The IRS has issued final Tangible Property Regulations which are effective as of January 1, 2014. Part of these regulations require that every business have a formal written capitalization policy in place in order to expense rather than capitalize de minimis amounts spent on tangible property.
Please download a sample capitalization policy which meets the criteria of the regulations in order to take advantage of this de minimis expensing rule. This policy should be part of your permanent tax records. We recommend that you use the template to create your policy, and sign and date it as of January 1, 20xx.
Please send us a signed copy of your capitalization policy to keep in our copy of your tax records. Please be sure to add your business name and the amount where requested. The amount that you can elect to expense per the IRS would be $500. If you have audited financial statements, the maximum expense amount could be up to $5,000.
If you have any questions, please contact our office and we will be happy to assist you.
