C corp Loss

[TAX]

1) "C" corp client paid 2007 federal tax of $26000 in 2008. Do I deduct anywhere?

This is recorded in QB of 2008. Is this a item that is in Quick Books but not deducted on Tax Return?


(2) This client, C corp, has a Loss of $58000 in 2008. He had income of $177,000 in 2007. He did pay tax of $26000 on this 2007 income. Can I take loss of 2008 (58000) and apply to 2007? (Carryback)

[TAX]

Corp Loss

Can any one help? Can I do 1139 for 2007 or just 1120X

Thanks!

[Nashville]

Yes Carryback

Your $58K loss is treated like an NOL, and carries back two years to 2006. If the loss is not all used up in 2006 (or if the C corp did not exist then), the remainder is applied to 2007. Whatever profit remains in 2007 has it's taxes recalculated, and you can then apply for a refund. I believe form 1045 can be used for this.

The federal income tax paid is not a deduction. If you paid state income taxes in 2008 as a result of 2007 profit, they would be a deduction for federal purposes.

Also at issue is the cash-versus-accrual method, but really beyond the scope of what you are asking. Federal taxes are not a tax deduction under either method, although they are reported on the financials as an expense.

[Nashville]

Correction

my apologies. Does not appear Form 1045 is available for Corporations. You are correct in choosing form 1139.

[TAX]

Your $58K loss is treated like an NOL, and carries back two years to 2006. If the loss is not all used up in 2006 (or if the C corp did not exist then), the remainder is applied to 2007. Whatever profit remains in 2007 has it's taxes recalculated, and you can then apply for a refund. I believe form 1045 can be used for this.

The federal income tax paid is not a deduction. If you paid state income taxes in 2008 as a result of 2007 profit, they would be a deduction for federal purposes.

Also at issue is the cash-versus-accrual method, but really beyond the scope of what you are asking. Federal taxes are not a tax deduction under either method, although they are reported on the financials as an expense.

Thank you!

Client is on a Accrual basis.
I did accrue 2007 taxes and apllied payment in 2008 to it.

[TAX]

1139

my apologies. Does not appear Form 1045 is available for Corporations. You are correct in choosing form 1139.

So you file 2008 return and then file 1139 seperatley?

[Nashville]

Concurrently or Separately

I would process the 1139 separately, but after filing the 1120.

I don't think you break any "rules" if you file them concurrently, I've just had problems in the past sending two separate returns in at the same time.