Tax deductible items that are fully tax deductible are all expenses incurred in the operation of your business. These are fully tax deductible expenses in the year they occur. Fully tax deductible items reduce your net income by their amount. You need to itemize fully tax deductible items and keep all receipts for verification in case of an IRS audit.

Some expenses are not fully tax deductible items but depreciation expenses. If you purchase a property that has an expected life of more than one year and you do not intend to resell it, then it is a depreciable expense. The cost must then be spread over time over the useful life of the property.