Credit Cards, Deducting Expense

[geekgirldany]

I have a customer, S-Corp. S-Corp has a credit card (I assume maybe in his name). He wants to only deduct the payments he has made on the credit card for 2007. Not actual expenses charged. I've met with him several other times on QuickBooks related issues and told him I had never done it that way. I always deduct the charges in the year made.

I've been asking for the information to do the S-corp and he is asking me this again. He says that if he deducts all the charges he made in 2007 then he will come up with a loss. He wants to carry over charges from 2007 into 2008.

Has anyone ever heard of doing this on a cash basis? He did not pay the card off so I am not sure how you would assign expenses to each payment if you did as he is talking about it.

Thank you for any help

[veritas]

Why?

Does he want to do it that way, other than he's lazy?

[Koss]

Cash Basis

I don't think there's any way to sustain his argument. It just doesn't work that way.

I don't know what kind of business he's in, but you may need to find a metaphor that your client will understand. For some reason, the one that comes to mind is "that dog won't hunt."

Where I come from, we might say that his approach is not going to play in Peoria.

His vendors or suppliers got all the money. He borrowed it, using the card. The entire expense was paid last year.

I have this discussion once or twice a year with parents in the lower socio-economic bracket, who have a kid who is the first generation to go to college. It goes something like this:

Pro: Okay, so Sheila was enrolled at Kent State for all of 2007, right? Except for the taking the summer off?

Client: Yeah, she went both semesters.

Pro: Full time? Full load of courses?

Client: Yeah, she's full time.

Pro: Okay, well, you may qualify for the education credit. Can you tell me roughly how much the tuition was?

(Maybe we'll get lucky and we can just max 'em out on one of the credits, so we don't have to mess with exact numbers... Probably not at Kent State, though...)

Client: Well, she hasn't paid anything yet. The school gave her a loan, and she doesn't have to pay anything until after she graduates.

This is when I usually take a bathroom break to tear some of my hair out...

Burton


_________________________________________
Have you ever considered that perhaps taxation
without representation might be better?

[geekgirldany]

He said he doesn't want to use an expense if he doesn't need it that year. I told him the first time he mentioned it that he was on cash basis and he would have to deduct them in the year charged. Even his friend with him said the same thing I did.

He is a very analytical person. A chemist but has two businesses. I was informed that he could do it himself but he just don't have the time. I could write some other things he said but I won't. It is hard to tell him this is how it has to be. He told me I made things "too hard". I told him the IRS has rules/laws I am following them.

Yeah maybe I need to use a story to explain to him. It is a construction business. So umm... I don't I will have to come up with something. Although Burton's story is pretty good I run into that also about college tuition.

[S T]

What about

Post the credit charges in the year purchased as they should be, regardless of when the t/p paid, and then if it generates a bottom line loss, what about NOL loss carryback or carryforward?

Sandy

[veritas]

Burton

Your writing style is always entertaining. I admire your skill and others like Black Bart. It is truly gift.

Now in geekgirldany's post we see the real reason for her client's position.

"He told me I made things "too hard"."=LAZY

Of course being a highly educated chemist the task of bookkeeping could be overwhelming.

[Koss]

Scientists

___________________________________________

There are two kinds of researchers: those that have implemented something and those that have not. The latter will tell you that there are 142 ways of doing things and that there isn't consensus on which is best. The former will simply tell you that 141 of them don't work.

David Cheriton, Prof. of Computer Science at Stanford, paraphrased

[Koss]

Computer Science

This one is said to have appeared in a user guide for one of the earliest versions of a computer programming language called FORTRAN, back in the seventies, I think:

The primary purpose of the DATA statement is to give names to constants; instead of referring to pi as 3.141592653589793 at every appearance, the variable PI can be given that value with a DATA statement and used instead of the longer form of the constant. This also simplifies modifying the program, should the value of pi change.

[geekgirldany]

Post the credit charges in the year purchased as they should be, regardless of when the t/p paid, and then if it generates a bottom line loss, what about NOL loss carryback or carryforward?

Sandy

Thats correct Sandy. Maybe he just doesn't understand this or is for some reason not wanting to show a loss for the business. I try to explain but well as I said before chemist.

He has come up with some questions that made me have to think for minute what he meant. I'll probably be posting on a few of them later.

To mathematicians, solutions mean finding the answers.
But to chemists, solutions are things that are still all
mixed up.

[gkaiseril]

The primary purpose of the DATA statement is to give names to constants; instead of referring to pi as 3.141592653589793 at every appearance, the variable PI can be given that value with a DATA statement and used instead of the longer form of the constant. This also simplifies modifying the program, should the value of pi change.

The real value will not change nor will the definition of the ratio, but the finite representation used by the FORTAN might be updated for a more accurately computed value of this irrational number.

If you know what FORTRAN means, do you think FORTRAN will be updated any time soon?

[Koss]

The real value will not change nor will the definition of the ratio, but the finite representation used by the FORTAN might be updated for a more accurately computed value of this irrational number.

If you know what FORTRAN means, do you think FORTRAN will be updated any time soon?

Probably not. But I actually met a guy once, at a wedding reception, who was in college working on a computer science degree back in the days when pi was only 3.14