Law Commons^™

The Requirement That A Capital Expenditure Create Or Enhance An Asset, Alan Gunn

Journal Articles

Should expenditures that have an impact on a company’s production beyond one tax year be capitalized for tax purposes? How can these be distinguished from the “ordinary and necessary expenses” of a business? Is it reasonable to permit a current deduction for these expenditures? While a capitalized expenditure has often been seen as an expenditure that has produced an “asset”, there is no clear rule on what is an asset how to define it. The article examines these issues, with a discussion of the statutory provisions concerning capital expenditures and the problem of whether capitalization is a method of accounting. …