Section 263(a)

Section 263(a) of the Internal Revenue Code deals with capital expenditures related to real estate and the corresponding improvements. In general any purchase for real estate that has some future benefit to the business is capitalized and not expendable in the current tax year.

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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