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IRS:Taxpayers May Immediately Deduct The Purchase of Assets Costing Less Than $2,500

MULTIZ321

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ROYAL HOLIDAY CLUB RHC (POINTS)
IRS:Taxpayers May Immediately Deduct the Purchase of Assets Costing Less Than $2,500 - by Tony Nitti/ Forbes/ Taxes/ forbes.com

"Lost among the administrative and technical complexities of the “repair regulations” was the occasional bit of good news.

For example: for years, taxpayers have fought with IRS examiners about whether the cost of certain small assets may be immediately deducted, or if instead, the cost must be capitalized and depreciated.

At the heart of the issue was the question of “materiality:” the taxpayer complained that the cost of the asset was so insignificant that to capitalize and depreciate the asset caused more headaches than anything else, while the IRS traditionally countered with the (absolutely correct) argument that there is no such thing as materiality when it comes to asset purchases.

If the asset has a useful life that extends beyond the end of the year of purchase, the IRS asserts, Section 263 requires the taxpayer to capitalize the cost and depreciate the asset, regardless of the purchase price.

This led to long and painful arguments between the IRS and taxpayers that, quite frankly, both sides grew weary of. As a result, when the repair regulations were finalized in August 2013, they included a “safe harbor” that would put an end to the majority of these battles..."


Richard
 
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