Discussion:Inventory's - Cost Allocation
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| Revision as of 12:54, 7 March 2008 RoyDaleOne (Talk | contribs) (The accountant(s) ← Previous diff |
Revision as of 16:03, 7 March 2008 Taxstudent (Talk | contribs) (Use Eugene Seago) Next diff → |
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| {{ForumReplyPost|UserID=RoyDaleOne|Date=7 March 2008|Text=The accountant(s) owes the workpaper to your client, and must give it up. It is part of your client's books and records, he was paid to produce the workpaper, not to keep it.}} | {{ForumReplyPost|UserID=RoyDaleOne|Date=7 March 2008|Text=The accountant(s) owes the workpaper to your client, and must give it up. It is part of your client's books and records, he was paid to produce the workpaper, not to keep it.}} | ||
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| + | {{ForumReplyPost|UserID=Taxstudent|Date=7 March 2008|Text=Use Eugene Seago's book on inventories from CBC (a Thomson company) or the BNA portfolio on UNICAP. The layman's version is that any cost that is you capitalize direct materials and labor and all indirect costs that directly benefit or are incurred because of the production activities. It is not easy to work on without the regulations in front of you because they are so detailed and nuanced.}} | ||
Revision as of 16:03, 7 March 2008
Discussion Forum Index --> Basic Tax Questions --> Inventory's - Cost Allocation
Discussion Forum Index --> Tax Questions --> Inventory's - Cost Allocation
Actionbsns (talk|edits) said: | 7 March 2008 |
| I hope someone can help, I'm trying to do the journal entries on this client so I can go forward with the tax return, but I can't figure out what something means. Under Inventories, there is a category called "Ind Overhead Alloc". What would "Ind" be an abbreviation for? From the figures I've been given, it looks like the amount for this year might be around $5,000, however, in past years it's been more in the $25,000 t0 $30,000 range, it offsets to COGS, one accountant just used COGS and another set up an account called Overhead Contra. The explanation is "Record S262A Cost Allocation" and one year "Adjust 263A inventory to computed amount". I looked up Section 262A and 263A in the Tax code and it's not relative to inventory, so I don't understand what that reference is nor do I know how to compute it. I was hesitant to take on this client because they are a manufacturer and outside of college (which was a very long time ago) I haven't done these kinds of journal entries. It's intimidating, but the client and I have a very good working relationship and she's tired of her prior CPA, he's a little on the jerky side. I expressed my concerns, but she really wanted me to do this work. So far I've done OK, but this one has me really stumped. They also qualify for QPAD if that makes any difference. I haven't done one of those on a tax return yet either, so I'll probably be back asking for help when I get there. | |
DeacDiggler (talk|edits) said: | 7 March 2008 |
| Definitely talking about Sec. 263A - which is almost entirely about inventory - capitalization of indirect costs to inventory and self-constructed assets.
263A is pretty detailed - you need to find out what method your client has used in the past (get a copy of someone's workpaper) and continue to use it, but I'd suggest finding some help on that one if it's significant. | |
Actionbsns (talk|edits) said: | 7 March 2008 |
| Deac, you're right - I was looking at 263 (a), a few pages on is 263A. Anyway, how is the best way to get a workpaper from a previous accountant? Asking is obvious, I think the client might be able to ask. Is there a laymen's version of 263A that might make sense faster and easier? I'm tired and whiney right now, sorry about that. | |
TheTinCook (talk|edits) said: | 7 March 2008 |
| This IRS article is kind of interesting, but I think the only way to truely understand it is by spending some quality time with §1.263A-1. | |
Actionbsns (talk|edits) said: | 7 March 2008 |
| Thanks Tin Cook. I've been reading and re-reading that section for the last hour or so - my eyes are spinning. I finally went to Kleinrock and did a search. It's a little clearer there, kind of easier to read without all the "begats", but I was beginning to feel this doesn't apply to my client - they manufacture potatoe chips - but the site you provided makes it clearer yet. It looks like with some effort, I may be able to develop a work paper on my own if I can't get one from the previous accountant. The first accountant is the person I worked for when I first moved here, then she bailed from her own practice, gave this client to the dweeby guy I need to talk to and he's been doing it for the last few years. I'd really like to get my hands on the workpaper if I can. It might help make it clearer as well. Anyway, thanks for the help. | |
RoyDaleOne (talk|edits) said: | 7 March 2008 |
| The accountant(s) owes the workpaper to your client, and must give it up. It is part of your client's books and records, he was paid to produce the workpaper, not to keep it. | |
Taxstudent (talk|edits) said: | 7 March 2008 |
| Use Eugene Seago's book on inventories from CBC (a Thomson company) or the BNA portfolio on UNICAP. The layman's version is that any cost that is you capitalize direct materials and labor and all indirect costs that directly benefit or are incurred because of the production activities. It is not easy to work on without the regulations in front of you because they are so detailed and nuanced. | |
