The IRS has issued new regulations on what must be capitalized as opposed to deducted. The IRS, unfortunately, has finalized two sets of rules. One for taxpayers(entities) with a written capitalization policy and audited financial statements, and one for smaller taxpayers (entities).

For companies with a written policy and audited statements, tangible personal property up to $5,000 per invoice may be deducted and not capitalized. This $5,000 limited is reduced to $500 per invoice for companies without audited financial statements.

In an effort to help apply this regulation evenly to smaller taxpayers (entities) who don’t have audited financial statements, business with less than $10 million in revenue and buildings with less than $1 million basis may deduct invoices of $10,000 or less