This is a cash basis used car dealership. Gross income is reported to match total bank deposits. Would you deduct Sales tax included in gross and DMV fees included in gross as separate items under other expenses or would you include them as other cost of goods sold?
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The sales tax and DMV fees should be reported as separate items under other expensesOriginally posted by FDTAX
The sales tax paid when the purchase was made is added to the cost.Everybody should pay his income tax with a smile. I tried it, but they wanted cash -
TTB, page 5-12, author's comment: "The treatment of sales tax collected from customers and then paid over to the government depends upon how local law imposes the tax. If the tax is imposed on the seller, then the seller deducts the taxes paid, and includes any taxes collected from the buyer in income. If the tax is imposed on the buyer, the seller does not deduct taxes paid, nor does the seller include taxes collected in income. IRS instructions and publications make the pint very clear that when a state or local government imposes the sales tax on the buyer, the seller cannot take a deduction for taxes collected and paid over to the government."Comment
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S-Corp >2% Shareholder Medical Insurance
I know if the S-Corp pays for the health insurance of a >2% shareholder the premiums are reported in box 1 of the shareholders W-2. Does the shareholder also report the full amount of the premiums that were paid by the S-Corp on line 29 of his 1040? I think he does, but I would like some confirmation. ThanksComment
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Yes Jim the insurance premiums that were added to his W2 are deductible on his 1040, page 1. Adding to his W2 gross is offset by the fact that the insurance premiums paid by the S-corp has reduced profit on Sch-E, so it balances out to zero on his tax return except for the insurance deduction on line 29.Originally posted by Jim from FloridaComment
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