The de minimis safe harbor election is an annual tax return election that permits a taxpayer to deduct, as ordinary and necessary business expenses, purchases of items that would normally have to be capitalized.

The De Minimis Tax Rule: An Overview The rule states that a discount that is less than a quarter-point per full year between its time of acquisition and its maturity is too small to be considered a market discount for tax purposes. ... De minimis is Latin for "about minimal things."

The de minimis safe harbor election is an annual tax return election that permits a taxpayer to deduct, as ordinary and necessary business expenses, purchases of items that would normally have to be capitalized.

How do you elect to use the de minimis safe harbor? You should attach a statement titled "Section 1.263(a)-1(f) de minimis safe harbor election" to the timely filed original federal tax return including extensions for the taxable year in which the de minimis amounts are paid.

This election for items $2,500 or less is called the De Minimis Safe Harbor Election. This election is an option you can take each year that lets you write off items $2,500 or less as expenses instead of assets. ... This election will apply to all your businesses, rental properties or farms.

The de minimis safe harbor is simply an administrative convenience that generally allows you to elect to deduct small-dollar expenditures for the acquisition or production of property that otherwise must be capitalized under the general rules.

What Is the De Minimis Safe Harbor Election? A safe harbor allows you to take certain actions with minimal questioning, assuming you follow IRS rules. For the de minimis safe harbor election, the limit is generally $2,500 per asset, but if you have an AFS, the limit goes up to $5,000.