Article Date:
September 2020


Word Count:
1251

 

 

Best Choice: De Minimis or 179 Expensing—or Bonus Depreciation?


How do you avoid losing money by making the wrong choice?

 

Here’s one way to see the issue: Say you have seven employees who now work at least two days a week from home because of COVID-19. To facilitate this working at both the office and the home, you purchased seven laptop computers at a cost of $2,179 each.

 

You have five choices for deducting the computers:

 

1.

De minimis expensing

2.

Bonus depreciation

3.

Section 179 expensing

4.

Modified accelerated cost recovery system (MACRS) depreciation

5.

Straight-line depreciation

 

You have four things to consider:

 

1.

What is the maximum you can deduct this year, and what if you want to deduct less?

2.

How does this affect your Section 199A deduction if you operate as a proprietorship, a partnership, or an S corporation? (C corporations don’t qualify for the Section 199A deduction. If you operate as an LLC, you are one of the four taxable entities just mentioned.)

3.

If you file as a proprietorship on Schedule C of your Form 1040, is there a self-employment tax issue when you sell the computers?

4.

How does your choice affect your local, county, and state personal property taxes?

 

Let’s get started.

 

De Minimis Expensing

 

Deduction. With de minimis expensing, you deduct $15,253 ($2,179 x 7) if ... Log in to view full article.

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