Discussion:Warranty Income
From TaxAlmanac, A Free Online Resource
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.
From TaxAlmanac
Discussion Forum Index --> Tax Questions --> Warranty Income
| 15 December 2006 | |
| A client is coming in to discuss starting a company that will receive warranty income. Total upfront. I know this is unearned income and assume it is converted to income as the expense goes out. When does the balance of unused income become taxable income? Is there a systematic method? For example, a 5 year contract is reclassed to income using a straight line approach 1/5th each year? | |
1099ez.com (talk|edits) said: | 15 December 2006 |
| From the top of my head , for warrat income, it should be front loaded more than back end to be reasonable. Look Income forecasting method for the Movie industry. I bet somebody here would give you a specific case as to how to amortize that because it's very common situation for the computer industry. I will wait to see. | |
Bottom Line (talk|edits) said: | 18 December 2006 |
| Some states regulate these businesses as insurance companies. You may want to look there. | |
To join in on this discussion, you must first
log in.
