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jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3028
Experience:  I've prepared all types of taxes since 1987.
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My S Corp has gone out of business but I still need file my

Resolved Question:

My S Corp has gone out of business but I still need file my 2012 return and can't afford to hire an accountant.

My accountant agrees that Turbo Tax for business would be a good solution under the circumstances.

I have an MBA degree and have done a lot of the bookkeeping myself over the years. Since I took accounting in the MBA (25 years ago) I believe I am familiar with the basic principles.

In house I have used the accrual method of accounting since it gives me a clearer picture of my financial situation.

However in the past my accountant "converts" my data to cash accounting. I believe this has been to minimize my tax burden. (which falls on me personally)

I think as far as income and expense I am fairly clear how to make the adjustment.

Do I need to adjust the balance sheet also? Would I just "back up" the accounts receivable and payable about 30 days for example?

BTW There will undoubtedly be a significant loss for the S corp for 2012.
Submitted: 1 year ago.
Category: Tax
Expert:  jgordosea replied 1 year ago.

Greetings,

 

For a cash basis corporation there should not be any balance in either receivables or payables.

 

Reduce the income by the receivables balance to get to the cash basis income.

 

Reduce the corresponding expense items by the payables balance to get to the cash basis expenses. (But I have seen some just make one gross adjustment to get to the correct net expenses without being concerned on the correct total in expense categories since for tax purposes so long as the net is correct the correct tax will be computed .)

 

That should give you income and expense that was paid or received during the calendar year for cash basis reporting. Not sure what you used to track income and expenses but some accounting programs allow you to simply toggle between cash and accrual basis for reports.

 

One concern would be that if this is to be a final return that the balance sheet when final will be almost, if not all, zero amounts. Perhaps there will still need to be a 2013 return if there were balances at 12/31/2012 that were not resolved until 2013.

 

Please ask if you need more discussion or clarification.

Thank you.

Customer: replied 1 year ago.

Thank you I think that makes it pretty clear.


 


I use Quickbooks Pro 2007 so I would imagine it would have this toggle feature.


 


I also have a question about Turbo Tax. Are you well-versed in Turbo Tax for Business/Corp. If so I could ask it as new question.

Expert:  jgordosea replied 1 year ago.

You are welcome.

 

I do have familiarity with Turbo Tax for Business (but be forewarned that reconciling balance sheets in the program often is an indicator of issues in the accounting that may or may not be able to be resolved with a discussion online).

I have been an Intuit Tax Expert for three of the last five years.

 

You can put my name in the question so other experts let me answer for you. Site rules do say that should be posted as another question. There is a category for Financial Software that I am a qualified expert here, as well as Tax.

 

Again, thank you.

jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3028
Experience: I've prepared all types of taxes since 1987.
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