Level 13

@Terry53029 wrote:

I did omit one very important fact " cost of improvement is less than $10,000 or 2% of basis of building, not all improvements


That is a ELECTION called the Safe Harbor for Small Taxpayers.

However, the $10,000/2% amount is if ALL repairs, maintenance and improvements TOTAL under that amount for the year.  If it is over that amount, none of it qualifies and the improvements would be depreciated.  And remember, it is the LESSER of $10,000 or 2%.  So if the undepreciated building is less than $500,000, you need to calculate what the 2% would be.

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

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