Publication 535 |
2000 Tax Year |
Capitalizing Premiums
Under the uniform capitalization rules, you must capitalize the
direct costs and part of the indirect costs for production or resale
activities. Include these costs in the basis of property you produce
or acquire for resale rather than claiming them as a current
deduction. You recover the costs through depreciation, amortization,
or cost of goods sold when you use, sell, or otherwise dispose of the
property.
Indirect costs include premiums for insurance on your plant or
facility, machinery, equipment, materials, property produced, or
property acquired for resale.
When the uniform capitalization rules apply.
You must use the uniform capitalization rules if, in your trade or
business or activity carried on for profit, you do any of the
following.
- Produce real property or tangible personal property for use
in the business or activity.
- Produce real property or tangible personal property for sale
to customers.
- Acquire property for resale. However, you generally do not
have to use the uniform capitalization rules for personal property
acquired for resale if your average annual gross receipts are not more
than $10,000,000 for the 3 prior tax years.
More information.
For more information on the uniform capitalization rules, see
Uniform Capitalization Rules in Publication 538
and the
regulations under Internal Revenue Code section 263A.
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