S-Corp P&L net income is w/o factoring in depreciation, correct?

[AZ-Tax]

Is the net income on the P&L an amt not factoring in any depreciation from assets that were purchased prior to the tax year that are still being depreciated in the tax year and those assets that were placed in service in the tax year OR is the depreciation built into the P&L and if so where?

[S T]

Prior Year Depreciation

Prior Year's Depreciation is on the balance sheet - Only current tax year would show depreciation deduction for current year and factor into P&L

Sandy

[AZ-Tax]

Sandy, so no current depreciation on P&L?

Prior Year's Depreciation is on the balance sheet - Only current tax year would show depreciation deduction for current year and factor into P&L

Sandy

Sandy if I am understand you correctly, the year end P&L will NOT include the current depreciation correct?

[S T]

Current

Only the current year P&L will post the current year depreciation - not any prior year depreciation accumulated which will post on the Balance Sheet

Example: Accumulated Depreciation of $10,000 would be on the Balance Sheet entry and the Current Year 2008 Depreciation of $2,500 would show on the Profit and Loss and then be added to the Accumulated on the Balance Sheet for a total of $12,500.

But on the P&L or the Income Statement of the Return for deductions it is only going to reflect the $2,500 to offset current year income.

Sandy

[AZ-Tax]

It possible the bookeeper did not calculate depreciation?

Sandy, I see nothing on the P&L that refers to any type of depreciation. Is it possible the bookeeper did not include any depreciation in the P&L feeling its the Tax Preparers job? Also, I emailed the bookeeper but the business owner told me the bookeeper wanted the current depreciation amt for 2007 after I completed amending the S-Corp's 2007 tax return.

Now the 2007 year end balance sheet does have accumulated depreciation. Question. The accumulated depreciation on the 1/1/07 balance sheet has the same amt that appears on the 12/31/07 balance sheet. Does that sound correct?

[S T]

I would guess

that only the Tax Preparer would be able to furnish the Bookkeeper with the Accurate Depreciation each year. If the Bookkeeper guesses, then there would probably be an additional journal entry to correct.

That is why I like to be both Accountant/Bookkeeper and Tax Preparer or have access to live data files to make adjusting entries in the Accounting files such as Quickbooks. It makes balancing the Income and the Balance Sheet on the Tax return a whole lot easier.

Sandy

[JG EA]

Sandy, I see nothing on the P&L that refers to any type of depreciation. Is it possible the bookeeper did not include any depreciation in the P&L feeling its the Tax Preparers job?

I know you asked Sandy, but Yes, many times bookkeepers do leave this up to the tax preparer and then when you are all finished you give the bookkeeper the adjusting entries he makes to the books. (Or at least have the TP give him a copy of the tax return.)

Also, I emailed the bookeeper but the business owner told me the bookeeper wanted the current depreciation amt for 2007 after I completed amending the S-Corp's 2007 tax return.

There you are - he wants you to do it.

Now the 2007 year end balance sheet does have accumulated depreciation. Question. The accumulated depreciation on the 1/1/07 balance sheet has the same amt that appears on the 12/31/07 balance sheet. Does that sound correct?

Yeah, until you give the current years depreciation the bookkeeper can't accumulate it.

_______________

Oops, Sorry Sandy I got in there while you were answering.

[S T]

Jg

Not to worry - I think this thread can use all the help it can or will receive

Sandy

[outwest]

Echo the above

I'd echo the comments that the tax preparer gives the depreciation adjustment back. It the company is using tax basis statements, you need to advise them on the many choices such as 179, bonus depreciation, and ADS. Aside from the fact bookkeepers don't know the entire tax picture, it's tricky to get these occasional entries right.

[AZ-Tax]

Will the bookeeper now send me an updated 12/31/07 balance sheet & P&L?

The bookeeper requested I send her a Depreciation report after I include all depreciable assets purchased in 2007. Can I expect an updated balance sheet and P&L reflecting those 2007 assets and if so do I report the updated "accumulated depreciation" amt from the 12/31/07 balance sheet on Sch L, 10b, column C on form 1120s?

I choose the option to flow the 2007 current depreciation to Sch L, Ln 10b, column C and it imbalanced the Sch L by the amt of the current depreciation.