Discussion:S-Corp-Final year expenses, procedure questions
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| Revision as of 19:45, 3 November 2009 Michaelstar (Talk | contribs) (absolutely - and) ← Previous diff |
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| {{ForumReplyPost|UserID=Moon101|Date=3 November 2009|Text=Have the client contribute cash in a petty cash account and credit the capital account. That way, he would have enough capital to take a deduction for accounting expenses. }} | {{ForumReplyPost|UserID=Moon101|Date=3 November 2009|Text=Have the client contribute cash in a petty cash account and credit the capital account. That way, he would have enough capital to take a deduction for accounting expenses. }} | ||
| - | {{ForumReplyPost|UserID=Michaelstar|Date=3 November 2009|Text=absolutely - and I do appreciate you posting }} | + | {{ForumReplyPost|UserID=Michaelstar|Date=3 November 2009|Text=absolutely Kevin - and I do appreciate you posting }} |
Current revision
Discussion Forum Index --> Basic Tax Questions --> S-Corp-Final year expenses, procedure questions
Discussion Forum Index --> Tax Questions --> S-Corp-Final year expenses, procedure questions
Michaelstar (talk|edits) said: | 2 November 2009 |
| Situation is that a client who is an S-Corp is in their final year. In two years of operations the business failed. 100% owner, just shut down business, closed the checking account in June in a rush before all items were paid or things finalized.
The S-Corp has some final expenses to pay including the preparation of final returns. Final expenses may be in a range of around $7,500 after all is said and done. My belief is the corporate checking account should not have been closed until things are finalized by 12/31. The s/h will be paying for all final expenses personally. I believe he should contribute the money to the corporation and pay expenses with corporate checks and report all final expenses actually paid in the final year - even if that means he needs to open up a new checking account to do this. From a procedural point of view on this - what are your opinions? | |
| 2 November 2009 | |
| I disagree, although it would be cleaner if he did do it your way. | |
RoyDaleOne (talk|edits) said: | 2 November 2009 |
| Sometime, somebody remind me why any shareholder gets any deduction in this situation.
There is no personal liability for these expenses, and no profit motive for paying the expenses, so where is the deduction? | |
| 2 November 2009 | |
Clients do first and ask later.
You can set up shareholder loan account. At least that way the expenses appear of the corp books and tax return. As items are closed at the end, they can be closed to the loan acct. I do, however, prefer a corp checking acct. | |
Michaelstar (talk|edits) said: | 3 November 2009 |
| Pink Floyd says it best "Is anybody out there....."
Roy - you make a very good point, and as it seems in another current post, expenses that were paid by the shareholder outside of the corporation were disallowed on audit. I might think that would cause Kevin to want to change his mind or at least reconsider but this being a post of mine - maybe not....... | |
| 3 November 2009 | |
| Have the client contribute cash in a petty cash account and credit the capital account. That way, he would have enough capital to take a deduction for accounting expenses. | |
Michaelstar (talk|edits) said: | 3 November 2009 |
| absolutely Kevin - and I do appreciate you posting | |
