RONALD MARK SEMARIA,  CFE, DABFE, FACFEI,CSC, CHS-III
 CERTIFIED FRAUD EXAMINER & FORENSIC ACCOUNTANT
 DIPLOMATE & FELLOW AMERICAN BOARD OF FORENSIC EXAMINERS
 FRAUD, TAX, MANAGEMENT & INVESTIGATIVE ACCOUNTANT
 FORMER INTERNAL REVENUE AGENT
 SPECIALIZING IN EMPLOYEE THEFT & EMBEZZLEMENT

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COMPUTER SOFTWARE DEDUCTION

 The general rule for business software says you must depreciate costs over 36 months. But there are some exceptions you can take advantage of. Specifically: 

         1 – When software is bundled with hardware and sold for a single price, you                  can treat the whole setup as a new computer. Then you may be able to                    take a Section 179 deduction for the entire cost.           

2 – Some software programs, such as tax preparation packages, are really in the nature of  subscription products. These should be treated as “abandoned” and written off as soon as  they lose their usefulness. If a program will be good only for one year, deduct the entire cost in the year of acquisition.

3 – Even if you are stuck with the 36 month rule, you can acquire software this year, you can  claim first – year bonus depreciation equal to 30% of the cost. The remaining cost then can  be written off over 36 months.

The following articles are for informational purposes only, and your should always consult with your tax advisor to determine the tax implications for your particular financial situation.

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