Capitalizing Premiums Under the uniform capitalization rules, you must capitalize thedirect costs and part of the indirect costs for production or resaleactivities. Include these costs in the basis of property you produceor acquire for resale rather than claiming them as a currentdeduction. You recover the costs through depreciation, amortization,or cost of goods sold when you use, sell, or otherwise dispose of theproperty. When the uniform capitalization rules apply.You must use the uniform capitalization rules if, in your trade orbusiness or activity carried on for profit, you do any of thefollowing. Produce real property or tangible personal property for usein the business or activity. Produce real property or tangible personal property for saleto customers. Acquire property for resale. However, you generally do nothave to use the uniform capitalization rules for personal propertyacquired for resale if your average annual gross receipts are not morethan $10,000,000 for the 3 prior tax years. Indirect costs include premiums for insurance on your plant orfacility, machinery, equipment, materials, property produced, orproperty acquired for resale. More information.For more information on the uniform capitalization rules, seeUniform Capitalization Rules in Publication 538and theregulations under Internal Revenue Code section 263A.