Construction – Tools & Tax Tips
In the construction industry, for tax purposes, you do treat the purchase of a hammer and a cement mixer differently. Sure you may view them as "tools of the trade" - but the IRS thinks differently! Construction is by nature a tool driven industry. Buying and providing them can get expensive. But how do you know when you can expense a tool and when you should capitalize a tool and depreciate (expense) it over time? Here are a few tips. First off, let’s define expenses from the tax perspective. Any business expense that is considered to be ordinary and necessary is deductible. An “ordinary” expense is considered to be something that is common and accepted in your industry – in this case, the construction industry. To be considered “necessary”,…