Do I record book to tax differences on my book financial statements?

C

Chester

New member
My accountant was doing my 2008 tax returns and has come up with adjusting journal entries based on using accelerated depreciation for tax, when I use straight line for my books. Do I have to record these entries on my 2008 financials?
 
No. That is why they are called TAX DIFFERENCES. Tax does not allow straight-line, but GAAP does. These will be reconciling differences between your tax return and financial statements. No action is required on the financial statements
 
This should be in the accounting forum not the tax forum!

You're question is somewhat vague as you did not indicate if you have a business or not!

The difference is recorded on the corporation's tax return (you indicated you use straight line for books and financials so most likely you have a business) not on the financials.

See Section M-1 of the return for book-tax differences on the return (it's commonly referred to as a "M-1 adjustment" as there are many of them). There are differences between accounting laws and tax laws.

Accelerated depreciation can be used for "accounting (book)" purposes as well!

Generally, GAAP/SEC requires straight-line depreciation for financial reporting.

Tax accounting uses accelerated depreciation but you can elect to use straight-line depreciation (which most people won't).
 
He should not have done so without your permission. This could bite you in the long run. If any of those business items goes out of service before the end of their useful life, you will have to pay the money back to the IRS. Also, if they were started SL, they have to stay that way. If they are new items, you just need to keep good records on their usage and lifetime.
 
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