More business costs can now escape capitalization.(Brief Article)

Kiplinger Tax Letter, The, January, 2004

More business costs can now escape capitalization, the IRS says in final regulations. The easing applies to salaries and overhead for workers who are involved in acquiring assets such as consumer loans. Also for expenses incurred in switching to just-in-time inventory systems. This is so even though the company derives significant long-term benefits.

There's a special 12-month rule. Businesses can deduct premiums on insurance policies and payments on leases that run for a year or less.

Some costs remain non-deductible: Expenses of acquiring firms, issuing stock, restructuring and costs paid to acquire intangible assets. In many cases, the IRS will make an exception for costs of $5,000 or less.

These rules apply now...for payments made after Dec. 31, 2003.