For 2014, the IRS issued a whole new set of regulations governing the tax treatment of tangible property (buildings, equipment, computers, etc.) placed in service by a business, rental property owner, or farm. Among these regulations was a new “de minimis safe harbor” (DMSH) for small capital expenditures. This safe harbor, if elected on a tax return, stated that the IRS would not challenge the immediate deduction of any capital expenditures of under $500 per unit, provided that the taxpayer had in place, as of January 1, 2014, accounting procedures for tangible property (generally called a “capitalization policy”) that specified a DMSH amount. For most taxpayers, this policy did not have to be written. In addition, the taxpayer’s accounting procedures could specify a higher safe harbor amount if that was more applicable to their business. However, this higher amount could be challenged by the IRS under audit
