Where to report a check refund from IRS for penalty that was previously paid on form 1065?

Hello,

We have paid a penalty that IRS has imposed on us but then through an appeal received a check back.

If you did not deduct the payment, you would not need to report it.

If you did deduct it as an expense, report it as "other Income" into a contra account.

So if it was a "tax penalty payment" expense, make it a "Tax penalty refund" income account.

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Thank you for your response. We did not deduct it initially but we did deposit the check. So now our Balance Sheet is off by the amount of the check.

Employee

A couple of follow-up questions:

How did you record the initial payment of the penalty?
Which tax year was the penalty paid?
- If the payment of the penalty was the same year as the receipt of the refund you just make a reversal entry and everything will wash.
Are you maintaining separate books and records?
Something seems off here (pun intended)

*A reminder that posts in a forum such as this do not constitute tax advice.Also keep in mind the date of replies, as tax law changes.