Making sure your company is Y2K-prepared doesn't start and end with updating your computer systems. You can also reap tax savings for making those corrections and adjustments. The IRS recently issued an announcement indicating that companies can deduct the cost of modifying or converting their existing software to make it Y2K-compliant.
The new IRS provision includes the costs of using either in-house personnel or an outside firm to search through the software code and fix any date-related problems within existing software programs. It's important to keep in mind, however, that the announcement doesn't cover the purchase of new software or hardware, says Gary Juhnke, a CPA and tax partner with Deloitte & Touche LLP. Different tax provisions apply in those cases, as we discuss later in this column.
Joan Szabo is a writer in Great Falls, Virginia, who has reported on tax issues for more than 13 years.