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
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-