As of the beginning of Year 3, Wolf, Inc. has a written accounting policy to expense amounts paid for tangible property costing up to $8,000. Wolf also has an applicable financial statement for the year. During Year 3, Wolf pays $12,000 for three pieces of office furniture that cost $4,000 each and have an economic life of 5 years. Under the de minimis rule, how much can Wolf deduct for tax purposes in Year 3?

A. $0

B. $1,500

C. $4,000

D. $12,000

Question

Nibbles

Business

12 April, 11:42

As of the beginning of Year 3, Wolf, Inc. has a written accounting policy to expense amounts paid for tangible property costing up to $8,000. Wolf also has an applicable financial statement for the year. During Year 3, Wolf pays $12,000 for three pieces of office furniture that cost $4,000 each and have an economic life of 5 years. Under the de minimis rule, how much can Wolf deduct for tax purposes in Year 3?

A. $0

B. $1,500

C. $4,000

D. $12,000

+1

Answers (1)

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D.

Can expense if:

1. each purchase < 5,000, not written policy of max deduction

2. written policy of:

economic life < 12 months

OR

purchase under certain amount*

*NOTE: can exceed 5000