Web site design - expense?

[natiro]

Client paid $2,000 for web site design. Can this be expensed currently or is there a requirement to amortize? If so, over what life, and any cite you can provide would be appreciated.

Thank you.

[Beth]

Website design

No site for you, but I would use Section 179.

[natiro]

Web site design

Client won't get any benefit from Sec 179. Thanks though. Any other thoughts?

[gkaiseril]

It could be considered and advertising expense like the setup cost for printing. Do not forget the monthly service fee.

[Brian EA]

It could be considered and advertising expense like the setup cost for printing. Do not forget the monthly service fee.

Definitely advertising

[Gene V]

Link to earlier discussion

http://www.thetaxbook.com/forums/showthread.php?t=2819&highlight=%22website+expense%22

[gkaiseril]

Just as with an tax program, there are those who develop the application for resale or sale to a consultant to modify, those who modify the application and resell the application to the final purchaser and the final user who purchases and uses the program.

Clearly the developer of the program has to capitalize his cost of development, but will expense the cost of maintaining the program. The consultant that modifies and resells the program might not have any development cost and no capitalization of the software, and the end user may capitalize the original purchase but the continued maintenance or the upgrade purchases would likely be expensed, there could be an exception if the upgrade had significant changes to the original product.

Most small client are hiring a web designer to perform an art designer type of function with some purchased additional services but not write a completely new product for resale to others.

Since there are so many variables in each situation that can change how this should be handled, the IRS can not have black and white rules that are applicable to every case. You have to use your best judgement. You have to look at the cost, time of development, and if there was any new technology developed for the web site that no one else could purchase.

Paying someone like SMC for a designed web site to sell their products is entirely different from creating eBay. In the first case existing technology is being used. In the latter case, some existing technology is being used but there is substantial new and unique uses of the existing technology and new technology being developed.