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    Baker Tilly RSG LLP

    Finding the right audit, tax and advisory support for your business is one of the most important business decisions you will ever make. Business owners need advisors they can rely on. At Baker Tilly RSG, we’ll help highlight your opportunities and manage your risks.

  • Baker Tilly

    The difference between expenses and capital expenditures

    The tax implications of expenses and capital assets are quite different, so it’s important farm businesses understand these implications before making a significant investment in new assets or renovations. Unfortunately, the difference is not always clear. When a farm business spends money on a project that is deemed a repair, this can be deducted in the current tax year as an expense. However, if money is spent on a capital improvement, that gets added to the cost of the asset, which is then depreciated over time. In other words, rather than get the full benefit of the deduction in the year the investment is made, businesses see this benefit gradually, over a number of years, depending on the class of the asset and the depreciation rate. That is the fundamental difference between expenses and capital expenditures.

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