You Can Expense Business IT Purchases
Thanks to some very liberal tax laws written to encourage investment in personal tangible equipment, including information technology (IT) equipment, many businesses will be able to expense (write off as a tax deduction) all such assets purchased and placed in service before the end of the tax year. For businesses using the accrual method of accounting, the purchase must have been completed and the equipment placed in service before the company’s year-end.
There are a number of ways to deduct IT costs, and the best method should be based upon the need for a current-year deduction, while also considering that the deductions may be more beneficial in a future year. So careful planning is required.
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Congress passed, and President Trump signed, the Consolidated Appropriations Act, 2021. Included in its approximately 5,600 pages is a second draw of forgivable Paycheck Protection Program (PPP) loans. The first round allowed loans to businesses with 500 or fewer employees and to certain businesses with multiple locations, for which each location could not have more than 500 employees. Unfortunately, this opened the door to some large businesses gobbling up the allocated funding and shutting out the smaller businesses that the loans were intended to help until additional funding was authorized.
Tax reform imposed limitations on food, beverage and entertainment expenses. Expenses considered entertainment are not deductible at all during the years 2018 through 2025. The tax reform act also imposed a number of restrictions on food and beverage expenses as explained in this week’s article. Learn more….