Telephone Tax Refund Accounting


S

Steve Kraus

I'm about 10 months early but what will the tax & accounting be for the
telephone excise tax refund on an S Corp?

Normally anything outside normal business activities are reported to and
flow directly to the stockholders on an S Corp but telephone expense is
just ordinary business so in theory one ought to just use the refund to
reduce current expense, upping profit, and thereby being properly taxed.
But I presume they're gonna want to see it reported explicitly.
 
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P

Paul Thomas, CPA

Steve Kraus said:
I'm about 10 months early but what will the tax & accounting be for the
telephone excise tax refund on an S Corp?

Normally anything outside normal business activities are reported to and
flow directly to the stockholders on an S Corp but telephone expense is
just ordinary business so in theory one ought to just use the refund to
reduce current expense, upping profit, and thereby being properly taxed.
But I presume they're gonna want to see it reported explicitly.



I would suspect that for tax purposes they'll need that "income" reported on
a separate line, but I haven't seen the 2007 returns yet. I don't see why
it'd be a pass-through item on Schedule K.

I would show it as an item of income, under "Other Income" if need be, and
not as a reduction of your current year telephone expense.
 
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S

Steve Kraus

I would show it as an item of income, under "Other Income" if need be,
and not as a reduction of your current year telephone expense.
Yeah, that makes sense. Thanks Paul.
 

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