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Corporate Withdrawals

Posted by taxguru on February 11, 2006

Q:

Subject: just wandering

Can cash withdrawals from the corporations business account be considered a payroll expense if it’s withdrawn from an ATM machine at a casino?

Seriously,

A:

As you know, every bit of activity in the corp bank account has to be accounted for on the corp’s books and reported on the 1120.

If an employee receives his payroll via ATM withdrawals, you could post it that way on the books.  Of course, if it’s a W-2 employee, you will need to gross up the actual cash taken out to arrive at the gross pay and applicable tax withholdings, which you will also have to report on the 941.

There are obviously many other ways to treat ATM withdrawals, such as loans from the corp, or even as straight 1099 pay.  You obviously need to work with the persons concerned to make sure everyone is in agreement with how the withdrawals are being posted on the corp books.

Good luck.

Kerry Kerstetter

 

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