The Tax Preparation Blog

Posts Tagged ‘income tax payable cash flow statement’

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Question: What is income Tax expense a percetage of?

I have an adjusting journal entry that says Income Tax Expense is .32 with no extraordinary or unusual items to consider in this calculation. What is this a percentage of? What is the calculation?
I have the entry as a debt to Income Tax Expense and a Credit to Income Tax Payable.

Answer: Income Tax Expense is a percentage of Net Income. Your entry is correct. So you have to calculate Net Income Before Income Tax, skip a line, put Income Tax and the formula of .32*the cell with NIBIT, then total it and call it Net Income After Income Tax.

Exchange Income Corporation Announces August 2010 Dividend

Exchange Income Corporation , announced today that the Directors of the Corporation have declared eligible dividends totaling $0.13 per share for the month ended August 31, 2010, payable September 15, 2010 to shareholders of record at the close of business on August 31, 2010.

IRS Commissioner Dodges Income Tax Question – No Law!

Question: Personal Income Tax with 3 different projects.?

I am currently working on 3 different projects that earn me a monthly irregular income. All 3 projects I trade within my own name (not a sole proprietor or any formal entity). The 3 projects are: IT Contract work, renting out properties I own, marketing various projects and earning commission. I am paying income tax on a bi-annual basis.

My question is – when it comes to “business deductible expenses” – can I see all 3 projects as a combined income and take all the expenses on those 3 projects and deduct it from my combined income to get a profit value that is taxable? In other words my IT contract work is cash flow positive while my renting properties are cash flow negative. By using this combined approach I am aiming to deduct property renting expenses from my total income to save on tax payable instead of considering each project separate. Is it possible to structure it like this?

Answer: You’ve asked your question in the Other Taxes area and not given any inidcation of where you are located so it’s impossible to answer your question with any accuracy. I can only answer from the US perspective so this may not apply to you.

Your IT consulting business and the marketing gig are business ventures reported on Schedule C. You ARE a Sole Proprietor automatically if you have not organized the business any other way. You should prepare separate Schedules C for each business.

The rental activity is reported on Schedule E.

The net income from the Schedules C is subject to Self-Employment tax if the total is $400 or more for the year. Attach Schedule SE to calculate that. The rental income on Schedule E is not subject to SE tax so do NOT add that to the income from the Schedules C when calculating the SE tax!

All expenses are tied to the business that they are expensed for and must be reported as such. Do NOT co-mingle funds!

Get protected… for the worst can happen

One of the key financial new year wishes should be to gain income protection if you are injured or become too ill to work. This may not be a critical illness but sadly be severe enough to stop you from going to work for a long time. (09/01/2010 06:00:00)

Cash Flow Before Tax with Tom Lundstedt – Part 1