Discussion:Insurance premiums at YE
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Discussion Forum Index --> Tax Questions --> Insurance premiums at YE
| November 10, 2006 | |
| At a client's office, where both the garage liability and wc insurance contracts renewed in Oct. The premiums are in excess of 100k per year, and in this case, financed with monthly payments. One is an actual note agreement, bearing interest. I'm inclined to book that insurance expense now with a note payable. The other is interest free, just a monthly payment plan. Are these legit 2006 expenses in full? Or not? Doubting myself here, need some objective opin. | |
Bottom Line (talk|edits) said: | 10 November 2006 |
| Cash or accrual basis? Are we talking just for tax purposes? | |
| November 10, 2006 | |
| Just for tax. Accrual. About a 3 mil company...in the past I've just booked it as it's been billed, which, for insurance, is in advance, I realize. But you folks have made me want to be better...so now, searching for the right answer. | |
Michaelstar (talk|edits) said: | 10 November 2006 |
| JR1 - I would say no in both cases unless.... Cash basis - obviously no. If it is accrual basis and the insurance has been fully paid AND the client elected a change in method of accounting on the 2005 tax return under Rev Proc 2005-9 for insurance specifically then yes. But it must be paid by year end. Accrual taxpayers may only deduct prepaid expenses under this new regulation if the economic performance rules of Reg. 1.461-4 and also met (Reg. 1.263(a)-4(f)(6) are meet. Under the economic performance Reg 1.461-4(g), certain specified liabilities may meet the economic performance test merely by the taxpayer's payment of that liability, assuming the all events test is otherwise met (under which "all events" have occurred that establish the fact of the liability and the amount of the liability can be determined with reasonable accuracy).
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| November 10, 2006 | |
| Thank you my sailing accountant brother, will chase the link and read the PPC thing later. | |
Michaelstar (talk|edits) said: | 10 November 2006 |
| The Star of India (the oldest active sailing ship in the world for everybody else) is sailing both Saturday and Sunday this weekend. I am excited to again be sail crew and should again get some time on the helm while she is under sail out in the ocean. - oh yes - that is where the "star" after my name came from! | |
| 10 November 2006 | |
| Seems to me if you're going to mention it you might offer folks the chance to take the tour. San Diego Maritime Museum | |
Michaelstar (talk|edits) said: | 10 November 2006 |
| Great idea Dennis - Thank you! I have also posted the link to a short video recently filmed last year by KPPS. I am in it climbing when the title of the video is shown in the (spanker) sail at the beginning as well as other places but this part is the easiest to point out.
Enjoy: http://www.sdmaritime.org/ContentPage.asp?ContentID=422 | |
| November 10, 2006 | |
| Michael:
If you have any photographs of the ship (and perhaps of you on it) that are not protected by copyright, you might want to think about uploading them here to TaxAlmanac and adding them to your user page. I'm sure people here would love to see this. - Tim Doyle, TaxAlmanac Moderator - Talk to me 14:48, 10 November 2006 (CST) | |
Bottom Line (talk|edits) said: | 10 November 2006 |
| What a beautiful ship!! How fortunate you are to be able to sail on her! | |
| November 10, 2006 | |
| Back to the boring, but would sure love to be on the Star under sail. Wow. If any of you go down for the tour, hit the Midway next door, a real aircraft carrier. Awesome hardly describes it.
Oh, yeah. OK, as I read what Michael kindly sent, and BNA's comments, it's basically as Michael summarized above. So, I think my first reaction was the right one. Since the one policy is actually converted into a note payble, legally obligating the paymnent as if it were paid in cash, I'm deducting that one. The other is a straight up monthly payment plan, so I will not deduct anything unpaid, tho' it appears from the regs that I could take whatever payments would be made by Mar. 15, but I won't bother. It is an accrual basis taxpayer, and this is the same methods used in the past. Thanks for the input. | |
