The formulas
- Limit = $2,500 per invoice or item; $5,000 with an applicable financial statement
- Item at or below the limit is expensed; above it is capitalized
How it works
Tax year: Tax years beginning 2016 and later.
Under the de minimis safe harbor you may deduct amounts paid for tangible property up to $2,500 per invoice or item, or $5,000 per invoice or item if you have an applicable financial statement, instead of capitalizing them. You elect it each year by attaching a statement titled "Section 1.263(a)-1(f) de minimis safe harbor election" to a timely filed original return. No Form 3115 is needed, and the election applies to all qualifying amounts for the year.
Enter the cost of one item and how many you bought. The tool compares the cost with the limit and totals what you expense and what you capitalize. The limit applies to each item or invoice, not to the total deduction.
Illustrative figures only. Check the result against your firm's methodology before relying on it.
Common questions
Is the limit per invoice or per item?
Per invoice or item as substantiated by the invoice, so a high-volume invoice can be tested by item cost.
Do I file Form 3115?
No. The election is annual and is not a change in accounting method.
Does it apply to land?
Only to amounts paid for tangible property that would otherwise be capitalized.
Sources
Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.