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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 6181
Experience:  Extensive Experience with Tax, Financial & Estate Issues
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Hello, I have 3 small businesses.When I started the 3rd business

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Hello, I have 3 small businesses.When I started the 3rd business in 2007 I transfered $ from the other 2 business to get it started. I transferred $5129 from the 2 business to get the 3rd started. The business only bought in $472.97 from 1 credit card transaction.The rest was transfered from the the other two businesses. I am doing a schedule C for the 3rd business. What should I put in gross sales? $5601.97 or 472.97. Does the money transfered have to be in gross reciets. If yes how would I write off the transfer from the other 2 businesses. Is it considered an expense? Please help I have been audited for 2007 this year.
Thank You!

Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything you don't understand.

 

The income for the 3rd business would be $ 472.97.

 

The cash transfers from the other businesses are not revenue & are not included in Business # XXXXX's sales.

Customer: replied 6 years ago.

Thank you Stephen,

What do I do with the $5129 that came from the other businesses. Is it an expense for them? This IRS seems to think because the money was transferred its automatically income?

Again, thank you

 

No. It isn't expense for the transferor business either. It is just money taken out (draw) or money put in. Not income or expense to either business.

 

You should be able to show them the withdrawal from one business (either by transfer or check) and the deposit in business #3.

 

If this doesn't do it, you'll have to talk to the auditor's supervisor; hopefully not.

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