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In late 2013, the IRS issued new repair regulations that became effective as of January 1, 2014. Since the new repair regulations were issued, clarifying guidance has been and continues to be issued. The IRS issued Notice 2015–82 in late November 2015, which increased the de minimis amount from $500 to $2,500 beginning January 1, 2016. This increased amount is part of the repair regulations that were issued and found in Treas. Reg. § 1.263(a)–1(f)(1), which applies to taxpayers who do not have an applicable financial statement (AFS). Most farmers and ranchers will not have an AFS. The immediate tax benefit is that farmers and ranchers (as well as other business operators) can make the annual election to deduct as a current business expense items that prior to 2014 would have been capitalized and depreciated over the item’s tax life. Farmers and ranchers should have a written accounting policy which states that items costing $2,500 or less will be expensed. This discussion is intended to help farmers and ranchers to make an informed decision about whether or not to make the annual election to use the De Minimis Safe Harbor.


Rural Tax Education

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property, regulations, de minimis, safe harbor


Education | Higher Education | University Extension

Tangible Property Regulations: Using the De Minimis Safe Harbor