• Schedule C is an essential tool for listing business assets and maximizing deductions.tax forms image by Stephen VanHorn from Fotolia.com
  
  Any individual who does business as a sole proprietor or an independent contractor reports expenses and income on IRS Schedule C. Business assets are listed on this form in order to take all applicable deductions. This process follows well-defined rules designed to offset income for tax purposes and to maximize profits.
  
  

Assets Used in a Business to Produce Income

• Any asset integral to the business's operations and profits is listed on Schedule C. This covers everything from pens and paper to computers and equipment. The asset must be used in the business's day-to-day activities in order to produce income. A picture or plant in a back office not visited by clients are examples of items that do not qualify.
  
  

Assets Anticipated to Have a Useful Life Exceeding a Year

• While this rule must be followed, an equally important caveat is that the asset is expected to eventually break down or wear out, become obsolete or be used up. Any asset that does not fall into this category cannot be deducted.
  
  

Maintenance or Repair to Extend the Life of an Asset

• These costs include everything from fixing a computer or installing a new hard drive to batteries or software upgrades for a cellphone. The full cost of labor and equipment for any such item may be deducted on Schedule C.
  
  

Intangible Property

• This category includes those assets of value that cannot be physically seen or touched. In the case of a patent, for example, the filing and attorney's fees are deductible, as are the costs to defend the patent in the marketplace.
  
  

Types of Schedule C Asset Deductions

• There are two ways of deducting such expenses: either by depreciation, which is a percentage of the cost deducted over an item's expected useful life, or the total cost in a single year under what is known as a Section 179 deduction. The latter is a popular option as it can be used to immediately offset income; two important considerations are that this deduction cannot be more than taxable income, and it takes into account not just business income, but total taxable income from all sources.