Hello

My C Corp company is completing the 1120 and I am working on the book to tax differences, specifically the unpaid accrual 75 days after year end.

My accountant has recorded a few activities to the accrual ledger accounts which I believe should NOT be considered as a tax adjustment.

The first are sales rebates which occurred within the tax year, are definitely due to the customer, but won't be paid until later in the year beyond the 75 days of year end. The sale agreement specifies the rebate is due.

The second are liabilities related to a sales agreement where I earn a flat pre determined revenue fee regardless of sale profitibility. I invoice the customer, earn a definite flat fee, and remit all remaining amounts due back to the producer.

I would appreciate your input on my two issues above.

Also, can you please guide me to the specific IRS literature regarding the 75 day accrual adjustment.

I greatly appreciate your insight and thank you for your assistance.

GHC

Issue 1:

You need to record the customer rebate now. It does not matter when you pay them the refund, it all matters when you realize you owe them the refund. If your year end is Dec 31, but do not pay the employee salaries until the 2nd of each month, you must accrue Dec 2-31 pay even though you don't pay it until the next fiscal year.

I have no comment, as I have no experience in filing Form 1120 for C Corporation tax returns.

Wanted to let you know this so you would not think I was ignoring your post.

Issue 1:

You need to record the customer rebate now. It does not matter when you pay them the refund, it all matters when you realize you owe them the refund. If your year end is Dec 31, but do not pay the employee salaries until the 2nd of each month, you must accrue Dec 2-31 pay even though you don't pay it until the next fiscal year.


I did record the rebate, but I will not have to pay for 6 months.

Am I able to claim the rebate on this years tax return