Related Corp, One Cash, One Accrual

[equinecpa]

I'm doing an S and C corp return. There are some large related party transactions, one company bills the other for services. The ye receivable is approximately $25,000 (C corp is on accrual, S corp on Cash) C corp owes the S corp.

Is there anything I have to do for tax purposes? It would appear that the C corp is taking a deduction of $25,000 not yet recognized by the cash basis S corp - do I add $25,000 to taxable income in the S corp or take $25,000 out of the C corp deductions?

I'm thinking I need to take $25,000 out of the C corp deductions.

[veritas]

Irc 267

would prohibit the deduction until actually paid between related parties. Look at 267(f) to see if it applies.