Capital Expenses: What Are They?
Those consider capital expenses are wondering, how do I know if something falls under a capital expense or a current expense?
It is a perplexing consideration. Under tax law, anything that will help you to generate a business income over several years is considered a capital expense. For example, if you invest in a copier for the office, this will work for you for several years. Therefore, it is considered an expense that must be deducted over several years time. The IRS rules define how long this period will be. It could be three years, five years or seven years depending on the item.
But, do take into consideration Section 179 which now allows some items considered to be capital expenses to be deducted as current expenses. This includes things like computer purchases and office furniture, depending on the situation.
This entry was posted on Saturday, December 29th, 2007 at 9:21 pm and is filed under Deductions, tax tips. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.