Paid personal items with business check...

I'm trying to finish up the 1120S for my wife's business and have a question: we both have corporate AMEX cards for our business and early on we were a little sloppy and charged some personal items to the card. I then paid off the card balance every month with a business check. My question is how do I go about balancing this in my books and 1120S. I know I can't deduct the personal items as a business expense (even though I paid them with business money). Basically I have: AMEX BILL: Business: $800 Personal: $200

Paid: $1,000 with business check

1120S Line 19 Attached Schedule: Total Deductions: $800

Which leaves my 1120S and books out of balance because of the $200 personal stuff. Do I just consider the $200 a draw or dividend to the owner? Where does this show on the 1120S (if anywhere)? Any help is much appreciated.

P.S. - please no lectures on separating business & personal expenses - I know how bad that is and we've stopped doing it

- just got a bit sloppy for a couple months :-/

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Reply to
Craig
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On those rare occasions when I make a "mixed" purchase from a vendor and therefore have a personal expense on my business credit card the personal portion of the charge is expensed to an employee reimbursement account on my books. (I am a C Corp.) At various times during the year, and on December 31 I clear the reimbursement account with a check from me to the company. The personal charges never show up on the 1120 as the company has been fully reimbursed.

-- Vic Roberts Replace xxx with vdr in e-mail address.

Reply to
Victor Roberts

That's in effect what the 200$ was, a "withdrawal".

Where does it show? on schedule M-1, provided you even need to fill that out. Look at instructions to learn when you may safely omit doing that. One of the questions on page two, if answered "no", obviates the need for schedule M-1.

ChEAr$, Harlan Lunsford, EA n LA Sat 12 Mar 2005

Reply to
Harlan Lunsford

Well, now, let's see. What IF you regularly paid minor personal items as a convenience, and then at year's end instead of reimbursing the corporation, declared the total as a dividend which may be taxable at low rates? ChEAr$, Harlan Lunsford, EA n LA Sun 13 Mar 2005

Reply to
Harlan Lunsford

Then I would have to show a profit somewhere along the line to pay these dividends. I am a personal service corporation and profits get taxed at 35%. Since I am the only employee I have very little profit each year by design. A bit more than enough to cover the 50% non-deductible portion of Meals - since I also have to pay taxes on the profit used to pay the non-deductible meals.

-- Vic Roberts Replace xxx with vdr in e-mail address.

Reply to
Victor Roberts

Ex post facto dividends make me nervous. Time to talk to a lawyer.

-- Frederick E. Jorden

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Reply to
Frederick Jorden

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