The IRS issued new final capitalization regulations late last year. Generally, amounts paid to improve tangible property must be capitalized and depreciated over time, but the regulations provide a unique opportunity.
Strategy: Use a safe-harbor election to your advantage. This election, authorized by the regulations, allows you to currently deduct certain building costs above and beyond the usual Section 179 allowance.
Among other requirements, the election is limited to no more than $500 for a specific item or $5,000 if you have an “applicable financial statement” (AFA) audited by a CPA.
Tip: The election is only available to qualified small businesses with $10 million or less of average gross receipts.