Increase in Expensing Limits to $2,500 from $500

Yesterday, per Notice 2015-82, 2015-50 IRB; IR 2015-133, the IRS increased the de minimis safe harbor limit (Reg. § 1.263(a)-1(f)(1)(ii)(D)) from $500 to $2,500 for those taxpayers who don’t maintain applicable financial statements. This change is effective January 1, 2016, but the IRS will not contest the use of the new $2,500 expensing limit for previous years including the 2015 tax year.

​For example, a business owner buys equipment for $600; previously this equipment may have been required to be capitalized for a business owner without an AFS and depreciated. However with the increase, the $600 for equipment may be reported as a current deduction. 

If you have any questions, contact your CPA, financial advisor, or attorney on how this increase affects your business.