IRS regulations permit trade or business taxpayers to elect to currently deduct relatively inexpensive purchases of equipment and other fixed assets that would otherwise have to be capitalized.
The IRS recently announced an increase in the expensing threshold for taxpayers that don’t have “applicable financial statements” — generally defined as financial statements audited by a CPA. For these taxpayers, the deductible amount is raised from $500 to $2,500 per invoice (or per item as substantiated by the invoice). For taxpayers with the appropriate financial statements, the limit remains $5,000 per invoice or per item.
The new $2,500 amount applies to costs for tax years beginning on or after January 1, 2016. To make the election, taxpayers must have accounting procedures in place for expensing the amounts.
Source: Client Line newsletter