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Current expenses can be deducted from your business's total income in the year you incur them. They include the everyday costs of keeping your business going, such as office supplies, rent, and electricity.
Expenditures for things that will help generate revenue in future years -- a desk, a copier, or a car, for example -- are called capital expenses and must be written off over their useful life. Usually that period is three, five, or seven years, according to IRS rules. (See Nolo's article Current vs. Capital Expenses for more information.)
There is one important exception to this rule, called the Section 179 deduction, which may let you fully deduct capital expenses in the year you incur them. For more information on Section 179 of the IRC, see below, If I buy a new computer system this year, do I have to deduct the cost over a five-year period?