Write Off $2,500 Instead of Depreciating

published December, 2015

Very recently, the IRS issued Notice 2015-82 revising the limit on what is too small to require depreciation treatment, things we would otherwise have to keep track of until they are disposed of.

The prior rule was for qualifying items costing $500 and less, you could “expense” an item—that is, you could deduct the $500 purchase in the year you bought an item that would normally last longer than a year, and you wouldn’t have to depreciate it on Form 4562.

Now, they say you can “expense” an item if it is $2,500 or less.

The effective date for this change is January 1, 2016. However, in the Notice, they say for taxable years before 2016, if a purchase does not exceed $2,500 per invoice item, and you otherwise qualify to use this rule, the IRS will not pursue the issue. That sounds to me like we may use this rule for returns for 2015 that we’ll file in 2016.

There are several limitations and details to work out, and I still want a list of computers and other assets if I’m preparing your return, but this change is intended to “reduce taxpayer burden” for preparing returns.


Here’s a link to more info: https://www.irs.gov/pub/irs-drop/n-15-82.pdf