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Adobe Creative Cloud, better for taxes?

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Angelo LorenzoAdobe Creative Cloud, better for taxes?
by on Feb 9, 2012 at 11:35:05 pm

I'm a, mostly, freelancer who resides in the US. 2012 will be my first full year being self employed and I was wondering if, on the long term, subscribing to Adobe Creative Cloud (basically leasing Adobe's products) would be better on my taxes as it's a business expense and not a business purchase (looks like software can only be depreciated for the first year).

Any thoughts on this? Or should I bug my tax guy?

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Todd TerryRe: Adobe Creative Cloud, better for taxes?
by on Feb 10, 2012 at 5:40:29 am

[Angelo Lorenzo] "Or should I bug my tax guy?"

Yes, probably.

Unless I'm missing something, I'm not really sure why one would want to depreciate a software purchase (even if you can)... usually one would simply expense that purchase rather than depreciate it. Depreciation is usually best for really big-ticket hardware items. But again, ask your CPA. Your mileage may vary.


Todd Terry
Creative Director
Fantastic Plastic Entertainment, Inc.

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Steve BoultbeeRe: Adobe Creative Cloud, better for taxes?
by on Feb 10, 2012 at 7:01:53 pm

Software is a depreciable asset and is normally depreciated over a three year period for tax purposes. Off-the-shelf software qualifies for the Section 179 expense election which allows you to write off the entire amount in the year the software is purchased and placed in service.

The Creative Cloud subscription would be an ongoing business expense. If the cloud subscription costs more over the lenght of time that you normally upgrade the purchased version in, you have to decide if the extra cost is worth it - due to additional flexibility, features, etc. If there isn't really much difference other than cash flow, it doesn't make sense to spend an extra $100 to save an extra $35 in taxes.

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