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Level 1

De Minims Safe Harbor Deduction/Expense

I am very new to quickbooks and need some help.


My husband is a general contractor and we just started a residential/commerical construction business. We make a lot of small equipment and large tool purchases around $500-$2000 dollars. I want to take this full deduction this year (De Minimis Rule) rather than depreciating it over several years (Thank you Donald Trump!!!!). There are too many tools to deal with depreciating these and deducting over several years. 


My questions is how do I enter this in quickbooks? Whether I take the full deductible now or partial deductible over several years, they are still fixed assets. I categorized these under fixed assets. However, they are no longer showing up on the Profit and Loss statement. I want them to show up as expenses to show our true net income and true profits, but I ALSO want them to show up as fixed assets. Is there a way to do this without screwing up my books? 


2 Comments 2
Level 15

De Minims Safe Harbor Deduction/Expense

You need to structure the accounts correctly for this to work well

fixed assets - tools

>>tool one
>> >> depreciation tool one
>> tool two

>> >> depreciation tool two


then at tax time you do a journal entry

debit depreciation expense, (for the total of the credits)

credit depreciation tool one, $$$
credit depreciation tool two, $$$$


If you use the de minimus amount, on the balance sheet it would look like (after the journal entry_


tool one, $2,200
>> depreciation tool one, $2,200


depreciation expense would show $2,200 on the P&L


tool one is now fully depreciated and sits on the balance sheet at zero book value until you sell or scrap it, it will most likely have some scrap or used tool value at that time.

Level 1

De Minims Safe Harbor Deduction/Expense

Thank you Rustler for your response! I will be fully expensing these tools this year because there are so many. We have purchased 10-15  large tools this month alone. I am very new to quickbooks and definitely not an accountant. I have a couple questions...


Q1 - Why would the tools have a zero balance on the books as an asset? I mean technically these tools are assets. We took money (asset) and put them into wouldn't the asset just switch from cash to tools on the balance sheet? Sorry if this is a dumb question!


Q2 - Is the depreciation number going up or down? Is it showing the amount the tool has decreased in value or the amount we have deducted on our taxes? 


Q3 - If we use the de minimis amount and the tools will show a zero balance on our balance sheet, could we also just categorize these tools as an expense like this?

>>expense - tools <$2,500


I hope these make sense! Thank you again!


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