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Accrual to Cash Accounting

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    #1

    Accrual to Cash Accounting

    I have a client who is using cash method for 1065. They are going to file a final return this year. But the state franchise tax is due next year. Can I deduct the franchise tax as expense and create a tax payable liability on the book? Does anyone have the similar experience? Thanks
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    #2
    No

    I think your opening statement about this being a cash basis taxpayer pretty well prevents the establishment of an unpaid liability of any kind.

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      #3
      pay it now

      Why are they filing a final return this year, if they are still going to have additional income next year? Or if there won't be any more income, then they must already have the money to pay the tax, so why not pay it now?

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