We have a new client that hasn’t filed prior S corp. returns. We are in the process of preparing several years of cash basis returns. The client has made purchases by credit card that we normally would deduct in the year the items were purchased. Since it is several years after the fact, we now know that the card card bills were never paid. Should we expense the items in the year purchased, and record the cancellation of debt income when the 1099-C is received, or decline to expense the items originally?
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Patricia Giunta
J.T. SHULMAN & COMPANY, PC CPAs
Carle Place NY
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