Knowing whether a business expense is current or capitalized will help to determine when owners may deduct the expense from their business’s taxes. The IRC dictates what expenses can be deducted and even in what year they can be deducted. Owners can deduct some business expenses the year they incur them; these are called “current” expenses. They can deduct other business expenses in increments over a certain number of years in the future; these are known as “capitalized” expenditures. It is important to understand the differences between the two types of expenses and the tax rules that apply to each.