You can use both. You can expense the less expensive assets and depreciate the more expensive.
For both
elections each asset that you
would normally depreciate over a number of years needs to be $2,500 or less.
The items in the
"$20.00 to $50.00 range" would normally be taken as expenses,
anyway. The elections apply to the assets you
would normally depreciate, like carpeting, appliances, etc.
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.
Improvements Election
This election is an
option you can take each year that lets you write off some building improvements as expenses instead
of assets.
Here are the rules
you need to meet to take this election:
- Your gross receipts,
including all your other income, are $10,000,000 or less.
- Your eligible
building has an unadjusted basis of $1,000,000 or less.
- The cost of all repairs,
maintenance and improvements is less than or equal to the smallest of
these limits:
- 2% of the unadjusted basis
of your building or
- $10,000
