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PDtax
PDtax, CPA firm owner
Category: Tax
Satisfied Customers: 1922
Experience:  32 years tax experience, including four years at a Big 4 firm.
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If an individual taxpayer has two bank accounts, say, ABC Services

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If an individual taxpayer has two bank accounts, say, ABC Services (sole proprietorship business) and ABC Services, Inc (S corporation), can all income and expenses from the bank statements of ABC Services be merged into the income and expenses of ABC Services, Inc (S corporation) for filing just one 1120-S instead of filing both Schedule C (Form 1040) and 1120-S for a year? The business service is the same for both self-employed business and S-corp business.
Submitted: 1 year ago.
Category: Tax
Expert:  PDtax replied 1 year ago.

PDtax :

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Expert:  PDtax replied 1 year ago.
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Expert:  PDtax replied 1 year ago.
Hi Shiv,

The answer is no. Each business was established with its own identification number, and that is how IRS expects the results to be reported; by taxpayer number.

They can't be combined. Even a merger or other sale/purchase could not include the results before merger into one taxpaying entity combined income and expense.

If you were correcting an error, you might be able to do what you suggest. Let's say that the Schedule C business was open for years, and the new corporation, designed to replace it, was opened 1/1/2012. Both entities would still have identification numbers, and separate banking. Let's go further, and assume that some 2012 business was deposited in the old schedule c bank account, and checks drawn as well.

I could see filing the corporation return reporting all the income and expense, but the schedule c business would have to file as well, reporting the items that went through its bank account. I could then add a line item for the net results as an adjusting gain or loss, noted as "received by ABC Services, Inc.". This would allow the schedule C reporting of net income of $0, and filing of a final schedule C result.

Thanks for asking at Just Answer. Ask any follow up you may have, or leave positive feedback to close out your question. I'm PDtax.
Customer: replied 1 year ago.

>I could then add a line item for the net results as an adjusting gain or >loss, noted as "received by ABC Services, Inc.".

 

To show net income of $0 on the final Schedule C, can you demonstrate by an example showing Gross Receipts from tax accounting services and a couple of expenses on a sample Schedule C (2012)? Where and how to note "received by ABC Services, Inc."?

Expert:  PDtax replied 1 year ago.
Perhaps this example will be illustrative.

Income of $3,000, and one rent check paid of $1,900 out of the Schedule C bank account, leaving $1,100 as the schedule C income before transfer.

An other expense, list on the schedule of Other expenses, "earned by ABC Services, Inc., ID 16-1234567" could be used for $1,100. On the ABC Services, Inc. return, renamed "from ABC SErvices, ID 16-2345678" as an Other income item for the $1,100 item.

The Schedule C e-filing will process without incident.

Thanks again from Just Answer.
PDtax, CPA firm owner
Category: Tax
Satisfied Customers: 1922
Experience: 32 years tax experience, including four years at a Big 4 firm.
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