Part II. Expenses

Capitalizing costs of producing property and acquiring property for resale.

If you produced real or tangible personal property or acquired real or personal property for resale, you must generally capitalize certain expenses in inventory or other property. These expenses include the direct costs of the property and any indirect costs properly allocable to that property. Reduce the amounts on lines 8 through 27a and Part V by amounts capitalized. See Pub. 538 for a discussion of the uniform capitalization rules.