etiennevb[at]hotmail.com says...

- quote -

There is no clear answer. In fact, it can get as clear as
mud. Utilities and other regulated industries will
capitalize trash cans because doing so increases future
expenses which is a factor in setting rates.

As for your business, consider how easy it is for you to
replace something. If you break a $20 lamp at home, you
just go replace it. What if you break a $500 vase? This is
just a rule of thumb. Your thumb size may be different than
mine. That's why there is no clear rule.

In your examples:

$15 mouse - expense it as supplies or office expense
$75 fax - expense it like the mouse
$200 hard drive - borderline, we can argue about that
until it crashes.

Gary

--
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contact me directly, please send an e-mail to: gary at
gdgoodman dot com.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Hi all,

For some odd reason I cannot really find a clear answer for
this in the IRS publications:

Generally, business personal assets should be capitalized
and depreciated over their lifetime, instead of expensed at
once at the time of the purchase.

For practical reasons, businesses maintain a 'capitalization
treshold' of generally, $2.5k, $5k, or higher, depending on
the business size. Assets purchased with a value under the
treshold are expensed, for assets with a value over the
treshold a depreciation schedule is maintained.

But is there a similar treshold for capitalization/expensing
for tax purposes?

Based on what I've read, for taxes generally ALL business
assets need to be capitalized, I see no lower treshold limit
mentioned.

So technically, if I buy a new $15 computer mouse that I
plan to use for a few years in my business, I would need to
capitalize and depreciate????? That cannot be true... And
what about the $75 fax, and the $200 replacement
harddisk...?

Does the business structure matter?

All input is appreciated.

-Etienne

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >