Filing 1120S when had no income


C

c_sicker

I need to file a tax return for my S Corp. I made no money
last year but did accrue about $5400 in expenses (100 fees,
700 utilities, 100 hardware, 100 supplies, 300 services, 50
postage, 3500 travel, 550 meals and entertainment).

What is deductable and how much?

My accountant depreciated my business property the past two
years. I am confused as to how to depreciate. I read the IRS
documentation but only got more confused. Any suggestions of
a good web site that will give me easy to understand,
detailed info on how to depreciate computer hardware and
furniture (I have less than 25 items, only one new item this
year)?

I would go to my accountant but he wants $300, a lot I think
considering I did not make any money and most likely will
require minimum effort to fill out this years taxes.

Any helpful, friendly suggestions would be appreciated.
(Please no slamming about the accountant, I am broke!)

Clyde
 
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M

marko.online

Depreciation is very complicated and there aren't too many
posters who even dare ask questions on it for this fact.
(Its just not possible to properly address a topic like this
in this forum.) And, a fee of $300 is pretty fair for a
business return.

Why do you draw a correlation between not making any money
and the ease of preparing such a return (especially when you
have 25 depreciable assets)?

Still, I can appreciate your financial situation - but you
might want to consider that you could be saving yourself
money in the long run by having the return done properly in
the first case.
 
S

Shyster1040

First, if you're not going with the accountant, you need to
sit down and spend as much time reading the IRS publications
about S-corps as it takes to understand everything. Even
though the corp is filing a return, everything will pass
through to you and be reported on your personal return for
purposes of paying taxes.

Second, since you already have two years of returns you
should review those and use them as models to help you
figure out what the IRS publications are saying. In
addition, the accountant should have prepared a depreciation
schedule the first time around, which you should be entitled
to have even if you're not using his services. That
schedule should show you what the depreciation for this year
should be.

As far as the expenses you list - did you accrue those, or
did you actually pay them? If you just accrued them without
paying them they're not deductible (in general) until you
pay them because you're a cash-method taxpayer (most people
are, if you're not you will know it). Other than that,
provided you have the necessary supporting documentation
(receipts, e.g.), those items should be deductible (although
you should double-check on the travel expenses).

Even though they are deductible, however, you may not be
able to actually deduct them on your return if you don't
have enough basis in your stock - losses in excess of basis
are suspended until you get enough basis to cover the
losses, at which point they become deductible (as a general
matter).

The above is just some basic thoughts about your situation,
since I don't have you sitting in front of me with your
returns and records, this is necessarily tentative - since
you're not going to go with the accountant, please sit down
and spend as much time as it takes reading through the IRS
publications and using your past returns as examples to
figure out what you're going to be doing. Ok?
 
D

David Woods, EA, ChFC, CLU

I need to file a tax return for my S Corp. I made no money
last year but did accrue about $5400 in expenses (100 fees,
700 utilities, 100 hardware, 100 supplies, 300 services, 50
postage, 3500 travel, 550 meals and entertainment).

What is deductable and how much?

My accountant depreciated my business property the past two
years. I am confused as to how to depreciate. I read the IRS
documentation but only got more confused. Any suggestions of
a good web site that will give me easy to understand,
detailed info on how to depreciate computer hardware and
furniture (I have less than 25 items, only one new item this
year)?

I would go to my accountant but he wants $300, a lot I think
considering I did not make any money and most likely will
require minimum effort to fill out this years taxes.

Any helpful, friendly suggestions would be appreciated.
(Please no slamming about the accountant, I am broke!)
Sorry. $300 is usually a bare minimum for a corporate tax
return regardless of what is on it. If you can't afford to
spend that for required filings, I would reconsider being in
business.
 
M

Mike Lewis

I need to file a tax return for my S Corp. I made no money
last year but did accrue about $5400 in expenses (100 fees,
700 utilities, 100 hardware, 100 supplies, 300 services, 50
postage, 3500 travel, 550 meals and entertainment).

What is deductable and how much?

My accountant depreciated my business property the past two
years. I am confused as to how to depreciate. I read the IRS
documentation but only got more confused. Any suggestions of
a good web site that will give me easy to understand,
detailed info on how to depreciate computer hardware and
furniture (I have less than 25 items, only one new item this
year)?

I would go to my accountant but he wants $300, a lot I think
considering I did not make any money and most likely will
require minimum effort to fill out this years taxes.

Any helpful, friendly suggestions would be appreciated.
(Please no slamming about the accountant, I am broke!)
Watch out for determination of S Corp basis. You can't
deduct losses in excess of your basis, they are suspended
until you have increased your basis by earning profits,
making additional capital contributions or loaning money to
the S corp.

If you know how to download a file, here's an IRS
publication covering depreciation.

http://www.irs.gov/publications/p946/ch04.html

Mike Lewis, CPA
 
P

Phoebe Roberts, EA

Shyster1040 said:
the accountant should have prepared a depreciation
schedule the first time around, which you should be entitled
to have even if you're not using his services. That
schedule should show you what the depreciation for this year
should be.
IMHO, the OP is entitled to a 2003 depreciation schedule
(used to prepare the 2003 return) at no charge, but not a
2004 depreciation schedule, without regard to whether the
prior accountant's computer software will produce the '04
schedule without any additional effort.

Phoebe :)
 
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H

Harlan Lunsford

Shyster1040 wrote:
IMHO, the OP is entitled to a 2003 depreciation schedule
(used to prepare the 2003 return) at no charge, but not a
2004 depreciation schedule, without regard to whether the
prior accountant's computer software will produce the '04
schedule without any additional effort.
Depending on how many years there's been depreciation,
simple reference to those year's form 4562's and the
corporate records should suffice in reconstructing
depreciation schedules. I know of no requirement that
accountants have to furnish depreciation schedules for
returns they prepare.

When such a client doesn't return to me, he's welcome to
call and request copies of same which I keep in my "working
papers". But many a time I've had to reconstruct such. Oh
well, that takes time... and ... time is money. (grin

ChEAr$,
Harlan Lunsford, EA n LA
Wed 23 Feb 2005
 
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P

Phoebe Roberts, EA

Harlan said:
I know of no requirement that
accountants have to furnish depreciation schedules for
returns they prepare.
In Oklahoma, CPAs (I work for a CPA firm, so fall under
those rules) are required to return the client's documents
at no charge upon request, and the Board of Accountancy
construes "client documents" to include preparer-prepared
workpapers essential to getting from what the client handed
over to what went on the return, including depreciation
schedules and basis calculations.

Now, if you didn't prepare a depreciation schedule (only
asset was a building placed in service 5 years ago, and
depreciation is the same as last year) in order to prepare
the return, there's no obligation to create one. But if you
have one, you (that would be the "I" you) have to provide it
to the client upon request.

Phoebe :)
 

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