Year End Tax Planning: Purchasing Software for the Current Year Tax Deduction

12/1/2011 - 5:46 p.m.

As the end of the taxable year approaches, the decision to purchase software is important for the business owner. Eric R. Shivers, CPA offers some insight into tax planning for some beneficial deductions of year end purchases.


Details of the Deduction

The IRS allows for the benefit of a current year deduction for purchased computer software through a special election on the taxpayer’s federal income tax return.  Generally, software that is purchased is amortized (expensed) over 36 months.  The special election under Code Sec. 179, allows the tax payer to deduct 100% of the purchased software costs in ...

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