Corporate taxes backdating checks Chat badwab
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Follow on from previous post I was of the understanding that you cannot backdate the registration of a Partnership to last year.
This potential new client asked me if they could backdate the registration of a husband/wife Partnership to the 14/15 tax year so profits for 14/15 could be split between husband and wife; I had advised NO based on feedback I got.
The date of Receipt or deposit doesn't seem to matter from my understanding (again unless this is clearly a 2013 event for the donor and you have knowledge of it). Since these are donations received, aren't you required to send a statement to the donors?
If you record the donation as received in 2013, are you allowed to provide a donation statement to the donor for 2012?
You cannot show this in your 2013 records and give a letter dated in 2012.
However potential client has advised me their current accountant (who is about to retire) has backdated the start of the partnership to 14/15 so profits can be split when they do their returns for 14/15.
I am a bit confused now; was it OK for this to be done?
She must include this payment in her 2012 income because it was constructively received in 2012. Receipt of a valid check by the end of the tax year is constructive receipt of income in that year, even if you cannot cash or deposit the check until the following year. She could not deposit the check in her business account until January 2, 2013. If it is to be December event it is best to send it early enough to be able to say with confidence that the check arrived at the destination before the end of the year.
It would seem to me that the date the IRS would be looking most closely at is the date the money was actually transferred.