Assets Archives - Langdon & Co

Update on Increase of Deduction for Purchase of Tangible Property

Pam WilliamsDecember 7, 20150 Comment

by Eric Murphy

For several years, the IRS has deemed that tangible assets used in business such as equipment and computers with a purchase price of more than $500 must be capitalized and depreciated based on the Assets’ useful life. Any money spent below $500 on an asset that would have traditionally be capitalized, could be expensed in the year of purchase instead. The IRS made this rule under the Tangible Property Regulations, specifically Reg. 1.263(a)-1(f)(1)(ii)(D). This deduction was allowed for businesses that didn’t have annual financial statements subjected to annual audits.

Under IRS Notice 2015-82, the lower tier safe harbor amount was increased from $500 to $2,500 of costs per tangible item and can now be expensed instead of being capitalized for small businesses that don’t have audited annual financial statements. This ruling will take effect for the tax year beginning January 1, 2016 all future years unless a modification is made at a future date. The IRS will also not challenge amounts between $500 and $2500 that were expensed in prior years between December 31, 2011 and December 31, 2015 that should have been capitalized. book stack

If you’re a business owner who wants to make sure their purchases are properly recorded and reported in their financial statements and tax returns, contact Langdon & Company LLP. Our team of highly skilled tax and bookkeeping professionals will assist you in making sure your company’s financial activity is reported properly and in conformity with all legally mandated requirements. We will also analyze your statements and make suggestions on ways you can become more profitable and efficient to the best of our ability.

Eric ([email protected]) is a Senior in the Langdon & Company LLP tax practice. He works with a variety of clients in preparation of tax returns and other projects.

Should you be filing FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR)?

Pam WilliamsOctober 29, 20140 Comment

by: Brittany Craig

According the to the IRS’ FBAR guidance [1], the foreign currency list of U.S. persons who may be required to report their foreign bank and financial accounts annually to the United States Treasury include, but is not limited to the following who have a financial interest or signature authority in a foreign account or asset:

U.S. citizens
Resident aliens
Trusts
Estates
Certain domestic entities

The Department of the Treasury indicates that if the aggregate value of all foreign account(s) or asset(s) is at least $10,000 in U.S. dollars at any time during the calendar year, then the maximum value of the financial account(s) maintained by a financial institution physically located in a foreign country should be reported.

While the reporting threshold is $10,000, some U.S. persons may choose to report their foreign bank and financial account(s) even if they are below the aforementioned threshold in an effort to instill good faith with the Department of Treasury.

Form 114 must be received by the U.S. Department of Treasury no later than June 30, via FinCEN’s BSA E-Filing System. Note, this report is not filed with a federal tax return and there are no extensions of time. In addition, if the report is not filed on time non-willful penalties may be up to $10,000 and willful penalties may be up to the greater of $100,000 or 50% of account balances. Criminal penalties may apply, too.

Our tax department is incredibly knowledgeable about miscellaneous forms and other tax issues. Please feel free to contact our office for more information.

Brittany ([email protected]) is a tax senior at Langdon & Company LLP. She has experience in tax planning for a variety of clients including corporate and pass-through to individuals.

[1] http://www.irs.gov/pub/irs-utl/IRS_FBAR_Reference_Guide.pdf