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Where to Put Non-Deductible Expenses

 
 
CHANGE USERNAME TO westes
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      02-03-2004, 06:51 PM
For a California S Corporation, where is the best place to locate
non-deductible expenses. If some item was paid for with a company credit
card or check, and your accountant disallows the expense for whatever
reason, the question becomes where do you stick the item? I don't want to
duplicate expense categories into deductible and non deductible version of
each category (e.g., deductible software expense, non-deductible software
expense). Do people create a single master expense category and group
non-deductible items there?

--
Will
westes AT earthbroadcast.com



 
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Allan Martin
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      02-03-2004, 07:07 PM
Check with your accountant.

"CHANGE USERNAME TO westes" <(E-Mail Removed)> wrote in
message news:(E-Mail Removed)...
> For a California S Corporation, where is the best place to locate
> non-deductible expenses. If some item was paid for with a company

credit
> card or check, and your accountant disallows the expense for whatever
> reason, the question becomes where do you stick the item? I don't want

to
> duplicate expense categories into deductible and non deductible version of
> each category (e.g., deductible software expense, non-deductible software
> expense). Do people create a single master expense category and group
> non-deductible items there?
>
> --
> Will
> westes AT earthbroadcast.com
>
>
>



 
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CHANGE USERNAME TO westes
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      02-03-2004, 07:40 PM
I'm checking with other people other than my accountant as well, because the
answer I got from my accountant was essentially "I don't care because I'll
take care of it."

I do care because I have a responsibility for my income statement in
Quickbooks to map exactly to the tax return that gets filed, and I'm not
going to waste hours in later years trying to reverse engineer why the two
are different.

--
Will
westes AT earthbroadcast.com


"Allan Martin" <(E-Mail Removed)> wrote in message
news:ZjSTb.21264$(E-Mail Removed) t...
> Check with your accountant.
>
> "CHANGE USERNAME TO westes" <(E-Mail Removed)> wrote in
> message news:(E-Mail Removed)...
> > For a California S Corporation, where is the best place to locate
> > non-deductible expenses. If some item was paid for with a company

> credit
> > card or check, and your accountant disallows the expense for whatever
> > reason, the question becomes where do you stick the item? I don't want

> to
> > duplicate expense categories into deductible and non deductible version

of
> > each category (e.g., deductible software expense, non-deductible

software
> > expense). Do people create a single master expense category and group
> > non-deductible items there?
> >
> > --
> > Will
> > westes AT earthbroadcast.com
> >
> >
> >

>
>



 
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Z Man
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      02-03-2004, 08:11 PM

"CHANGE USERNAME TO westes" <(E-Mail Removed)> wrote in
message news:(E-Mail Removed)...
> I'm checking with other people other than my accountant as well, because

the
> answer I got from my accountant was essentially "I don't care because I'll
> take care of it."
>
> I do care because I have a responsibility for my income statement in
> Quickbooks to map exactly to the tax return that gets filed, and I'm not
> going to waste hours in later years trying to reverse engineer why the two
> are different.


Expenses deducted on your books but not on your tax return should be mapped
to Schedule M-1 (on form 1120S, page 4). BTW, you don't need to check with
anyone else


 
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Tony
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      02-03-2004, 08:21 PM
>Subject: Where to Put Non-Deductible Expenses
>From: "CHANGE USERNAME TO westes" (E-Mail Removed)
>Date: 2/3/2004 10:51 AM Pacific Standard Time
>Message-id: <(E-Mail Removed)>
>
>For a California S Corporation, where is the best place to locate
>non-deductible expenses. If some item was paid for with a company credit
>card or check, and your accountant disallows the expense for whatever
>reason, the question becomes where do you stick the item? I don't want to
>duplicate expense categories into deductible and non deductible version of
>each category (e.g., deductible software expense, non-deductible software
>expense). Do people create a single master expense category and group
>non-deductible items there?
>
>--
>Will


You can basically do it however you would like. If you & I were putting a plan
together, the key would be the level of detail you wanted to capture/report on.

You certainly could create one expense account to hold ALL non-ded items, but
you would not be able to easily track WHAT they were. If you don't care, then
that's the way to go. If you do want to know where that money went, then you
may want to set up a couple of sub-acconts and/or use classes to capture a
little more detail.

I would try to keep the entries out of the "normal" accounts. If the non-ded
entries are segregated, that's one less thing that your accountant has to do
(and charge you for) at year-end.

Tony
 
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CHANGE USERNAME TO westes
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      02-03-2004, 09:56 PM
Sorry, maybe I wasn't clear in the original question. I'm not asking a tax
question about where to put things on income tax forms. I'm asking an
income statement issue, because I want to be able to map numbers that can be
easily calculated in the income statement to the appropriate parts of the
tax form.

