Materials cost and Form 1099-MISC

[Questionguy101]

Taxpayer hired a contractor for a repair job in his business in 2008. He paid him $1,000 for labor and reimbursed him $200 for the materials. Taxpayer issued a check to the contractor and noted on the check that it was for materials. The contractor kept the receipts of the materials.

On the Form 1099-Misc., does the taxpayer put $1,000 or $1,200 in box 7?

[veritas]

I would

issue the 1099 for $1,200.

[S T]

From IRS Website

Here is the link to forms 1099 Misc http://www.irs.gov/instructions/i109...02.html#d0e840

Here is the quote on box 7- regarding labor and materials

Examples. The following are some examples of payments to be reported in box 7.

Payment for services, including payment for parts or materials used to perform the services if supplying the parts or materials was incidental to providing the service. For example, report the total insurance company payments to an auto repair shop under a repair contract showing an amount for labor and another amount for parts, if furnishing parts was incidental to repairing the auto.

I am not so sure the example is so much on target, but I do include materials along with labor, and in my client's records I do record them separately however and then furnish that vendor with the breakdown.

If for some reason the t/p's vendor does not furnish us a breakdown, I account all as a labor cost.

Sandy