Question

Tax Year Prior to 2020: change to soon to be paid expenses

Forum|Forum|6 years ago
January 15, 2020
1 reply
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Assume no NOL last year or this year.

Accrual accounting

, $50000 in accrued expenses (expenses not paid as of ed of fiscal year, but expected to be paid within 60 days of end of 2018 fiscal year) per balance sheet on 2018 tax return.

$100,000 in such expenses per balance sheet on the 2019 balance sheet for the 2019 return.

How do I put the $50K increase on the 2019 deductions on form 1120 ? I cant list the full $100K as common business expense, because that wouldnt handle the fact that I started the 2019 year with $50K in soon to be paid expenses from 2018

W

WillK

Employee

Looks like you are referring to an accrual to cash adjustment (your Profit & Loss and Balance Sheet are on an accrual basis but you are filing your taxes on a cash basis). If that is the case, a $50,000 increase in accrued expenses on the Balance Sheet would correlate to a reduction of $50,000 of expenses on the Profit & Loss. Ideally, you would know what expense accounts are affected by the accrued expenses and decrease each of those expenses on the Profit & loss by the increase in accrued expenses related to that account on the Balance Sheet.

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