Where to Put Non-Deductible Expenses

Discussion in 'Quickbooks' started by CHANGE USERNAME TO westes, Feb 3, 2004.

  1. 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
     
    CHANGE USERNAME TO westes, Feb 3, 2004
    #1
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  2. CHANGE USERNAME TO westes

    Allan Martin Guest

    Check with your accountant.

    "CHANGE USERNAME TO westes" <> wrote in
    message news:...
    > 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
    >
    >
    >
     
    Allan Martin, Feb 3, 2004
    #2
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  3. 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" <> wrote in message
    news:ZjSTb.21264$...
    > Check with your accountant.
    >
    > "CHANGE USERNAME TO westes" <> wrote in
    > message news:...
    > > 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
    > >
    > >
    > >

    >
    >
     
    CHANGE USERNAME TO westes, Feb 3, 2004
    #3
  4. CHANGE USERNAME TO westes

    Z Man Guest

    "CHANGE USERNAME TO westes" <> wrote in
    message news:...
    > 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 :)
     
    Z Man, Feb 3, 2004
    #4
  5. CHANGE USERNAME TO westes

    Tony Guest

    >Subject: Where to Put Non-Deductible Expenses
    >From: "CHANGE USERNAME TO westes"
    >Date: 2/3/2004 10:51 AM Pacific Standard Time
    >Message-id: <>
    >
    >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
     
    Tony, Feb 3, 2004
    #5
  6. 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" <> wrote in message
    news:0gTTb.14104$...
    >
    > "CHANGE USERNAME TO westes" <> wrote in
    > message news:...
    > > 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 :)
    >
    >
     
    CHANGE USERNAME TO westes, Feb 3, 2004
    #6
  7. CHANGE USERNAME TO westes

    Allan Martin Guest

    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" <> wrote in
    message news:...
    > 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" <> wrote in message
    > news:ZjSTb.21264$...
    > > Check with your accountant.
    > >
    > > "CHANGE USERNAME TO westes" <> wrote in
    > > message news:...
    > > > 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
    > > >
    > > >
    > > >

    > >
    > >

    >
    >
     
    Allan Martin, Feb 3, 2004
    #7
  8. CHANGE USERNAME TO westes

    Z Man Guest

    "CHANGE USERNAME TO westes" <> wrote in
    message news:...
    > 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?
     
    Z Man, Feb 5, 2004
    #8
  9. CHANGE USERNAME TO westes

    Allan Martin Guest

    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" <> wrote in message
    news:S7hUb.11637$%...
    >
    > "CHANGE USERNAME TO westes" <> wrote in
    > message news:...
    > > 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?
    >
    >
     
    Allan Martin, Feb 5, 2004
    #9
  10. CHANGE USERNAME TO westes

    Z Man Guest

    "Allan Martin" <> wrote in message
    news:7KrUb.24482$%...
    > 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.
     
    Z Man, Feb 6, 2004
    #10
  11. CHANGE USERNAME TO westes

    Allan Martin Guest

    "Z Man" <> wrote in message
    news:wACUb.40427$%...
    >
    > "Allan Martin" <> wrote in message
    > news:7KrUb.24482$%...
    > > 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.




    Not true. In the case of meals and entertainment the non-deductible portion
    may also get posted to the tax line for meals and entertainment and the tax
    software will calculate the non-deductible portion. The same can also be
    said for charitable contributions.



    >
    >
     
    Allan Martin, Feb 6, 2004
    #11
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