By Jeff Bronswick, Managing Partner, Bronswick Reicin Pollack, Ltd., CPAs

The IRS recently issued final regulations that clarify when business owners can deduct the cost of acquiring, producing or repairing tangible property. For example, the costs of resurfacing a floor to keep the property in good condition would likely be deducted immediately, whereas the addition of a security system may need to be capitalized. Almost all businesses will be affected by the new regulations.

The good news is that taxpayers may deduct any single item whose cost does not exceed $500 per invoice or item. For taxpayers who file financial statements with the Securities Exchange Commission or state or federal agencies or have audited financial statements, the regulations allow any item up to $5,000 to be deducted if they have written expensing thresholds in place.

Under another new rule, small business taxpayers may elect to expense improvements if the total amount paid for repairs, maintenance and improvements does not exceed the lower of $10,000 or 2% of the adjusted basis of the building. Your CPA can help you understand the reach of the new rules and help you navigate the elections and other requirements.

Contact your BRP professional for further guidance for your business.

Disclaimer: The information contained in this Blog (the “Blog”) is intended solely to provide general guidance on matters of interest for the personal use of the reader, who accepts full responsibility for its use. In no event will BRP, or its partners, employees or agents, be liable to you or anyone else for any decision made or action taken in reliance on the information in this Blog or for any consequential, special or similar damages, even if advised of the possibility of such damages.

Call Now