You just spent $1,800 on a laptop for your locums paperwork. Do you deduct it this year, or spread it over several years? That’s the capital expense question, and for most 1099 CRNAs the answer is friendlier than you’d expect.
A capital expense is a cost to acquire, create, or improve a business asset, such as equipment, furniture, or practice space. The tax rules often let you deduct these costs in the year you buy them. What is important is knowing which rules applies, and keeping the paperwork to back it up.
This post covers general federal tax rules and isn’t tax advice for your situation. State rules can differ, so run big purchases past your CPA or tax advisor.
What Counts as Capital Expense?
A capital expenditure (CapEx) generally creates or improves an asset rather than paying for an ordinary operating service. When you capitalize a cost, your record it as part of an asset’s cost instead of immediately treating it as a one-time expense in your books.
For tax purposes, the amount you have invested in the property is called your basis. Basis helps determine depreciation and the gain or loss when you dispose of the property. Acquisition cost can include freight, installation, and other related charges, as IRS Publication 551 explains.
Two things trip people up. Price alone doesn’t decide whether something is capital, and a pricey service can still be an ordinary operating expense. Additionally, the way your books record a purchase can differ from how the IRS treats it, especially if you keep simple tax-basis books instead of full GAAP statements.
Capital Expenses vs Operating Expenses
Operating expenses (OpEx) keep your business running day to day. Capital expenses give you something that lasts. Here’s how they compare for a working CRNA:
| Comparison | Capital Expense | Operating Expense |
| What the expenditure does | Buys or improves an asset | Covers ongoing business costs |
| CRNA examples | Laptop, ultrasound unit, office furniture | Malpractice premiums, CE courses, license renewals, software subscriptions |
| Tax deduction timing | Deducted now or over several years | Usually deducted in the year you pay or incur it |
Paying from a business bank account does not by itself establish deductibility. The cost still has to be ordinary and necessary for your business, and you’ll need to split out any personal use.
Capital Expense Examples for CRNAs and Locums
The questions to ask are the same every time: did you buy it, is it yours, and how much of it is for work? Here’s how that plays out.
- A laptop for contract admin. It’s equipment you own, so it’s a capital purchase. Whether you deduct it now depends on the rules below. Know your total cost and your business-use percentage.
- Equipment for your own practice. If you buy your own ultrasound unit or similar gear, it’s your asset. Keep the invoice and note the date you started using it. Consumable supplies are a separate category.
- Office furniture. A desk and chair for your home office count. If the space isn’t use only for your work, you’ll need to allocate the business portion.
- Software. A monthly subscription is usually an ordinary operating expense. Separate fees for setup or custom development can be treated differently, so ask your advisor.
Facility-owned equipment does not become your purchase deduction simply because you use it during an assignment. For expense categories beyond equipment classification, see broader tax deductions for healthcare contractors.
Repair or Improvement? When the Work Must Be Capitalized
An invoice that indicates “repair” doesn’t settle anything. The IRS looks at what the work actually did to the property. Work is treated as an improvement, and has to be capitalized, if it fits one of three buckets.
- Betterment. It fixes a material pre-existing defect or materially increase capacity, productivity, or quality.
- Restoration. It replaces a major component or substantial structural part, among other specified situations.
- Adaptation. It changes property to a new or different use inconsistent with its original intended use.
Can You Deduct a Capital Purchase in the Same Year?
Yes, if a special tax rule allows it. A capital purchase that is capital in nature does not automatically require deductions over several years. You have three main routes, and they work separately from how your books classify the purchase.
Small Purchases and the De Minimis Safe Harbor
The de minimis safe harbor allows you to expense smaller equipment purchases right away. The ceiling is $2,500 per invoice or substantiated item without an applicable financial statement (AFS), and $5,000 with a qualifying AFS. A typical bookkeeping report is not automatically an AFS, so most independent CRNAs fall under $2,500.
To qualify, you need to:
- Have an appropriate expense procedure in place at the beginning of the tax year
- Treat the cost as an expense in your books too
- Make the annual election with a timely original federal return, including extensions.
The limit only decides safe-harbor eligibility. Costs above the it can still qualify for deduction under normal rules.
Section 179, Bonus Depreciation, and Regular Depreciation
Section 179 lets you elect to deduct the cost of qualifying equipment in the year you place it in service. It has dollar limits, but they’re high enough that most CRNAs won’t hit them. The deduction can’t exceed your business income, and the property generally needs to be used more than 50% for business.
Bonus depreciation is another accelerated option. IRS Topic 704 currently describes 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025. “Placed in service” means ready and available for use, not just ordered or paid for. State rules may not follow the federal ones.
Everything else: regular depreciation
If you don’t or can’t use the options above, you recover the cost gradually through regular depreciation. IRS Publication 946 explains how it works.
Depreciation, Section 179, and bonus depreciation are generally reported on Form 4562 and flow to Schedule C if you file as a sole proprietor. S-corps and other entities report them on their own returns.
Worked Example: An $1,800 Laptop and a $6,000 Equipment Purchase
Say you’re an established 1099 CRNA buys a laptop for $1,800,total invoice cost. Assume you use it only for work, you have no AFS, you had an expensing procedure in place at the year’s beginning, your books also expense it, and you make the de minimis election on time.
Under those assumptions, the laptop may qualify for a current deduction even though it lasts several years. IRS Notice 2015-82 establishes the $2,500 limit; the other conditions still apply.
Now say you buy one piece of equipment for $6,000 under the same no-AFS assumption. It exceeds that safe-harbor ceiling, so review the normal acquisition rules and potential Section 179 or bonus-depreciation treatment. The price alone does not establish that deductions must span several years.
What Records to Keep for Equipment Purchases
Give your bookkeeper enough detail to identify each purchase and coordinate it with your tax review. Keep:
- The itemized invoice, with total cost, freight, installation, and related charges.
- The purchase date and the date you started using it.
- Your business purpose, who owns it, and your business-use percentage.
- A description of any improvement and the property it affected.
- Payment records and financing documents, if you financed it.
- Prior deductions, plus details on any later sale, disposal, or change in use.
An asset register is a simple way to track all of this in one place. IRS Publication 583 covers recordkeeping for business assets.
Need Help Sorting Out a Purchase?
Understanding what a capital expense is helps you collect the right records before classifying a purchase. Unsure how to record equipment or an improvement? Explore 1099 Accountant’s monthly bookkeeping support or contact us at (855)529-1099 and discuss the support available for your healthcare contracting business and how to coordinate records with tax review.