Thank you so much for your reply.
I don't think I understand. In my line of work, site preparation, whatever labor I can't finish myself I have to sub it out further. I paid out of pocket for the materials and that additional labor.
Does that make it a type of loan?
Also, Publication 538, Accounting Periods and Methods says:
Methods you can use.
Generally, you can figure your taxable income under any of the following accounting methods.
...
Hybrid method.
Generally, you can use any combination of cash, accrual, and special methods of accounting if the combination clearly reflects your income and you use it consistently. However, the following restrictions apply.
If an inventory is necessary to account for your income, you must use an accrual method for purchases and sales. However, see Exception for Small Business Taxpayers, later. Generally, you can use the cash method for all other items of income and expenses. See Inventories, later.
If you use the cash method for reporting your income, you must use the cash method for reporting your expenses.
If you use an accrual method for reporting your expenses, you must use an accrual method for figuring your income.
Any combination that includes the cash method is treated as the cash method for purposes of section 448 of the Internal Revenue Code.
When I read that, I just got more confused.
