Reference:
IRS Publication 535: Business Expenses
"You generally capitalize the cost of property that has a useful life substantially beyond the tax year. You recover its cost through depreciation. Operating expenses, on the other hand, are deducted in the year they are paid or incurred."
You can access the full document here:
IRS Publication 535
Summary
The key difference is that capital expenditures allow for the cost to be depreciated over time, while operating expenses are fully deducted in the accounting period they are incurred. This reflects the long-term versus short-term nature of these expenses.
The correct answer is D. Sometimes, salaries can be included as a capital expense (when you buy an asset, the installation labor cost can be capitalized as well), so C is not a good answer
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