V bought electric motors for her business from a sales representative who said that they had a four horsepower output.V discovered while using the motors that they only produce two horsepower after a few weeks use.V may recognize as a loss the value of the reduction in horsepower and currently deduct the amount as a business expense.

Question

Quizplus · Accepted Answer

The reduction in horsepower and the consequent loss in value of the electric motors would typically be considered a capital loss, not a currently deductible business expense. Business expenses are generally for more immediate costs rather than depreciations or devaluations of capital assets.

V Bought Electric Motors for Her Business from a Sales