Where to charge factory special tools

[oldsfan]

What account do you GM guys charge your special tools to? We are using shop supplies 61d. I dont think this is the best place to charge it. Can't we count this as equipment and depreciate it? Any thoughts would be great.

[texaslp]

61 is correct for smaller amounts;larger tools can be capitalized and depreciated.

I would suggest asking your CPA to define "larger" amount for you.

[fburrows]

Oldsfan:

I think most people use 61D. The problem with depreciating the expense is that the dealership has to pay for the tools when they are received. If they are depreciated they will not be able to deduct 100% of this until the tools are fully depreciated.

Generally you want to avoid depreciating smaller expenses if it is possible. The amount you can take as an expense is not defined by the IRS so there are lots of interpretations.

------------------
Frank Burrows
fburrows@absdata.com

[Old Irish]

Less than $300 = 61D

Over $300 = set up for depreciation

Those are out guidelines, FWIW

DD

[XFACTOR]

I believe NADA guidelines state under $500.00 61d over $500.00 depreciate them.