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In 2001 my wife and her business partner spent about $1000 recording a CD of original music that they are now selling to the public through various outlets.

I am trying to determine the proper method for writing off these recording costs. In reading various things on the IRS web site, I came away with the impression that they can't simply deduct these expenses, but have to spread them over time. I have had no luck figuring out the proper way to figure this deduction, ie., the number of years to spread the expense across, the proper method, whether the asset is tangible or intangible, etc. The only concrete thing I found is that they can't use 179 or MACRS. There was also some mention of 'capitalizing' a portion of their indirect costs, but again, no detail as to how I can figure this out.

If you can provide any clarity on this matter, it will be much appreciated. Also, if you are aware of any good reference material on the subject, I'd really like to know about it. Thank you in advance for your assistance.

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