If your company is dealing with the headaches caused by the infamous Year 2000 bug -- the problems that will strike a lot of hardware and software on January 1, 2000 -- the Internal Revenue Service has one piece of good news. Most companies that incur software development costs in coping with Year 2000 software conversions should be able to qualify for a current-year tax deduction for the full amount of those expenses. (If you're buying new software instead, you'll have to capitalize the expense, writing off the cost over time.)

The details on the deduction can get painfully technical, but the point to keep in mind is simple: The IRS made a general decision to treat Year 2000 software modification activities as another form of software development work. Such work typically qualifies as a current, deductible expense.

Business owners should definitely contact their accountants on this one, since there are exceptions. If you do qualify for the deduction, then follow the advice of Douglas O. Brundage, a partner in the Melville, N.Y., office of accounting firm Arthur Andersen LLP: Document everything. "If you've brought in an outside consultant to handle the conversion, then keeping records of your costs should be easy, since you'll have all the invoices," Brundage observes. "But if you're doing the work internally, then you'll want to carefully document who's doing what, including all relevant salaries, hours, and any other costs," he says.