Publication 535 |
2001 Tax Year |
Introduction
This chapter discusses two ways of treating certain
costs--deduction or capitalization.
You generally deduct a cost as a current business expense by
subtracting it from your income in either the year you incur it or the
year you pay it.
If you capitalize a cost, you may be able to recover it over a
period of years through periodic deductions for amortization,
depletion, or depreciation. When you capitalize a cost, you add it to
the basis of property to which it relates.
A partnership, corporation, estate, or trust makes the choice to
deduct or capitalize the costs discussed in this chapter except for
exploration costs for mineral deposits. Each individual partner,
shareholder, or beneficiary chooses whether to deduct or capitalize
exploration costs.
You may be subject to the alternative minimum tax (AMT) if you
deduct any of the expenses discussed in this chapter, other than
carrying charges and the costs of removing architectural barriers.
For more information on alternative minimum tax, see the
instructions for one of the following forms.
- Form 6251, Alternative Minimum
Tax--Individuals.
- Form 4626, Alternative Minimum
Tax--Corporations.
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