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Q&A: De Minimis or 179 Expensing or Bonus Depreciation?

· Section 179,Bonus Depreciation

Before tax reform, the de minimis safe harbor election was the best way to immediately expense the entire cost of your small-business assets for federal income tax purposes.

Now that the Tax Cuts and Jobs Act tax reform gives you 100 percent bonus depreciation through 2022, you have three possible reasons to use 100 percent bonus depreciation as your federal income tax default expensing method:

  1. If you are filing Schedule C for your business activity, there is no self-employment tax on the sales proceeds.
  2. It’s an easy method. You face none of the de minimis rules.
  3. There are increased Section 199A deductions in certain cases.

Before deciding on the best method for federal tax purposes, make sure to check on how your selection will affect your property taxes and what that does to your net savings.

If you would like assistance working through this, please do not hesitate to reach out to your team at Luster Tax Consulting. Please use the following link to book your complimentary strategy call with your team at Luster Tax Consulting.

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