The IRS issued final regulations effective for tax years beginning in 2014 that clarifies when business owners can deduct the cost of acquiring, producing or repairing tangible property. For example, the costs of resurfacing a floor to keep the property in good condition would be deducted immediately, whereas the removal of a floor and instillation of a new floor should be capitalized. Almost all businesses will be affected by the new regulations. The good news is that taxpayers with an election for 2015 may deduct any single item whose cost does not exceed $500 per invoice or item. For 2016, this amount will increase up to $2,500.
If you have questions about or buying or improving property or need assistance with your tax return preparation call the accountants at Ketel Thorstenson with offices in Rapid City, Custer, Spearfish, and Williston. We are here to help. We are your “Friends for Life.”