"Marty Tipipn" <ggmt[at]pobox.com> wrote:

- quote -

Nope - your time is of no value in this instance.

- quote -

INHO - for $300 in supplies I'd expense it as office
supplies and call it De Minimus. BUT I can also make an
argument that since the useful life exceeds a year they
should be capitalized and depreciated over 7 years, 10 (I
think) for AMT.

- quote -

True Cost is True Cost - you can calculate the cost per
board foot and measure the board feet used. Add to that your
hardware costs and BAM! You get a workable number.

- quote -

Does the business have a need for the table saw? If not, I
think you're out of luck on this. Of course, the business
can own the saw and can write it off, but then you'd hvae to
calculate the personal use portion for every time you use it
and include that amount as income on your personal return.
Plus you may have to list your assets for local personal
property tax purposes so I wouldn't recommend holding an
asset that you have to pay tax on if you aren't going to be
using it in the business.

- quote -

Try IRS Publication 334 & 946.

I have inserted some comments/observations in with the
original post - please see them above.

Seriously, I doubt you have so much invested in the saw that
it will hurt much to just let that go. As I said, for the
$300 for the shelves, I'd run that through office supplies
and let it go.

Gene E. Utterback, EA

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"Marty Tipipn" <ggmt[at]pobox.com> wrote

- quote -

You don't get a deduction for your labor. But if you were
to do that you would have to claim that same amount as
income.

But if you must, record a "labor" expense for building the
bookshelves, then generate another Scjhedule C (for your
carpentry business) and see where you land.

- quote -

Same as if you were to buy the shelving. Capital asset,
depreciate it. If it's "built-in" it may be part-n-parcel
of the house and get depreciated over a longer period of
time. IF they are stand alone bookshelves, then 7 years (or
Section 179 if available).

- quote -

What'd you spend?

- quote -

Unless you have hundreds of boards left over, just use your
cost. I you still have half the boards left over, use half
your cost.

- quote -

I'd say no on this one. You still have the saw, there
wasn't a "business" need for it, there isn't now a
"business" need for it. It's a personal expense.

--
Paul A. Thomas, CPA
Athens, Georgia
taxman at negia.net

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ggmt[at]pobox.com (Marty Tipipn) wrote:

- quote -

As a sole proprietor or partner, you are not totally
"separate" from your business. Whether you (personally) pay
an expense, or the business pays the expense is immaterial -
it all comes out of the same pot. Unless the table saw
continues to have a business purpose, it is a personal
expense, and not a company asset.

- quote -

You are NOT an employee of your business and do not receive
a salary. You pay income tax on the net profit of the
business. Reimbursing yourself for your labor merely reduces
the net profit of the business and increases your personal
income. Net tax result is ZERO.

- quote -

Expense the actual cost, or capitalize it as "office
fixtures" on the business return.

- quote -

What you paid for the materials. Your labor is worth nothing.

- quote -

See above.

- quote -

You've got to be kidding, right? Why didn't you just lease a
saw for the short time needed?

- quote -

www.irs.gov

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- quote -

Yes it does. Now you need to file a partnership return and
issue K-1s to you and your wife, much more complicated than
doing a schedule C.

- quote -

No. You are not an employee of your partnership. You are a
partner. Sales - expenses = profit, your take. That is
your salary.

- quote -

Your personal funds became capital contributions to the
partnership.

- quote -

Cost of the materials.

- quote -

You need some professional help here. You are very short of
understanding. This kind of business is most easily handled
as a sole proprietorship. Se my earlier message about the
IRS pub 583, Starting a Business and Keeping Records.

All freely provided advice guarantee correct or double your
money back

Frank S. Duke, Jr. CPA
Cincinnati, OH USA

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I run a small business out of my home. If it matters, the
business is classified as a partnership between my wife and
I.

Recently, I spent about $300 in personal funds to purchase
wood and related materials for the purpose of building
storage shelves for my inventory. I also bought a table saw
to assist in the fabrication of the shelves. Now I need to
get the business to cut me a check for some or all of the
expense.

A few questions:

* I've invested about 40 hours of labor in building the
shelves. Is there any way I can charge a "fair" cost to the
business for my labor? If I had hired someone to build the
shelves for me, I probably would have spent another $500 or
so just for labor.

* How do I account for the expense of buying the materials?
Capitalize them as fixtures and start depreciating the cost,
put the expense down as "office supplies" or something
similar, or what?

* If I need to capitalize, how do I determine the true cost?
Some of the materials I bought ended up as scrap, some went
only partially used. Plus there's the labor I put in.

* The table saw was a critical piece of the effort; without
it, I couldn't have fabricated the shelves. (Believe me when
I say that I ran the saw for probably 4 hours
continuously... I made a *lot* of cuts.) Can the business
either purchase the saw from me or reimburse me for the wear
and tear in using it?

* Any clues as to what IRS document might shed some light on
how to properly treat this expense?

Thanks

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