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Discussion Forum Index --> Tax Questions --> Capital expense paid in separate years
Link1time (talk|edits) said:
| 23 January 2006
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| Have a client that had one wall of his barn totally replaced. The job was completed in 2005 and he paid the amount he was billed which was $2000. He is still waiting for the final bill which of course won't come until 2006. Should I get him to find out the remaining balance due and depreciate the total amount in 2005? I don't know if the payments will all go to one contractor or if he had different sub-contractors which might have caused this problem.
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Captcook (talk|edits) said:
| 24 January 2006
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| Is your client cash or accrual basis? This would influence my decision.
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DZCPA (talk|edits) said:
| 24 January 2006
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| I would write off as a repair. Barn had 4 walls and now still has 4 walls. What percentage is $2000 in relation to the cost to replace the whole barn?
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Link1time (talk|edits) said:
| 24 January 2006
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| In this case, we are talking about cash basis, not accural.
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DZCPA (talk|edits) said:
| 24 January 2006
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| I would write off as repair in the year the repair was paid.
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Captcook (talk|edits) said:
| 24 January 2006
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| I agree with DZCPA. Unless $2000 is significant in relation to the replacement cost, expense it.
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