accounting question

Apr 01, 2005 4 Replies
F

I have recently begun doing the 1120 for a C Corp.



As I understand it, the Federal Taxes Paid for the Corporation are not deductible for tax purposes.


1) Is that correct?


2) Since we have to list the balance sheet and changes in Retained Earnings from the beginning to the end of the year = Profit (Loss), I am wondering how the taxes paid are accounted for, if they are not deductible, so that the balance sheet is correct and the profit/loss is correct.



Can anyone explain this to me?


3) I assume that state excise taxes are deductible for federal tax purposes.

thanks for any help,



fran



snipped-for-privacy@hotmail.com __________________



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P

wrote

For a calander year-end business (December 31) the return was due March

15th. If that's the case with you, I hope you have an extension.

Yes, federal income taxes paid are not deductible.

It's an M-1 adjustment, Line 2 (page 4 of the 1120)

Basically, show net profit (loss) per the books (which includes a deduction for taxes) and Line 2 is an add-back item to book profit/loss to obtain the tax profit/loss number. The form says "See page 24 of the instructions)

State and local income taxes (and other types of tax) are deductible on the federal tax return.

It might not hurt to have your returns prepared by a competent tax professional.

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F

thanks for the info. my return was prepared on time, we had losses in the previous year, so I didnt need to do the m-1 adjustment but I am looking ahead. thanks again fran

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A

Sorry, I don't want to sound incentive, but if you have to ask you should not be doing the return.

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