A publisher can deduct as a current business expense the costs of establishing, maintaining, or increasing the circulation of a newspaper, magazine, or other periodical. For example, a publisher can deduct the cost of hiring extra employees for a limited time to get new subscriptions through telephone calls. Circulation costs are deductible even if they normally would be capitalized.

This rule does not apply to the following costs that must be capitalized.

• The purchase of land or depreciable property.
• The acquisition of circulation through the purchase of any part of the business of another publisher of a newspaper, magazine, or other periodical, including the purchase of another publisher's list of subscribers.

Other treatment of circulation costs. If you do not want to deduct circulation costs as a current business expense, you can choose one of the following ways to recover these costs.

• Capitalize all circulation costs that are properly chargeable to a capital account.
• Amortize circulation costs over the 3-year period beginning with the tax year they were paid or incurred.

How to make the choice. You choose to capitalize circulation costs by attaching a statement to your return for the first tax year the choice applies. Your choice is binding for the year it is made and for all later years, unless you get IRS approval to revoke it.

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