Galaxy Corporation purchases specialty software from a software development firm for use in its business as of January 1 of the current year at a cost of $90,000.No hardware was acquired.How much of the cost can Galaxy deduct this year?
A)$18,000
B)$15,000
C)$30,000
D)$90,000

Question

Quizplus · Accepted Answer

According to IRS rules, software can either be deducted all in the year it was purchased or it must be amortized (deducted over time) over 36 months. Since no hardware was acquired, the software is not considered an asset subject to depreciation, so the entire cost of $90,000 can be deducted in the current year. Therefore, the answer is (C) $30,000.

Galaxy Corporation Purchases Specialty Software from a Software Development Firm