Quicken - Interest & Schedule B

Posted by scott s. on February 8, 2008, 2:49 am

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> scott s. wrote:

>> Well, let's see: when it's "interest" on my personal acct, it goes

>> to sked B. When it's interest on a business acct, it goes to Sked

>> C,E, or F depending on the business, assuming I'm not a c corp or a

>> partnership. Or, it could be tax emempt, at the state or federal

>> level. Other than that, I guess it's just nuts.

> This is incorrect. Interest income for an individual taxpayer always

> goes on Schedule B, never on C, E or F.

Not trying to be argumentative, but I am curious if you have a cite
for that? Reason I'm asking is that in my state there is a tax
ruling that interest on a business bank account is subject to the
gross receipts tax. It could be that state and federal treatment is
different, but I would be interested in knowing for sure. I took a look
in IRS Pub 334 and it seemed kind of vague on the subject.

scott s.
.

Posted by R. C. White on February 8, 2008, 9:59 am

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Hi, Scott.

Brian is right. A sole proprietorship business is simply the alter ego of
the individual who owns it. The business does not get a separate TIN
(Taxpayer Identification Number). Even W-2s issued to the employees use the
TIN of the individual employer. If one individual owns two or a dozen
separate businesses, they all use the same TIN on their several Schedule Cs.
And any bank accounts or investment accounts use that individual TIN, too.

A partnership is a separate tax entity and gets its own TIN. A corporation
is a legal "person" and gets its own TIN, even if it is 100% owned by one
individual.

State laws vary because state legislators jealously guard the right of each
state to make its own laws, as guaranteed by the Constitution. (Although
states have given up much of that right in return for more money or other
benefits from the federal government. But let's not get into a political
debate here.)

So your state might define interest earned by a proprietorship to be
business income, but that interest belongs on the individual owner's Form
1040, Schedule B.

I've been retired for over a dozen years, so check with your own CPA to be
sure this information is still correct. I've not read Pub. 334 in a looong
time.

RC
--
R. C. White, CPA
San Marcos, TX
(Retired. No longer licensed to practice public accounting.)
rc@grandecom.net
Microsoft Windows MVP
(Currently running Quicken 2008 Deluxe in Vista Ultimate x64 SP1)

>> scott s. wrote:

>>> Well, let's see: when it's "interest" on my personal acct, it goes

>>> to sked B. When it's interest on a business acct, it goes to Sked

>>> C,E, or F depending on the business, assuming I'm not a c corp or a

>>> partnership. Or, it could be tax emempt, at the state or federal

>>> level. Other than that, I guess it's just nuts.

>> This is incorrect. Interest income for an individual taxpayer always

>> goes on Schedule B, never on C, E or F.

> Not trying to be argumentative, but I am curious if you have a cite

> for that? Reason I'm asking is that in my state there is a tax

> ruling that interest on a business bank account is subject to the

> gross receipts tax. It could be that state and federal treatment is

> different, but I would be interested in knowing for sure. I took a look

> in IRS Pub 334 and it seemed kind of vague on the subject.

> scott s.

> .

Posted by scott s. on February 8, 2008, 3:05 pm

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> Hi, Scott.

> Brian is right. A sole proprietorship business is simply the alter

> ego of the individual who owns it. The business does not get a

> separate TIN (Taxpayer Identification Number). Even W-2s issued to

> the employees use the TIN of the individual employer. If one

> individual owns two or a dozen separate businesses, they all use the

> same TIN on their several Schedule Cs. And any bank accounts or

> investment accounts use that individual TIN, too.

> A partnership is a separate tax entity and gets its own TIN. A

> corporation is a legal "person" and gets its own TIN, even if it is

> 100% owned by one individual.

> State laws vary because state legislators jealously guard the right of

> each state to make its own laws, as guaranteed by the Constitution.

> (Although states have given up much of that right in return for more

> money or other benefits from the federal government. But let's not

> get into a political debate here.)

> So your state might define interest earned by a proprietorship to be

> business income, but that interest belongs on the individual owner's

> Form 1040, Schedule B.

> I've been retired for over a dozen years, so check with your own CPA

> to be sure this information is still correct. I've not read Pub. 334

> in a looong time.

> RC

thanks for the clarification

scott s.
.

Posted by Laura on February 7, 2008, 7:26 am

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> gk wrote:

>> To benefit from Quicken, the most important and useful thing is to

>> categorize transactions properly and in a meaningful matter.

>> The burden of doing it is completely on the user.

> let's see - downloaded transactions from a bank that were described as

> "Interest",

> and yet when they are used between Quicken & TurboTax,

> they no longer are "Interest" without my manually categorizing them ???

They are described as "interest" only because of the text that the bank
passes to the program. That populates the Payee field but not the category
field. The user has to define what category ALL transactions are to be
mapped to. Your transactions in the "blank" category mean nothing to Q or
TT.

Additionally, the user must also specify what tax line, if any, a category
falls into or your tax summary reports will be meaningless.

> let me just cut/paste my other reply -

> --

> you're kidding right ?

> I don't even know where to begin to reply to this line of thinking...

> A financial program that defines the transaction types, and downloads them

> from participating institutions

> and then on the back end can't bring the basic information together in a

> meaningful manner

> without my manipulating the already tagged data into manual categories ???

> That's just nuts -

No. that is how the program works. It appears that you feel that the
financial institution should be the one to define the category your expenses
fall into. What is a personal expense for you might be a business expense to
me. It is up to the user to define and map the categories the transactions
fall into. This must be done on a transaction by transaction basis.

It sounds like it is time for you to go back through that "blank" category
and figure out which category they belong to.

Posted by Oilcan on February 7, 2008, 9:20 am

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Unless I have a memorized transaction, I have to enter categories. In some
versions of Quicken it has a feature to suggests categories for certain
charges - but I have disabled that.

I would run a report on last year on all charges without categories and
clean up your transactions.

Oilcan

> gk wrote:

>> To benefit from Quicken, the most important and useful thing is to

>> categorize transactions properly and in a meaningful matter.

>> The burden of doing it is completely on the user.

> let's see - downloaded transactions from a bank that were described as

> "Interest",

> and yet when they are used between Quicken & TurboTax,

> they no longer are "Interest" without my manually categorizing them ???

> let me just cut/paste my other reply -

> --

> you're kidding right ?

> I don't even know where to begin to reply to this line of thinking...

> A financial program that defines the transaction types, and downloads them

> from participating institutions

> and then on the back end can't bring the basic information together in a

> meaningful manner

> without my manipulating the already tagged data into manual categories ???

> That's just nuts -