<menawach[at]msn.com> wrote:

- quote -

For several clients, I have a "write-in" line item for
schedule C labled as small tools, and I expense them.

You could put them on 4562 and take Sec 179 and achieve the
same results as long as the qualify for the Sec 179
deduction. They'll then get lost or destroyed and you'll
have to take them off the 4562 with no gain or loss. It just
seems like a bunch of work to achieve the same results.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

<menawach[at]msn.com> wrote

- quote -

There isn't one in the Code, but the business entity can
adopt a ~reasonable~ policy (in writing) that sets a dollar
limit. While I still have a stapler bought several years
back, I'm quite sure it didn't make it to the depreciation
schedule. Alternatively, you could lump "tools" together on
one line item on the depreciation schedule if you were to
buy a large amount of tols in one year. The policy might be
to expense any ~single~ item less then $xxx, but if part of
a group purchase, ie: several items purchased together that
exceeded the limit, it would be capitalized and depreciated.

--
Paul Thomas, CPA
paulthomascpapc[at]bellsouth.net

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

enawach[at]msn.com wrote:

- quote -

Most businesses have a policy on minimum capitalization
limits. There is no rule and you probably won't find
anything from IRS. The issue here is what accountants refer
to as "materiality," which refers to an amount which would
be significant to a reader of the financial statements of
the business; what is material to you would not be material
to Microsoft or other public companies.

Only individual items, or group of items, which cost more
than the company's minimum would be capitalized; anything
for less money would be expenses.

Items which must be replaced frequently may also be
expensed, even if more than the capitalization limit. The
theory is that, over a long term, the overall, cumuative
results would be the same either way. For example, I once
had a client in the janitorial service business. He bought
rather expensive, heavy-duty vacuum cleaners. Being used
for several hours, 5 days a week, even the heavy-duty
machines usually lasted about a year. Since he was buying
several vacuums every year, he charged them to expense. The
end result was the same, either way and this meant he didn't
need to keep depreciation records and show asset
abandonments each year.

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

The IRS pubs state that depreciable property, among other
criteria, must be expected to last more than one year. Some
small tools are relatively inexpensive but can last more
than one year. Is it proper to list these small,
inexpensive items under supplies or do I have list all of
them individually on Form 4562 even if they cost less than a
dollar. It would make it so much easier if there were a
dollar minimum.

Ric Smith, EA
Dunlap TN

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >