Beginning in 2014 the IRS has defined more narrowly what can and can not be deducted in the current year as a repairs expense and what needs to be capitalized. The rules are complex. As a safe harbor, If you have a capitalization policy, assets that cost less than $500 and /or have a useful life of less than 12 months can be expensed in the current year. This policy does not have to be written, but it is a good idea to have one in writing.
Material and supplies over $200 can not be expensed and need to be inventoried.
A sample policy you can adopt is:
Purpose: This accounting policy establishes the threshold (minimum cost) for capitalization and depreciation of fixed assets. Assets meeting these requirements shall be recorded for both book and tax purposes in the records of ____________ (business name).
Fixed asset definition: A fixed asset is defined as a unit of property that: (1) has an economic useful life that extends beyond 12 months; and (2) was acquired or produced for a cost greater than $2,500. Fixed assets must be capitalized and depreciated for book and tax purposes.
Capitalization thresholds: __________________(business name) establishes $2,500 as the minimum threshold amount for capitalization. Fixed assets costing below this amount shall be expensed in its financial statements (or books).
Capitalization method and procedure: Fixed assets shall be recorded at historical cost as of the date acquired, and depreciated beginning on the date the fixed asset is placed in service.
A fixed asset costing less than the threshold stated above shall be recorded as an expense for financial statement and tax purposes. A fixed asset with an economic useful life that is less than 12 months shall be expensed for financial statement and tax purposes, regardless of the acquisition or production cost.