ncCPAp on the GO!

CASH BASIS

  • 1.  CASH BASIS

    Posted 12-14-2018 17:40
    I have a client who is a videographer/cameraman, etc. working through a Subchapter S corp, obviously on the CASH BASIS.

    He received a check for $ 250,000 in 2018 to basically build and buy the equipment for a television studio for a client. His estimate of expenditures is approximately $ 200,000, with $ 50,000 falling to the bottom line.

    In 2018 he has spent approximately $ 100,000 with the next hundred to be spent in 2019.  Obviously, the rest of the cash is laying in the bank.

    How do i handle this transaction in 2018, to avoid a big profit now and a loss next year. ( Percent of completion ? , Reclassify some of the initial payment as deposit versus sales? Return some of the money and ask for it back in January ?  I hate that one)

    Any thoughts would be appreciated.  Thanks.

    Allan


    ------------------------------
    Allan Cohen CPA
    RAPHAEL GOLDBERG NIKPOUR COHEN & SULLIVAN CPAS, PLLC
    WOODBURY NY
    ------------------------------


  • 2.  RE: CASH BASIS

    Posted 12-15-2018 14:23
    Have him quickly engage my services with a retainer of $50 K.
    With the holidays, he will miss his appointment.
    He will decide not to travel to see me.
    I will return most of his retainer next year.

    Leon Levine CPA  Blush
    (with tongue in cheek!)
    and Happy Holidays!!



    £eon £evine
    llevinecpa@verizon.net






  • 3.  RE: CASH BASIS

    Bronze Most Valuable Member
    Posted 12-16-2018 11:42
    Hi Alan seems to me that I would allocate and indicate funds not used and classify as a customer deposit as liability
    you would then indicate revenue, costs, and ratable profit in each year.
    Although this is cash basis taxpayer part of check received is deposit against future profit and costs
    it would support the position to have an invoice for 50% and remainder as a deposit towards completed job

    ------------------------------
    Gary Sanders
    Gary Sanders, CPA, PC
    North Bellmore NY
    ------------------------------