Liz Smith, CPA, MSTFP

Marijuana dispensaries must file federal income tax returns and pay income tax the same as any other business—except that dispensaries are not allowed to deduct their operating expenses because they are considered drug traffickers under federal law. Marijuana dispensaries must pay federal income taxes by filing one of the following tax returns: Schedule C: For…

The primary difference between the completed contract method (CCM) and the percentage of completion method (PCM) is the timing of income recognition. With PCM, income is recognized in phases as the work is completed while, with CCM, income is recognized upon completion of the contract. Quick Comparison of Completed Contract vs Percentage of Completion Method…

The percentage of completion method (PCM), a means of recognizing income and expenses, is the required income tax method for long-term contracts—unless the small contractor or home construction contract exceptions apply. Under PCM, only a portion of total contract income is recognized annually. When you “recognize” income, you are recording it for tax or other…

The completed contract method (CCM) is a way to recognize income and expenses for construction contracts. With this method, no income or deductions are recognized until the contract is complete. When you “recognize” income, you are recording it for tax or other reporting purposes. Long-term contracts require special rules to determine when the income and…

Completing Form 1065 starts with document assembly — you’ll need the company’s balance sheet and income statement. If you don’t have those, you can use informal reports or spreadsheets that show totals for the company’s income, expenses, and asset and liability categories. Once you’ve gathered your documents, fill out the form’s sections for general information…

A Section 351 exchange is a way to obtain ownership in a corporation by exchanging property for stock while delaying tax. Without Section 351, giving property to a corporation and getting something valuable (corporate stock) in return would be treated by the IRS as a sale of the property and would result in recognizing a…