Notice 2015-82: Increased threshold, deductible capital expenditures by “small businesses”

Increased threshold, deductible capital expenditures

The IRS today released an advance version of Notice 2015-82 that increases the de minimis safe harbor threshold to $2,500 for deductions of certain capital items for “small business” taxpayers—that is, those that do not maintain an “applicable financial statement” (taxpayers without an audited financial statement) under the tangible property regulations. For taxpayers with an audited financial statement, the de minimis or small-dollar threshold remains $5,000.

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Notice 2015-82 [PDF 19 KB] increases the de minimis small harbor limit from $500 to $2,500 for small business taxpayers, and applies to amounts spent to acquire, produce or improve tangible property that would normally qualify as a capital item.

The new $2,500 threshold applies to an item substantiated by an invoice, and allows small businesses to deduct immediately certain expenditures that would otherwise need to be spread over a period of years through annual depreciation deductions.

The new $2,500 threshold is effective for tax year 2016. As noted in a related IRS release—IR-2015-133—the IRS will provide audit protection to eligible businesses by not challenging use of the new $2,500 threshold in tax years prior to 2016.

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