Article Date:
January 2016

Word Count:



Act Fast: Install New Audit-Proof $2,500 Expensing ($5,000 with AFS)

Beginning in 2016 and retroactive to 2015 in select circumstances, the IRS created a new audit-proof option that you can use to improve your tax deductions.


The new option allows you to avoid depreciating certain assets and instead simply write them off. For example, say you buy two $2,000 computers for your office.


Under the old rules, you likely had to treat the computers as capital assets and either:



depreciate them using the five-year depreciation table, or


elect Section 179 to expense them immediately. (Note that if you used Section 179, you had to hold the computers for five years to avoid recapture of some expensed amounts.)


And then, whether you depreciated the assets or expensed them, you had to carry them in your books of account and track them for your tax return. This was a pain.


But now, because of some new rules, you can avoid the capitalization and recapture rules. And this new rule allows you to remove those expensed assets from your books of account and tax returns. And it’s easy. You simply need to



follow a few simple rules,


likely insert some magic language that we will give you for your expense policy, and


do this today (this is the “act fast” part). ... Log in to view full article.

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