business taxes, business tax deductions, deduction limits, business expense threshold limits, De Minimis Safe Harbor Expense ThresholdOn November 25, 2015, the IRS issued a Notice increasing the De Minimis Safe Harbor Threshold for deducting certain capital expenses from $500.00 to $2,500.00.  The new limit goes in effect on January 1, 2016.  The De Minimis Safe Harbor Expense Threshold is applicable to any type of business entity: a C Corporation, an S Corporation, an LLC, or any type of partnership, and Schedule C (Profit or Loss from Sole Proprietorship), Schedule E (Supplemental Income and Loss from Rental Real Estate), Schedule F (Profit or Loss from Farming) and Schedule 4835 (Farm Rental Income and Expenses).   We are recommending that our clients who are affected by the Notice talk with their income tax professionals before the end of the year to decide if they should adopt a higher threshold amount.  The threshold amount is determined on a per item basis.  

By electing a higher threshold amount, you are able to expense items that were previously capitalized and depreciated over a period of time.  The downside to selecting a higher threshold amount is that every item must be an expense which falls below the threshold amount.  As such, you will lose some flexibility on being able to control your income by either expensing or depreciating an item.  

If the new Notice applies to your situation, I would strongly recommend you contact your accountant before the end of the year to discuss whether adopting a higher De Minimis threshold amount is in your best interest.