Archive for August 30th, 2010
Jerry 71 asked:
The small business here is operating at a loss. The expenses exceed the income and the business is being propped up by loans from the owner’s savings. There are deductions for business expenses, but the business runs into the alternative minimum tax and not all of the tax deductible expenses can be deducted. Refunds (partial refunds) are frequently given to customers because they pay a deposit. The entire deposit is deposited when paid and is considered income. Though the partial refunds are “tax deductible” I am concerned because of the low income and high expenses making it impossible to get the full deduction for expenses. Any suggestions for making the best of this situation? Essentially, we sometimes pay tax on money that ends up being refunded to the customer. Thanks.
Jerrod Narron
The small business here is operating at a loss. The expenses exceed the income and the business is being propped up by loans from the owner’s savings. There are deductions for business expenses, but the business runs into the alternative minimum tax and not all of the tax deductible expenses can be deducted. Refunds (partial refunds) are frequently given to customers because they pay a deposit. The entire deposit is deposited when paid and is considered income. Though the partial refunds are “tax deductible” I am concerned because of the low income and high expenses making it impossible to get the full deduction for expenses. Any suggestions for making the best of this situation? Essentially, we sometimes pay tax on money that ends up being refunded to the customer. Thanks.
Jerrod Narron