Tax Guru – Ker$tetter Letter

Q:

Subject:  Deducting Website Expenses

What is the accepted protocol among CPA’s for deducting the costs of building, updating, and maintaining a website and is there a difference beteween the costs of an ecommerce vs. a branding site?

 

Thanks,

A:

There is no universal answer for this because too many variables need to be taken into account.

Your own personal professional tax advisor should be considering such things as how much the design of the website cost, when it started generating income, and how long it will be before it needs another expensive overhaul, in order to determine whether it makes more sense to immediately expense the costs or amortize them over the expected useful life of the design.

That would only apply to the up-front design cost.  Monthly maintenance costs, including hosting services, would be expensed as paid or incurred, depending on whether you are on the Cash or Accrual tax basis.

Good luck.

Kerry Kerstetter

Follow-Up:

Thanks for the info.