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Org and the question you pose is becoming one of the most common questions we get (as year-end approaches).Per the Industry Specialization Program (ISP) published by the IRS, a website development should be capitalized as an asset and amortized (depreciated) over 3 years (exactly like software).Then, to compound the complexity, even if your client follows all the rules and correctly capitalizes the intangible assets from part of your services, then then we run into the fact that the IRS also allows the deduction of a large amount of captial expenditure for business each year under section 179 (up to 5,000 in 2007).So these types of expenditures may be availabe to be deducted anyway under Section 179 if the expenditure is one of those available under Sec. Aron Sotnikoff, CFE, CPA, Audit Supervisor at Rosen Seymour Shapss Martin & Company LLP The real answer to whether website development costs (in part or in total) are deductible in the year incurred or must be capitalized and amortized over a longer period is…nobody knows.Hosting, graphic design costs, content writing, advertising.
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But not every dollar is deductible – and a smart business owner knows this.
Speaking of which, you apparently have savvy, business minded clients exploring the issue of whether your services are, e.g.