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Repair Expense Safe Harbor Increased

Companies that do not submit financials to the SEC or have their financial statements audited each year could only deduct repair expenses up to $500 under the IRS's de minimis safe harbor.  This safe harbor applies to a large number of small businesses.  The IRS has increased the de minimis safe harbor amount to $2,500 for tax years beginning after 2015.  They also stated that they will not challenge this for earlier years if other conditions are met.  You must have a policy in place at the beginning of the year to take advantage of this safe harbor.  Consider adopting this policy soon to prepare for the 2016 tax year.  Do not hesitate to contact your tax advisor to ask about this new policy change.

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