Is the "de minimus Safe harbor" election the same as Safe Harbor election for small taxpayers"election

Forum|Forum|3 years ago
March 16, 2023
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For my rental property, I do not qualify for the "Safe Harbor election for small taxpayers" because total of all repairs, maintenance and improvements was more than $10,00.

1) Was wondering if the "de minimus Safe Harbor" had a different criteria from "Safe Harbor election for small taxpayers"? If so, what is the criteria?

2) If the election is one and the same thing, then how do I get rid of the "Section 1.263(a)-1(f)
De Minimis Safe Harbor Election" page from my tax return?

Best answer by Anonymous_

The two are indeed different.

See https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations#Ademinimis

A de minimis safe harbor election

Note: Effective for taxable years beginning on or after January 1, 2016, the Internal Revenue Service in Notice 2015-82PDF increased the de minimis safe harbor threshold from $500 to $2500 per invoice or item for taxpayers without applicable financial statements. In addition, the IRS will provide audit protection to eligible businesses by not challenging the use of the $2,500 threshold for tax years ending before January 1, 2016 if the taxpayer otherwise satisfies the requirements of Treasury Regulation § 1.263(a)-1(f)(1)(ii).

See https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations#SimplifiedProceduresforSmallBusinessTaxpayers

There is also the safe harbor for small taxpayers for improvements in Treas. Reg.§1.263(a)-3(h):

See https://www.law.cornell.edu/cfr/text/26/1.263(a)-3

Anonymous_Answer

Employee

The two are indeed different.

See https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations#Ademinimis

A de minimis safe harbor election

See https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations#SimplifiedProceduresforSmallBusinessTaxpayers

There is also the safe harbor for small taxpayers for improvements in Treas. Reg.§1.263(a)-3(h):

See https://www.law.cornell.edu/cfr/text/26/1.263(a)-3

optca50Author

If they are different elections, does that mean the only criteria for claiming the de minimus safe harbor is that the expense/improvement is less than $2,500?

For background information, the total of ALL repairs/improvements for this property were $22,000 (which would not qualify for the safe harbor for small businesses). When I separate the items (water heater, cabinets, countertops, rock garden landscaping, new plumbing), each is under $2,500 so can I just categorize each under "miscellaneous expenses"?