J.K. Lasser's Small Business Taxes 2022

CHAPTER 10Repairs, Maintenance, and Energy Improvements

1. Ordinary Repairs
2. Rehabilitation Plans
3. Qualified Improvement Property
4. Small Business Safe Harbors
5. Rotable Spare Parts
6. Change in Accounting Method
7. Special Rules for Improvements for the Elderly and People with Disabilities
8. Lists of Deductible Repairs and Capital Improvements
9. Energy Improvements

Property and equipment generally need constant repairs to keep them in working order. Preventative maintenance—regular servicing of equipment—can cut down on replacement costs by allowing you to keep your current equipment longer. When your computer goes down, a service person is required to make repairs. When the air-conditioning system in your office building stops working, again, servicing is necessary. If you have property or equipment to which you make repairs, you can deduct these expenses. The only hitch is making sure that the expenses are not capital expenditures. As a general rule, the cost of capital expenditures cannot be currently deducted but instead are added to the basis of property and recovered through depreciation or upon the disposition of the property. But there are several important exceptions to this rule, which were created by what tax pros call the “repair regulations” issued several years ago.

For further information about deducting repairs, see IRS Publication 535, Business Expenses.

Ordinary Repairs

Deducting Incidental Repairs in General

The cost of repairing property and equipment used in your ...