Announcement

Collapse
No announcement yet.

Grant Income handling?

Collapse
X
Collapse
 
  • Page of 1
  • Filter
  • Time
  • Show
Clear All
new posts
Previous template Next
    #1

    Grant Income handling?

    I have gone through search and do not find an answer to my questions.

    Client - LLC filing as H/W partnership, received a $25,000 SBA grant to be used to pay operating expenses. It does not have to be repaid.

    How should this be shown on 1065? Would it have to be included for figuring SE tax?

    Thanks for all help.
    Only in government or politics is a "cut in spending" really an increase. It's just not as much of an increase as they wanted it to be, therefore a "cut".
    Tags: None
    #2
    Does the pregnant barefoot mom pay tax on her welfare check

    Originally posted by thomtax View Post
    I have gone through search and do not find an answer to my questions.

    Client - LLC filing as H/W partnership, received a $25,000 SBA grant to be used to pay operating expenses. It does not have to be repaid.

    How should this be shown on 1065? Would it have to be included for figuring SE tax?

    Thanks for all help.
    Well, you're talking about corporate welfare, so I wouldn't think that you would show it as taxable. I would most likely show it as an investment by the owner that did not add to basis.

    Comment

      #3
      Just bringing this back to the top. And, Josh, I don't think he is pregnant - at least I hope
      not. :-)
      Only in government or politics is a "cut in spending" really an increase. It's just not as much of an increase as they wanted it to be, therefore a "cut".

      Comment

        #4
        Here's my take..

        Principal #1: All income, from whatever source derived, is taxable unless excluded as a matter of legislative grace.

        So: Is it income... Yes.
        exclusion available ... apparently not.
        Is it taxable .... Yes

        Now, the welfare mom is not real relevant. A better comparison would be a federal EQUIP grant to a farmer. This program subsidizes certain conservation measures.

        Is it income ..... yes
        exclusion available .. if you commit to 10 year maintenance / no sale condition
        Is it taxable? ... Yes unless you agree to the conditions.

        Doug

        Comment

          #5
          Thanks,Doug - I appreciate your observations. I talked with the tax professional help line at the IRS yesterday, was sent to the tax law section and they still did not know where they wanted it on the forms. They are supposed to research and get back to me. I thing I will just put it on line 7, showing what it is for, and let it go at that if I don't get told otherwise before completion.

          LT
          Only in government or politics is a "cut in spending" really an increase. It's just not as much of an increase as they wanted it to be, therefore a "cut".

          Comment

            #6
            Follow-up

            For anyone interested in the outcome, I just received a call from the IRS. Last week, the law department, since no one knew the answer, had written up an inquiry for the experts to research.

            According to the IRS, the grant does not go anywhere on any return if there are no services to be rendered for it and it does not require repayment.

            LT
            Only in government or politics is a "cut in spending" really an increase. It's just not as much of an increase as they wanted it to be, therefore a "cut".

            Comment

            Previous template Next

            Disclaimer

            Collapse

            This message board allows participants to freely exchange ideas and opinions on areas concerning taxes. The comments posted are the opinions of participants and not that of Tax Materials, Inc. We make no claim as to the accuracy of the information and will not be held liable for any damages caused by using such information. Tax Materials, Inc. reserves the right to delete or modify inappropriate postings.

            Working...
            X