When figuring the deminimis safe harbor for repairs, you add up all the work that was done to see if less than 2% of depreciable basis. Say a person buys a range for $700 and installs it himself. This is a supply and could qualify for a write off under the new supply rules if the taxpayer has the written statement in place before Jan 1 of that year. Do you add the $700 to the other repairs, improvements etc for the purpose of seeing if the under 2% test is met.
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I would not combine the range with repairs, maintenance, and improvements unless it was a built in range. Free standing and plug in is not part of the building and I would depreciate it (de minimis limit is $500 and the range is $700). I have heard that the intent to use the de minimis rule does not have to be written (if I run across this I will investigate). -
I agree partially with Don. The building safe harbor is separate from the de minimis election. However, the amount for de minimis was increased to $2,500 for this year with audit protection for all prior year. Basically meaning that this limit always was $2,500. Nothing written required but intent should be clear and consistent.Comment
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The taxpayer still needed to have the non-tax "accounting procedures" at the beginning of the year to deduct a "specified amount". If that "specified amount" was $2500 or more, yes, you probably can use the 'de minimis' election on the FEDERAL return.
However, that does not necessarily mean the State will follow suit. California has specifically said that it will NOT provide Audit Protection for amounts over $500 for years before 2016. If you don't know what your State is doing, you may want to stick with $500.
I agree, Kram is combining the De Minimis election (deduct items $500/$2500 or less), with the Safe Harbor for Small Taxpayers (if the total of ALL R&M is 2% (up to $10,000) or less of unadjusted basis).Comment
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