Substantial Tax Savings Recognized – De Minimis Safe Harbor

Thursday, March 17, 2016 - 12:00

Substantial Tax Savings Recognized – De Minimis Safe Harbor
De Minimis Threshold Increased 

  • $2,500 limit for taxpayers without audited financial statements (AFS) 
  • $5,000 limit remains the same for taxpayers with AFS

Requirements: 

  • The de minimis safe harbor is elected annually by including a statement on the taxpayer’s tax return for the year selected 
  • Consistent application 
  • Capitalization policy required for taxpayer’s with AFS and recommended for taxpayer’s without AFS 
  • Must be expensed on books/financial statements

Case Studies


2010 Hotel Acquisition

  •  An $800,000 hotel renovation was completed in 2014. A de minimis study resulted in over $500,000 eligible for expensing in 2014.

2010 Hotel Acquisition 

  • An $1.2M hotel renovation was completed in 2015. A de minimis study resulted in over $800,000 eligible for expensing in 2015.

2011 Assisted Living Facility Acquisition 

  • An $1.9M assisted living facility renovation was completed in 2015. A de minimis study resulted in over $900,000 eligible for expensing in 2015.

The de minimis safe harbor is an elective provision that requires guidance in invoice preparation and knowledge of unit of properties and building systems. Contact MS Consultants (MSC) to assist with identifying assets eligible for an immediate write off. MSC will assist in identifying opportunities early with necessary invoice preparation to best enable maximum savings!

Ashley Sullivan, SCSP
asullivan@costsegs.com
757-705-6264