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Posted by nearly_blind on June 10, 2008, 2:14 pm
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I'm a officer/founder of a small C corp. Another person is
responsible
for the bookkeeping (who is not an accountant, but an engineer) with
the help of a CPA.
Every quarter the "bookkeeper" generates a YTD P&L statement
from QuickBooks (I guess it can do this automatically). This is
probably not relevent,
but he generates CASH and ACCURAL version for us for reference,
although we file our
taxes using CASH.
My specific question is should taxes (e.g. federal) paid (and TAXES
due for the accrual case) be
included as a Expense on the P&L? He says yes, but I think they
should not be. (I don't have any direct contact with the CPA to ask
him
without making waves).
In our case, tax management is one our primary concerns (distributing
salary/commision payments
over the year to minimize profits, corporate taxes, and late
estimated
tax payment penalties).
When taxes are included in the P&L you have to remember to add
the taxes back into the net income to to estimate the taxable
profits.
Does the standard definition of a P&L include taxes or not? - Thanks
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Posted by Katie on June 10, 2008, 2:34 pm
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On Jun 10, 11:14 am, nearly_bl...@yahoo.com wrote:
> I'm a officer/founder of a small C corp. Another person is
> responsible
> for the bookkeeping (who is not an accountant, but an engineer) with
> the help of a CPA.
> Every quarter the "bookkeeper" generates a YTD P&L statement
> from QuickBooks (I guess it can do this automatically). This is
> probably not relevent,
> but he generates CASH and ACCURAL version for us for reference,
> although we file our
> taxes using CASH.
>
> My specific question is should taxes (e.g. federal) paid (and TAXES
> due for the accrual case) be
> included as a Expense on the P&L? He says yes, but I think they
> should not be. (I don't have any direct contact with the CPA to ask
> him
> without making waves).
>
> In our case, tax management is one our primary concerns (distributing
> salary/commision payments
> over the year to minimize profits, corporate taxes, and late
> estimated
> tax payment penalties).
> When taxes are included in the P&L you have to remember to add
> the taxes back into the net income to to estimate the taxable
> profits.
>
> Does the standard definition of a P&L include taxes or not? - Thanks
>
Of course it does. Taxes are an expense of the business. Just
because they aren't deductible in calculating taxable income doesn't
mean they don't reduce income for accounting purposes. Otherwise you
would get a very unrealistic picture of your business profit!
An accrual method corporation expenses state and federal income taxes
accrued on a book basis. If there are timing differences between book
and tax treatment of certain items (e.g., depreciation), the deduction
is divided between current and deferred tax liabilities. Debit tax
expense, credit current and deferred liabilities. When the tax is
paid, the liability account is debited.
Katie in San Diego
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by removeps-groups@yahoo.com on June 10, 2008, 5:43 pm
Please log in for more thread options On Jun 10, 11:14 am, nearly_bl...@yahoo.com wrote:
> My specific question is should taxes (e.g. federal) paid (and TAXES
> due for the accrual case) be
> included as a Expense on the P&L? He says yes, but I think they
> should not be. (I don't have any direct contact with the CPA to ask
> him
> without making waves).
State and local tax paid does reduce federal taxable income and thus
federal taxes, and foreign taxes paid also reduce federal tax.
When companies reporting their earnings, like 100M or 50 cents a
share, is that before all taxes, before federal taxes, or after all
taxes?
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
|
|
Posted by DF2 on June 10, 2008, 6:05 pm
Please log in for more thread options In misc.taxes.moderated, removeps-groups@yahoo.com wrote:
>On Jun 10, 11:14 am, nearly_bl...@yahoo.com wrote:
>
>> My specific question is should taxes (e.g. federal) paid (and TAXES
>> due for the accrual case) be
>> included as a Expense on the P&L? He says yes, but I think they
>> should not be. (I don't have any direct contact with the CPA to ask
>> him
>> without making waves).
>
>State and local tax paid does reduce federal taxable income and thus
>federal taxes, and foreign taxes paid also reduce federal tax.
>
>When companies reporting their earnings, like 100M or 50 cents a
>share, is that before all taxes, before federal taxes, or after all
>taxes?
For public corporations, as a single headline number it is after
accrued taxes. The without-taxes number is usually also available.
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Katie on June 10, 2008, 6:09 pm
Please log in for more thread options On Jun 10, 2:43 pm, "removeps-gro...@yahoo.com" <removeps-
gro...@yahoo.com> wrote:
> On Jun 10, 11:14 am, nearly_bl...@yahoo.com wrote:
>
> > My specific question is should taxes (e.g. federal) paid (and TAXES
> > due for the accrual case) be
> > included as a Expense on the P&L? He says yes, but I think they
> > should not be. (I don't have any direct contact with the CPA to ask
> > him
> > without making waves).
>
> State and local tax paid does reduce federal taxable income and thus
> federal taxes, and foreign taxes paid also reduce federal tax.
>
> When companies reporting their earnings, like 100M or 50 cents a
> share, is that before all taxes, before federal taxes, or after all
> taxes?
EPS is reported after all taxes. That's the number investors are
looking for.
Katie in San Diego
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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