Auto Technician's tools.

[Jack from Ohio]

I have a Master Auto Technician who purchased a large amount of tools for his Diesel Truck repair job. ($20K) All is financed through the tool dealers. Can I get opinions about whether to deduct (2106) the amount purchased, ($20K) or the amount paid in 2008 ($4,200).

I await your experienced answers.

[Janitor Bob]

I have a Master Auto Technician who purchased a large amount of tools for his Diesel Truck repair job. ($20K) All is financed through the tool dealers. Can I get opinions about whether to deduct (2106) the amount purchased, ($20K) or the amount paid in 2008 ($4,200).

I await your experienced answers.

Is he on a cash or accrual basis...i.e. does he recognize his income when earned or when actually receved?

[OldJack]

It is the amount he "purchased and placed in use" for the year 2008. How he financed the purchase is irrelevant.

[kcjenkins]

Jack is right. It's no different than if he bought a company car, you set up the car at purchase price plus sales tax, whether you paid cash for it or you financed 100%, or anywhere in between. Same thing with tools and equipment.

[Jack from Ohio]

Is he on a cash or accrual basis...i.e. does he recognize his income when earned or when actually receved?

He is a W-2 employee paid on "flat rate" time. Paycheck weekly. So he is on cash basis.

OldJack stated what I had thought. I was just asking to make sure I was on the right track.

[Terry D EA]

Stick with OldJack and KC on this one. I have been and still am a ASE Certified Master Technician and they both have hit it right on the head.

Terry D.