I am working on the completion of my 2011 tax return. My husband has a sole proprietorship as he is a self employed contractor. I am really confused! The way he operates is that he gives his customer an estimate, if they accept, he receives a check for the material cost that he "estimated". Once the job is complete, my husband then receives a check for the labor cost that was quoted.

My question is whether I have to show the amount that he received for materials? If so, is there somewhere that I also am able to show the material costs? We are in a range of about $42,000 for the year in materials.

Thank you