Increase in De Minimis Safe Harbor Limit

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Effective January 1, 2016 the IRS has increased the de minimis safe harbor limitation from $500 to $2,500 for a taxpayer without an AFS (Applicable Financial Statement). This means small business have the option to expense items or invoices under the $2,500 limit instead of capitalizing them over multiple years. For taxable years beginning before January 1, 2016, the IRS has issued audit protection and will allow a taxpayer without an AFS to utilize the de minimis safe harbor provided in § 1.263(a)-1(f)(1)(ii) for an amount not to exceed $2,500 per item or per invoice if the taxpayer otherwise satisfies the requirements of § 1.263(a)-1(f)(1)(ii).