Finch Construction Company provides the carpenters it employs with all of the required tools. However, the company believes that this practice has led to some employees not taking care of the tools and to the mysterious disappearance of some tools. The company is considering requiring all of its employees to provide their own tools. Each employee's salary would be increased by $1,500 to compensate for the additional cost. Complete the letter to Finch's management explaining the tax consequences of this plan. SWFT, LLP 5191 Natorp Boulevard Mason, OH 45040 September 18,2021 Finch Construction Company 300 Harbor Drive Vermillion, SD 57069 Dear Management: You asked me to determine the tax implications of requiring the company's employees who are carpenters to furnish their own tools, with a compensating increase in their salaries of about $1,500 each. In short, most employees would experience a in after-tax income. Under the company's present way of doing business, the carpenters income when the employer provides tools. This is a "working condition fringe." If the employee's salary is increased and he or she must purchase the necessary tools, the employee include the additional $1,500 in salary in gross income. The cost of the tools be deductible. Another possibility would be for the employees to purchase the tools, but account to you for their cost, and obtain reimbursement. Under this plan, the employee be allowed to directly offset the reimbursement with the expense, in arriving at adjusted gross income. The request for reimbursement provide you with a means of controlling costs. Please contact me if you would like to discuss this further