During the last 2 years, my partner and I listed all our expenses as normal expenses instead of capitalizing portions of it for depreciation. We had toned down our spending and capital investments and so there was not much involved, but technically some of the items such as lawn equipment and some medium-sized repairs probably should have been capitalized and depreciated.
I plan to start again, but I also got to thinking about the possible consequences if we are reviewed. What are the typical penalties for deducting expenses right away that should have been depreciated? Are there fixed penalty amounts, or do they simply recalculate what our tax bills should have been and then charge the difference and interest?
thanks