Expensing Policy for Low Cost Items

[JON]

How do you know?

I have never seen an audit that has questioned this... The closest thing was in the question from the auditor he asked if there was any guidelines for the capitalization of items and we said $1,000 and he said that was fine and there were not any items capitalized at less than a $1,000.

I have never seen an auditor wanting to get tied up in small details. In most cases they have audited more than I've had audited. If tied up in the wrong areas asking for the supervisor has been a good course of action. The main reason that happens is if you get a rookie... If your doing that with an experienced auditor the "hard feelings" will cause a hard audit, but that may be a necessary evil on occasion.

If these are $5000 lamps they may be collectables and put them with the art work that are collectables.

[Bees Knees]

Generally speaking, most auditors will not get tied up in small details. However, if you happen to get one of those fine tooth comb audits that is used to determine the discriminate index function computer scores, I think they might squabble over a few hundred bucks.

[Unregistered]

What happens if your business use falls to 50% or less or you sell one of the items (one of the lamps) or start using it for personal purposes? You would have to identify the part of the 179 deduction that applied to that item.

[Bees Knees]

What happens if your business use falls to 50% or less or you sell one of the items (one of the lamps) or start using it for personal purposes? You would have to identify the part of the 179 deduction that applied to that item.

Same treatment would apply regardless of whether you expense it under section 179 or whether you expensed it as part of office supplies. If business use can fall to 50% or less in a later year, or you can sell it, that fact alone should tell you it cannot be treated as anything other than an asset with a life greater than one year.