De Minimus Safe Harbour

[Wendy Vaidic]

Hi Everyone!

I have researched De Minimus Safe Harbour election & it sounds like a very beneficial tax election.

My understanding is:

1. You can writ-off, instead of depreciating any item under $2500.00 ($5000.00 with an income statement).

2. You must account for these items as DeMinimus in your books.

3.  You must notify the IRS you are electing it on your taxes.

4. You cannot write off individual components to keep an item under $2500.00.  For instance if your flooring cost $1500.00 & the labor to install it cost $1500.00 it would not qualify because the aggregate cost is $3000.00 for the flooring.  

I am wondering if you increase your likelihood of being audited by taking it?

Thanks!

Wendy