Safe Harbor

Safe harbor is a threshold dollar amount used by the IRS to ease the volume of paperwork for tax compliance. Safe harbor rules are used in several of the code sections as a tool to make the documentation and compliance elements of reporting easier for the small business owner.

Capital Expenditures – IRS Definition

Capital Expenditures

The Internal Revenue Service uses a complex definition to identify capital expenditures (assets).  A capital expenditure is not deductible as an expense in the tax year purchased; the taxpayer or entity must use depreciation, amortization or depletion to obtain deductible value on the entity’s return.

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