How to handle a tax transaction for tax-acctg?

In tax-year 2005, my business was a C-corp.
I then converted to an S-corp.
For tax-year 2006, I will be filing as an S-corp.
Now I have a question as to how to account for two tax transactions
made during 2005, since I've changed my corporate status.
1) During the year 2006, I received and deposited a $600 corporate income tax refund. If my gross total intake (just all the money I've deposited, not determining 'taxable income' yet) was $10,000, I am assuming that I can keep that $600 out of the total and report just the $9400 as 'taxable income' (in other words, I am determining that the 600 is both, not 'income', and thus also not 'taxable income'). I have accounted for the $600 in my cash-accounting, but I am thinking I can keep it out of my tax-accounting.
2) I also had a transaction in 2006 where I paid $800 corporate income tax. But I don't know how to account for this. Is it deductible as an expense, the way, say, my property taxes are deductible? I don't think it is a credit of any type, because it wasn't a prepayment for 2006's estimated taxes (which there won't be any '06 income tax anyways because everything is passing through the S-corp and going to my individual tax return). All my expenses for the S-corp filing are being listed on a Rent and Royalties worksheet (RRws) (not on the front of the 1120-S Form page). The RRws has all the basic expense categories; Advertising, Auto & Travel, etc, including a line for the category 'Taxes'. So... is that $800 federal income tax payment tax deductible for me? and if it is, does it get added to the amount for 'property taxes' and reported on the 'Taxes' line of that RRws? I know how to account for it in my cash-accounting... but how do I handle this in my federal- income-tax-accounting?
Thanks.
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If it's a federal tax refund, you're right, it's not included as income because you didn't take a deduction for the payment. If it's a state tax refund, you'll have to include it as income if you deducted the tax payment in an earlier year.

Federal tax is easy, no deduction on your corporate (C or S) returns.
State tax paid gets deducted, and state refunds are income.

No. Federal Income Taxes are never deductible on the federal income tax return.

Probably on the Schedule M1 as an expense recorded in the books that are not included on Schedule K. (page 4 of the 1120S).
One thing you'll have to keep a close eye on is the built-in gains tax, that probably touches on things like your refund (if a state tax), collected receivables, etc.
--

Paul A. Thomas, CPA
Athens, Georgia
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Thanks for the help.
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