Tax Guru – Ker$tetter Letter

Q:

Subject: Tax vs. Book depreciation – quick question

 

Dear Mr. Kerstetter,

I had a quick question for you – I have looked around to try to get a definite answer to this, but to no avail yet.  I was wondering if you could help me.  Based on the S Corp tax summary outlined below, I was wondering if you would be able to tell me what the actual depreciation charged to book/financial income was by looking at this?  Thank you in advance, and I enjoy your website!  Thank you – Greg Torgerson, from Iowa

 

S Corporation Tax Return Summary:

Form 1120S

Total Income                                                     $1,266,997

Depreciation  (ln 14a)                                        $ (87,612)

Other Deductions                                              $ (1,156,919)

Ordinary Income                                               $ 22,466  (flows to Sch K, ln. 1)

 

Schedule K                                                       $  22,466

Charitable Contributions                                  $ (215)

Section 179                                                       $ (100,000)

Income                                                              $ (77,749)

 

M-1 (col. 1)

Net Income, Books                                            $ 90,770

Expenses recorded on books,

not included on Sch. K:

Depreciation      $45,928

Other                   $1,132                                    $ 47,060

                Total                                                       $ 137,830

 

M-1 (col. 2)

Deductions included on Schedule K not

Charged against Book Income (Depreciation)$ 215,579

                                                                          $ (77,749) (ties to Income Sch K) 

A:

Greg:

It has always been my policy not to answer homework questions.  I only deal with real life issues for real life people.

You should ask your professor and teaching assistant for help.  That is what they are paid the big bucks for.

Good luck.

Kerry Kerstetter