The IRS has issued new proposed regs on capitalization vs.
expensing of materials and supplies. I usually think about pens or pencils,
paper, etc, as supplies and never considered a computer meeting the definition
of materials and supplies, but computers are used as an example to explain
one section of the proposed regs. The de
minimis rule exception for capitalization can now apply to computer
equipment. IIf you file a timely election on your tax return for 2012 and
thereafter, and if you have a written policy in place for expensing such
computer items under a certain dollar amount, for example- $500 per unit, then you
may deduct the total purchase of computers for the year that meet your policy
guideline of $500 or less per unit times the number of units purchased. This is subject to the upper limit of .1%
times the gross sales of the business, or 2% of the total amount of
depreciation and amortization claimed. For additional information,
give Kelly Phillips, Pancho Espejo, or myself a call.
501.753.9700 Richard Bell, CPA
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