Repair Regulation Safe Harbor Limits Too Low for Small Business?

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Feb. 25 — Many accountants were briefly pleased with change of accounting method relief from filing Form 3115 under tangible property regulations, but now some seek to raise the $500 limit of deductible business costs, according to dozens of comments received by the IRS.

The Internal Revenue Service asked for letters earlier this month about a de minimis safe-harbor threshold to deduct capital expenses for small businesses (31 DTR G-7, 2/17/15).

The limit outlined in Section 1.263(a)-1(f)(ii)(D) in the so-called “repair regulations” (T.D. 9693) isn't high enough to actually reduce the administrative burden for small businesses, David Lichtenstein, principal at Sansiveri Kimball & Co. in Providence, R.I., told Bloomberg BNA. These rules are used to distinguish capital expenditures from supplies, maintenance and other deductible businesses expenses.