Improvement - wiring

[taxgirl]

I want to make sure I understand correctly...

My client spent $2600 in updating wiring. If we "elect" the small taxpayer safe harbor, we can expense the improvements vs. capitalizing?

He qualifies as small w receipts of less than $10 million
The building has an unadjusted basis of less than $1 million

[TaxGuyBill]

Yes.

Just be sure that the TOTAL of all the repairs, maintenance and improvements are less than the smaller of (1) 2% of unadjusted basis or (2) $10,000). If the TOTAL is more than that, the taxpayer does not qualify.

[taxgirl]

I use proseries software and am wondering how to enter the expenses. Do I just enter them as expenses with the "election" or enter the improvements as an asset and depreciate and 179 the amounts?? (also with the election)

[TaxGuyBill]

Don't enter it as an asset. The election is to treat that cost as a deductible expenses, so just enter it as an expenses (and fill out the election). Personally, I enter it as an "other" expense and name it "Safe Harbor for Small Taxpayers", but you technically can lump it with any other category of expense.

[taxgirl]

Thank you for your comments