A safe harbor election for tangible property involves a taxpayer's option to elect to expense certain items rather than capitalize them. This allows the taxpayer to deduct in the current tax year the entire amount of the expenditure rather than depreciate the item over some period of time. These expenditures then are subject to a monetary limitation in an amount which is referred to as the de minimis safe harbor election. Under this election, you must treat all the expenditures that meet the criteria for the election in the same manner in any year that the taxpayer makes the election.
In order to claim this election, the preparer must attach a statement titled "Section 1.263(a)-1(f) de minimis safe harbor election" to the tax return for each taxable year. This statement should include the the taxpayer's name, address, and SSN, as well as a statement that they are making the de minimis safe harbor election for the applicable tax year.
TaxSlayer Pro Desktop
To enter the safe harbor election in TaxSlayer Pro, from the Main Menu of the tax return (Form 1040) select:
- Miscellaneous Forms
- Notes / Statements
- Election Explanations (Sent to the IRS)
- Opt Out button - select De Minimis Safe Harbor Election to generate the election statement that will be transmitted with the return.
The election will appear in View Results along with all the other forms and documents that will print with the rest of the return. It can be printed from there by itself or with the rest of the return.
To enter the safe harbor election in TaxSlayer ProWeb, from the Federal Section select:
- Miscellaneous Forms
- Election Explanations
- Enter the title "Sec 1.263(a)-1(f) de minimis safe harbor election"
- Include in a single line the following information:
- The taxpayer's name, address, and SSN, plus
- A statement to the effect that "For the year ending [month day, year], [the taxpayer] elects the de minimis safe harbor under Treas. Reg. 1.263(a)-1(f) for its tax year ending December 31, [year]", with the appropriate information entered for the bracketed items.
When you print the return, the election will be includes on its own page headed "Election Explanations".
Effective for taxable years beginning on or after January 1, 2016, the Internal Revenue Service in Notice 2015-82 increased the de minimis safe harbor threshold from $500 to $2500 per invoice or item for taxpayers without applicable financial statements. For taxpayers that have audited financial statements, the requirements are different.
Note: This is a guide on making the de minimis safe harbor election for tangible property in TaxSlayer Pro desktop and ProWeb. This is not intended as tax advice.