  Click on Edit next to your business.
4. If you haven't already started adding information about the property, continue through the screens to enter the needed information.
5. You will now be on the Your [business name] Business screen.  
6. In the Business Assets section, click on the Start/Update box.
7. When you come to the screen, Did you buy any items that each cost $2,500 or less in 2019? mark the Yes button and click Continue. 
8. On the screen Let's see if you qualify to deduct these items as expenses, mark both of the Yes buttons and click Continue. 
9. On the screen Now, let's review each item you bought -- If you mark that every item cost $2,500 or less, you will be asked if you want to claim the improvements as expenses.  Select the No button since you're claiming them under the de minimis election.  You will be brought to the Business Summary screen.  Proceed with Step 2, below. 
10. If you mark that some cost above $2,500, proceed through the screens and answer Yes on the screen Do you have any items that aren't covered by your elections?  Proceed through the screens to enter these assets. 

Step 2.  Enter your election-related items as other expenses.

1. On the Your [XX] Business Summary screen go to the Business Expenses section and click on the Start/Update box next to Other Common Business Expenses. 
2. On the next screen, Let's write off some business expenses, scroll down to Other Miscellaneous Expenses screen and click on the Start/Update box.  On the screen Any Miscellaneous Expenses? enter the description and amount paid for the assets. Click Continue when finished.

[fasteddie577 · Accepted solution]

Hi Irene, thank you for the quick reply. So if the cost of the equipment purchase was over the $2,500, I cannot expense them? The items cost slightly over $10K. 

[HelenC12 · Accepted solution]

That is correct, you can't treat your $10,000 item as an expense however you may be able to take a  Section 179 Deduction or other type of Bonus Depreciation. This will offset the cost of your asset. 

Set up your asset and go through the interview. If you qualify, you may be eligible for the above deductions.

See Depreciation of Business Assets.

[fasteddie577]

Thank you HelenC12.  Great job!