Margaret CPA in OH Posted March 1, 2012 Report Share Posted March 1, 2012 Contractor damaged a car with his truck on a job and, instead of reporting to insurance, reimbursed the car's owner for the repairs. This is a first for me. I'm not sure how to handle it. It's $1061 and makes a difference. I couldn't find anything on point is Pub. 535. Thanks for help! Quote Link to comment Share on other sites More sharing options...
BobinNJ Posted March 1, 2012 Report Share Posted March 1, 2012 I don't think that this is a deductible expense. Akin to a traffic ticket. (Maybe not the best example) Quote Link to comment Share on other sites More sharing options...
jainen Posted March 1, 2012 Report Share Posted March 1, 2012 >>Akin to a traffic ticket<< Tickets are for violations of law. Contracting is an inherently dangerous business, but we expect the contractor to fix anything he breaks. Paying for accidental damage from utility trucks and other equipment is an ordinary and necessary operational expense. Quote Link to comment Share on other sites More sharing options...
Margaret CPA in OH Posted March 1, 2012 Author Report Share Posted March 1, 2012 Thanks for the replies. I certainly was inclined to think it a legitimate expense in this business but don't know what sort of account to use. I do have a Truck/Auto Maintenance and Repairs but that is for the business trucks and car. Other suggestions? Thanks again! Quote Link to comment Share on other sites More sharing options...
MAMalody Posted March 2, 2012 Report Share Posted March 2, 2012 I don't think I agree. It would appear to me that if you bypass an opportunity to have the damage paid for by a third party of which you are paying a premium for, that you surrender the ability to take the deduction. It is not usual, ordinary or necessary for any business to pay an expense they do not have to pay. It could be possible if you could document that you premium would go up as a result and it would be cheaper to pay it directly you may have a case. Quote Link to comment Share on other sites More sharing options...
OldJack Posted March 2, 2012 Report Share Posted March 2, 2012 I agree with Jainen! It is simply a valid business decision as to not involving the insurance company. It is an ordinary and necessary business expense. Quote Link to comment Share on other sites More sharing options...
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