Parking card splits that cross year boundary

?Hi, jo.

I agree with JM. Treat it kind of like a credit card - a prepaid credit card, that is. Record the purchase of the card as an asset. Then record each use in that card account, as of the date of use, by charging to the proper expense category. At year-end (or at any other time), the balance in that card account should reflect the unused amount still available. And the expenses will fall into the correct years.

RC

Except that the original date purchase of the travel card is when the expense was incurred NOT when used up. Taxpayers are on a cash basis and trying to allocate how used post purchase or setting it up like a credit card is applying accrual accounting.

JM wrote in news:4352c8f6-2b89-42f2-a3f1- snipped-for-privacy@k3g2000yqc.googlegroups.com:

But it is an expense - you bought the card as an asset. It "depreciates" as you use it for parking expenses. Indeed a credit card in reverse, or a prepaid credit card.

Good question. I'm not sure only because the IRS considers all credit card charges the same as using cash. So when the card was "purchased" is when the IRS would recognize the expense. I see no harm in classifying the usage during the year to the various categories. Anything left over at the end of the year would have to go to personal since the initial expense happened that year. In other words you can not carry over the balance to the next year.

JM wrote in news: snipped-for-privacy@f21g2000prn.googlegroups.com:

Well, that may be your opinion. I consider an asset as something that may under certain conditions be convertible into cash, but not equivalent to it. But this is all semantics, really. We are talking about how to handle the purchase and usage of a parking "credit card" in Quicken. I still think of it as buying an asset that loses value in usage.

For another point of view, could you consider the "parking card" just another form of bank account? Then, transferring money from your bank account to another bank account, which also belongs to you, is not a taxable event? The taxable event is when you spend down this special, second, account?

I could easily consider it as another form of bank account and I like the suggestion as to how to handle it as such.

The real question is whether or not the IRS would allow it.My gut says no. They would consider it an expense when purchased--even if it was for a pre-paid card since the taxpayer is on a cash basis.

Laura wrote in news:ihnuk1$kce$ snipped-for-privacy@n102.xanadu-bbs.net:

Since this now is a tax question, see whether you can get it answered on misc.taxes.moderated.

As does mine. The IRS isn't interested in your cost per trip, they are interested in your costs for the year. If you buy prepaid parking and use 90% of it on allowable charitable work, they are either going to say it's too small a delta to worry about or only allow the 90% of the value. Trying to allocate based on a given trip is really just an academic exercise.

What does your paperwork say? Do you get a receipt that can be submitted as proof when you purchase the card, or can you get a receipt dated when you actually park? I hope you can't get both - that would really create confusion in my mind?

Isn't the date of the receipt what you would need to 'prove' the IRS that you actually spent something that is deductible assuming you're on a cash basis as a filer?

I agree with this concept. Use whatever date shows on your receipts. If this is like a Fast Pass then use the statement showing the actual dates the money is used. (assuming one exists for this prepaid card)

Why not buy two cards and use one just for deducible expenses. That way one can be charged against medical or charitable use at the time of purchase.

A lot of heartfelt nonsense in this thread. Whether or not something "feels like an expense" isn't what matters. And many purchase of assets are expenses. There are whole chapters in accounting texts about when expenses are realized and incurred. And the credit card comparisons prove the point. Until I PAY the credit card company, there's no way I get a taxable deduction as a cash-basis taxpayer.

Sorry guys, but while there may be budgeting value in considering the pre-paid parking an asset, and amortizing its cost over the time period in which it is consumed, and while Quicken can do that, the tax deductions come, if at all, when the card is bought.

Unless, of course, I'm wrong.

Doug

Not quite true. You can apply a credit card charge, for tax purposes, either on the date of the charge OR on the date you pay the CC company.

In December that gives one the choice of taking a deduction in either year if the CC is paid in the next year. That can be applied in Quicken by making offsetting entries on the dates involved to xfer money between accounts. That is, an entry in December to a tax deductible a/c with a memo to the offset transaction on the date of payment to the CC.