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Deduct it all at once or depreciate it? If you are building office infrastructure, adding more computer equipment, copiers, fax machines, routers, networking gear, and the like, come tax time, you are faced with the prospect of depreciating all your new equipment, or taking the entire deduction in the year of purchase. Which is it? For starters, the amount is important. If you have too many acquisitions during the year, you may not be able to deduct them all no matter what you want to do. There are limits. The code section that allows a quick write-off is called Section 179. It's only for tangible, moveable personalty (as opposed to realty). See your tax professional or tax prgram for the current limits. They change on you when you weren't looking! Why expense in the year incurred? That's easy. The time value of money. Your tax savings, when plowed back into your business are generally worth far more than the tax savings in future years. Inflation comes into play here as well. Because the deduction in future years is fixed, but the VALUE of the deduction is reduced, thanks to inflation. So, whenever possible, take the deduction in the year incurred.

Contributed by Steven W Johnson on March 13, 2008, at 4:00 PM UTC.

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This intel was contributed by Steven W Johnson Steven W Johnson

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