tax implications of a rebate?


E

ebct

Hi. In researching previous posts, it seems that the majority opinion
is that rebates are not income, rather that they offset expenses. Let's
say that one spends the money for an item and claims it as a business
deduction. If you get a rebate check three months later, can you no
longer claim the deduction?

Thanks,
IMF
 
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V

Victor Roberts

Hi. In researching previous posts, it seems that the majority opinion
is that rebates are not income, rather that they offset expenses. Let's
say that one spends the money for an item and claims it as a business
deduction. If you get a rebate check three months later, can you no
longer claim the deduction?
I post rebates to the same account as the cost of the item I purchased
to get the rebate, even if the tax year is not the same.

I purchased a UPS for my computer systems in late 2004 for about $150
and charged that expense to my Small Tools and Equipment account. The
$30 rebate arrived this week. I posted it as a credit to the Small
Tools and Equipment account for 2005. I believe this is all correct
since I operate on Cash Basis. The improper thing to do would be to
purchase something with company funds and then pocket the rebate.
 
Z

Z Man

Hi. In researching previous posts, it seems that the majority opinion
is that rebates are not income, rather that they offset expenses. Let's
say that one spends the money for an item and claims it as a business
deduction. If you get a rebate check three months later, can you no
longer claim the deduction?
This issue has nothing to do with QuickBooks, but here's the answer. You can
claim the deduction, but the rebate is either miscellaneous income, or a
reduction in the expense. Either way, your net deduction is the original
cost of the item, less the rebate. If you receive the rebate in a subsequent
year, you will have the rather minimal benefit if deferring the rebate
income one year.
 
J

JerryMouse

Victor Roberts wrote:

The improper thing to do would be to
purchase something with company funds and then pocket the rebate.
But, you've got to admit, doing so simplifies the bookkeeping.
 
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M

Mike Block - Tax Cut C.P.A.

You may not legally claim a deduction if rebates
give you a "claim of right" to reimbursement. It
also affects employees not filing reimbursement
requests, property owners appealing assessments
and those who sue (until lawsuits end).

Mike Block - QuickBooks Tax Cut C.P.A.
Intuit paid me to make QuickBooks better!
http://www.blocktax.com/
http://www.quickbooks-add-ons.com/
 

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