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Safe Harbor Election for Tangible Property

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 minimus 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 user 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 Name, Address and Taxpayer Identification Number of the Taxpayer, as well as a statement that you are making the de minimis safe harbor election for the applicable tax year.

To enter a Safe Harbor Election, from the Main Menu of the Tax Return (1040) select:

  • Miscellaneous Forms
  • Note/Statements
  • Election Explanations

Select Opt Out and then select De Minimis Safe Harbor Election to generate the election statement that will be transmitted with the return.

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 for tangible property in the tax program.  This is not intended as tax advice.

Additional Resources:

Tangible Property Regulations – Frequently Asked Question

Updated on September 9, 2020

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