Operating Expense 1120s tax question

6 Replies

Quick question, if i have 10k of liabilities, how do i show that on my 1120s, specifically which line?  It's an operating expense.. 

What are the liabilities?  Are you Cash or Accrual basis?

If you are cash basis it is not deductible until it is paid.

If you are utilizing a corporation or a partnership you are required by the tax code to maintain a set of books. That means you should be able to product a balance sheet and a profit and loss statement.

99% of individuals should not be preparing an 1120s. (about 40% of accountants should not either)

Liabilities are shown on the balance sheet, Schedule L. As Steve mentioned, you need to make sure you can take the deduction based on your accounting method.

Thank you for your responses.. @Steven Hamilton II and @Lance Lvovsky ..

Here are my responses to your comments..

S-Corp

Accrual

On 1120s tax return, schedule L,

Shareholders & equity section.

Balance Sheet side.

Cash - 1000

Land 10,000

Assets- 11,000

No labilities

Which line is the 11,000 shown on

Line 25? Adjustments to shareholders 

Originally posted by @Ray G. :

Thank you for your responses.. @Steven Hamilton II and @Lance Lvovsky ..

Here are my responses to your comments..

S-Corp

Accrual

On 1120s tax return, schedule L,

Shareholders & equity section.

Balance Sheet side.

Cash - 1000

Land 10,000

Assets- 11,000

No labilities

Which line is the 11,000 shown on

Line 25? Adjustments to shareholders 

 My first question is why are you holding land in your 1120s? Is it for developing?

It would be line 15 on page 4 of the 1120s.

1) If you have below $250,000 in assets and gross receipts - you may not be required to complete the balance sheet.
If page 2 - Question 10 is marked Yes.

If you want to complete the balance sheet anyway
I would likely report the following

$1000 - Line 1 - Cash
$10,000 - Line 12 - Land
$11,000 - Line 15 - Total Assets

If there are no liabilities - then the 11,000 needs to be reported somewhere on the stockholders Equity Section

Depending on what the Par value of the stock is the $11,000 should go on 
Capital Stock
and/or 
Paid in Capital

Originally posted by @Steven Hamilton II :

99% of individuals should not be preparing an 1120s. (about 40% of accountants should not either)

+1 to this. 

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.