Capital Assets: Deducting the Costs of Long-Term Assets



Capital or long-term assets are items purchased for use in your business that have a useful life of more than one year (as determined by the IRS) and include computers, machinery, furniture, and other equipment. The tax laws offer two alternatives in deducting the costs of long-term assets:

  • Section 179. Deduct the costs of capital assets in the year they were purchased, if the requirements of Section 179 of the Internal Revenue Code are met, or

  • Depreciate. Depreciate the costs (that means deducting a portion of the cost of the item for each year of the item’s useful life).

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