TaxGuyBill
Level 15
02-18-2025
10:35 AM
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It means how do they treat it for their "book" purposes?
If they deduct the cost when purchased for their "book" purposes, they can deduct it for tax purposes (assuming they don't take a physical count of inventory, which is treating it as inventory). See Example 2 in §1.471-1.
The link you provided was discussing the "non-incidental materials and supplies".