brotherdarkness wrote:captainwasabi09 wrote:Maybe this is sleep deprivation, but although I know how to figure out whether or not to capitalize an expense, I can't think of what capitalizing an expense even means.
Capitalizing an expense means you don't take an immediate deduction at the end of the year in the entire amount of the asset, but instead either depreciate (if it's a tangible asset) or amortize (if it's an intangible asset) the asset over its useful life. Taxpayers would rather not capitalize because it means waiting to recoup the cost. Tangible assets have their useful lives prescribed by the Code and intangible assets usually have a 17 year useful life (I believe).
Note: capitalizing an asset does not mean it's a capital asset!
15 years for an acquired intangible, S197.