Grant for S Corp.

[Brian EA]

Taxpayer received $150,000 Grant for 2023. Because of this the Corp is showing a positive Net Income.
Do the shareholders have to pay taxes on the fund received?
Where do you put the grant on the Balance Sheet?
Your help is very much appreciated.
Thanks Brian

[Uncle Sam]

In order for anyone here to guide you - we need to know more facts.
What type of business is the S Corp? What type of entity granted the money?
What were the terms of the agreement? Over what period of time was
the grant for? How was the grant money supposed to be applied?
What was/were the condition(s) that determined how much of the grant was considered income vs advance of money?

Just from what you have described, you are talking about a liability on the balance sheet that could either be only current, combination of current and long term, or all long term.

[Brian EA]

The S Corp is a pre-school for kids 1-5 years old.
The funds were supposed to be used for expenses for the year.
No formal agreement. Use the funds or pay it back.
The grant has been reported as other income.
How do I get it on the Balance sheet?

Thanks
.

[Uncle Sam]

That is unusual. Entities providing education services would normally be formed as a tax exempt organization as a 501(c)(3). Not a commercial for-profit entity.
And what type of entity provided the grant? A government entity or other tax exempt, or a for-profit entity looking for a donation deduction?
"Funds were supposed to be used for expenses for the year" - Over what time period? How were the funds to be applied? Per Student? For what amounts over what period of time?
Over a 12 month period, school term calendar, or during the time granted by the donor? When does the "year" begin and end?
It looks to me as you have both a current liability as well as a long term liability, and only the portion of the funds used to pay for expenses for a reporting period is there reportable income.

[Brian EA]

As long as the funds are used up the school does not have to pay it back.
Why would it be recorded as a liability?

[Uncle Sam]

Because it's not income until such time as the funds are being used for its intended purpose.

[Brian EA]

Thanks Uncle Sam. I like that idea; however, the funds have already been used up for teachers training and other expenses. There were no unused funds.

[Uncle Sam]

If all the funds have been used up - then there's nothing to show on the balance sheet - all of that money is income

[DoubleO]

Yep. Taxable income. Expenses paid with funds deductible/nondeductible as usual. Note: Even if a 501(c)(3), the funds are still income.