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BillM
January 18, 2019
Solved

Can 20 items purchased as a set qualify for de minimis tangible property treatment?

I purchase a set of 20 identical items (retail store display "furniture").  If they were purchased separately, they would have cost $350 each.  Buying them as a set I paid a total price of $6000.  They were billed as a "kit" and no longer priced individually.  Can I still expense this under the de minimis regulations or does the fact that 20 individual items were sold and priced as a discounted set/kit mean I can no longer expense the items.
john-pero
john-peroAnswer
Level 12
January 18, 2019

Here, in case you do not have access, is the rule https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations

 

Per line item or otherwise quantity indicated such that individual pricing would easily be determined is what I see.  If, as you say, all of your documentation states you bought a single "kit" for $6000 you might have to treat this NOT as safe harbor. Even then, certain purchases do not qualify and if, for example, your store displays are attached to the walls or floor it is my understanding they would not be safe harbor. Consult with your tax CPA on all matters related to deductibility

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2 replies

john-pero
john-peroAnswer
Level 12
January 18, 2019

Here, in case you do not have access, is the rule https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations

 

Per line item or otherwise quantity indicated such that individual pricing would easily be determined is what I see.  If, as you say, all of your documentation states you bought a single "kit" for $6000 you might have to treat this NOT as safe harbor. Even then, certain purchases do not qualify and if, for example, your store displays are attached to the walls or floor it is my understanding they would not be safe harbor. Consult with your tax CPA on all matters related to deductibility

Malcolm Ziman
Level 4
January 18, 2019

it says " you may use the safe harbor to deduct amounts up to $2,500 per invoice or item (as substantiated by invoice). "

 that seems clear to me

If you have one invoice for each item then yes, but if all 20 are on one invoice then no

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