Non-operating Expenses
JamesW
Member Posts: 11
How would I go about accounting for my recent corporation tax payment as I tried to add another expense account and I am only given four options; Operating Expense, Cost of Goods Sold, Payment Processing Fee and Payroll Expense, all of which count as tax deductible expenses?
What I need to account for is non tax deductible, however does count as an expense and affects the net profit? (i.e. it cannot affect gross profit)
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Comments
JamesW,
Taxes are an operating expense even if they are not deductible by the corporation. Based upon post I'm assuming you are talking a C -Corp which has US tax payments. It is correct that they are not deductible on Form 1120 however, you make a book to tax adjustment on the return to account for the difference. This is the same as travel and entertainment. Only 50% is typically deducible but the entire expense is presented on the income statement.
Mike G, CPA
www.mgfinancial.net
@Mikeg Hi Mike- many thanks for the prompt reply. If I were to add an operating expense account for this should the expense affect the gross profit, as I thought taxes were deducted from the gross profit in order to calculate net profit?
JamesW,
Nope, should not affect gross profit. Taxes are shown after gross profit. So I would not add an account under cost of goods sold. Just regular operating expense.
Mike G, CPA
www.mgfinancial.net
Servicing clients coast to coast
@Mikeg thank you for the advice - much appreciated!
No problem, anytime
Mike G, CPA
www.mgfinancial.net
Servicing clients coast to coast