Can I deduct the entire cost of major, unexpected repairs ($7,100) I had to pay for my only tractor; which is essential to daily operations in the buisness?

[scattin]

I know I can not deduct repaires to a personal automobile, but this is to machinery essential for my tree farm buisness to operate

[MichaelL1 · Accepted solution]

Yes, you will be able to take the entire amount, however, read below as you may be limited to $2,500 as an expense, then capitalize the rest, but use Section 179 to write off that remaining amount. 

IRS has a what is called a "safe harbor rule" where up to $2,500 of repairs can be deducted from one invoice.  

There is also a provision I listed below where if the cost of the tractor is substantial then the lesser or 2% of its unadjusted basis or up to $10,000 can be written off. 

"repairs, maintenance, and improvements do not have to be capitalized if they do not exceed the lesser of $10,000 or 2% of the unadjusted basis of the asset, and the unadjusted basis of the asset itself cannot exceed $1 million."

Lastly, if you do not meet the 2nd provision, write off the $2,500, and capitalize the remaining amount and then take a Section 179 deduction for the remaining amount which is deducting it all anyway. 

A repair is a necessary maintenance to keep the property in working condition. The IRS defines repairs as those that “do not add significant value to the property or extend its life.”

When something is repaired, it is generally restored to its previous good condition, not improved upon.

Repairs can usually be completed for a reasonable amount of money.