Filing the tax return for S corp

Forum|Forum|5 years ago
June 17, 2021
2 replies
10 views

Im working with the client who has a s corp under real estate industry. When he is buying houses and selling houses, how should i record it? How can treat the house he purchased? Is it COGS?

Lacerte Tax

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sjrcpa

Level 15

COGS if it was sold. Otherwise Inventory.

The more I know the more I don’t know.

qbteachmt

Level 15

What you asked is not just part of the taxes; it's part of the financial operations. I recommend getting a CPA to be your mentor on the financial management all year so that it is not a mess when the year is over.

The purchase of the property and nearly all costs incurred, including interest, are related to the property and not Cost until the property is sold. Anything on hand over a year end is an Accrued Cost as Asset and only Sales in that same year are cleared out of the asset account to be Cost of Goods Sold. That allows them to compare Income from Sales against the costs, to see Profit on these sales.

It isn't clear why someone made this entity an S Corp. Make sure to follow all requirements; that includes Payroll for the shareholder-employee.

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