tax

  1. What tax consequences do you look for with a business owner?
    • 1. Income, including prepaid.
    • 2. Timing for reporiting income.
    • 3. Expenses (supplies, salaries, etc)
    • 4. Depreciable/amortizable capital expenditures.
  2. Cash Method Accounting - Income
    • Income:
    • - report it when you get it. Including
    • - constructive receipt (when you could have had it)
    • - cash equivilent (something that the bank will cash)
    • - economic benefit (to the extent of ascertainable value)
  3. Cash Method Accounting - Deduction
    • - deduct when paid
    • - no constructive payment
  4. Accrual Method Accounting - income
    • All events test:
    • - earned through performance OR
    • - payment received OR
    • - payment due under agreement between TP and payor
  5. Accrual Method Accounting - Deductions
    • All events test:
    • - fixed obligation AND
    • - can be determined with reasonable accuracy AND
    • - economic performance
    • (so if you have an obligation to pay and performance is done, you can deduct even though you haven't paid yet).
  6. Bad Debts
    • - real debt (obligation to repay)
    • - gone bad (attempts to collect, NOT forgiveness, compromise, compensation)
    • - what type? (business = ordinary. Non = STCL)
    • - how much? up to the amount of your basis in it (you only have basis in it if you're an accrual method TP)
Author
Anonymous
ID
165593
Card Set
tax
Description
tax
Updated