--
Will
westes AT earthbroadcast.com

"Z Man" <(E-Mail Removed)> wrote in message
news:0gTTb.14104$(E-Mail Removed)...
>
> "CHANGE USERNAME TO westes" <(E-Mail Removed)> wrote in
> message news:(E-Mail Removed)...
> > I'm checking with other people other than my accountant as well, because

> the
> > answer I got from my accountant was essentially "I don't care because

I'll
> > take care of it."
> >
> > I do care because I have a responsibility for my income statement in
> > Quickbooks to map exactly to the tax return that gets filed, and I'm not
> > going to waste hours in later years trying to reverse engineer why the

two
> > are different.

>
> Expenses deducted on your books but not on your tax return should be

mapped
> to Schedule M-1 (on form 1120S, page 4). BTW, you don't need to check with
> anyone else
>
>



 
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Allan Martin
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      02-03-2004, 11:01 PM
Talk to your accountant again, if he/she is really an accountant then you
would not get an answer like that. If they are non-deductible expenses or
perhaps items to be treated as shareholder distributions then how you code
these transaction would be important to the accountant as well. I have the
feeling that we are not getting the full picture.



"CHANGE USERNAME TO westes" <(E-Mail Removed)> wrote in
message news:(E-Mail Removed)...
> I'm checking with other people other than my accountant as well, because

the
> answer I got from my accountant was essentially "I don't care because I'll
> take care of it."
>
> I do care because I have a responsibility for my income statement in
> Quickbooks to map exactly to the tax return that gets filed, and I'm not
> going to waste hours in later years trying to reverse engineer why the two
> are different.
>
> --
> Will
> westes AT earthbroadcast.com
>
>
> "Allan Martin" <(E-Mail Removed)> wrote in message
> news:ZjSTb.21264$(E-Mail Removed) t...
> > Check with your accountant.
> >
> > "CHANGE USERNAME TO westes" <(E-Mail Removed)> wrote in
> > message news:(E-Mail Removed)...
> > > For a California S Corporation, where is the best place to locate
> > > non-deductible expenses. If some item was paid for with a company

> > credit
> > > card or check, and your accountant disallows the expense for whatever
> > > reason, the question becomes where do you stick the item? I don't

want
> > to
> > > duplicate expense categories into deductible and non deductible

version
> of
> > > each category (e.g., deductible software expense, non-deductible

> software
> > > expense). Do people create a single master expense category and

group
> > > non-deductible items there?
> > >
> > > --
> > > Will
> > > westes AT earthbroadcast.com
> > >
> > >
> > >

> >
> >

>
>



 
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Z Man
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      02-05-2004, 01:37 AM

"CHANGE USERNAME TO westes" <(E-Mail Removed)> wrote in
message news:(E-Mail Removed)...
> Sorry, maybe I wasn't clear in the original question. I'm not asking a

tax
> question about where to put things on income tax forms. I'm asking an
> income statement issue, because I want to be able to map numbers that can

be
> easily calculated in the income statement to the appropriate parts of the
> tax form.


My response was accurate. Let's take an example. For tax purposes, tax
penalties are not deductible. Here's how to handle them. For QuickBooks
purposes, they are an operating expense, just like any operating expense. So
you place them in the same area as utilities, payroll, etc. However, for tax
purposes, tax penalties must be mapped to Sch M-1 because that is the
appropriate place for expenses that are deductible for financial statement
purposes, but NOT deductible for tax purposes. Let's review: I have told you
where to put the expense for financial accounting purposes, and where the
same expense goes (or, to use your terminology, get's 'mapped to') for tax
return purposes. Now am I clear?


 
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Allan Martin
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      02-05-2004, 01:41 PM
I just had a thought, wouldn't it be nice if the OP told us exactly what
then non-deductible expense was. Then answers could be very specific.

"Z Man" <(E-Mail Removed)> wrote in message
news:S7hUb.11637$%(E-Mail Removed) et...
>
> "CHANGE USERNAME TO westes" <(E-Mail Removed)> wrote in
> message news:(E-Mail Removed)...
> > Sorry, maybe I wasn't clear in the original question. I'm not asking a

> tax
> > question about where to put things on income tax forms. I'm asking an
> > income statement issue, because I want to be able to map numbers that

can
> be
> > easily calculated in the income statement to the appropriate parts of

the
> > tax form.

>
> My response was accurate. Let's take an example. For tax purposes, tax
> penalties are not deductible. Here's how to handle them. For QuickBooks
> purposes, they are an operating expense, just like any operating expense.

So
> you place them in the same area as utilities, payroll, etc. However, for

tax
> purposes, tax penalties must be mapped to Sch M-1 because that is the
> appropriate place for expenses that are deductible for financial statement
> purposes, but NOT deductible for tax purposes. Let's review: I have told

you
> where to put the expense for financial accounting purposes, and where the
> same expense goes (or, to use your terminology, get's 'mapped to') for tax
> return purposes. Now am I clear?
>
>



 
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Z Man
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      02-06-2004, 02:02 AM

"Allan Martin" <(E-Mail Removed)> wrote in message
news:7KrUb.24482$%(E-Mail Removed) et...
> I just had a thought, wouldn't it be nice if the OP told us exactly what
> then non-deductible expense was. Then answers could be very specific.


I agree, but most non deductible expenses are entered on Sch M-1 on a
corporation tax return, so a general answer will cover most situations.


 
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