We Prepare Tax Returns!

We prepare most type of tax returns:

Individual. 

S Corporation.

C Corporation.

Partnership.

Payroll.

Amended.

Gary Bode, CPA is a Master's Degreed, nation wide accountant offering tax and business services. Member of AICPA and NCACPA. Our virtual office provides excellent service to long distance and international clients. Call (910) 399-2705 for a free phone consult.

Client Video Testimonials

Click here to watch some of our clients in their video testimonials!

Client Testimonials

I became totally and permanently disabled after a working for 44 years. I returned to college late in life (while working full-time) to fulfill my dream of becoming an RN and at that time found it necessary to secure student loans. Three years after being declared totally and permanently disabled my student loans were discharged. In January 2013 we received a 1099-C form declaring said student loans that were discharged however that amount could be considered as income for 2012. This was a large amount of money and we live on two pensions and social security income.

I started looking on the internet for information regarding 1099-C and felt that this was something that we could not handle alone. I made phone calls locally to a very reputable tax group in a city near us and they said it would cost $500 for an appointment and that they really prefer to do corporate taxes and they referred me to a local person who had worked for them at one time, we called and explained the situation and an appointment was made and then the comment was made that "I will have to do some research on this" and flags immediately went up and we called back and cancelled that appointment. I had been researching the IRSwebsite and every place else I could think of and I was not comfortable doing our own taxes this year. We called another local tax preparer that we had used in the past and made an appointment, however prior to the appointment, while still seeking information regarding our situation,

I came across a website for Gary l. Bode, MSA, CPA, PC in Wilmington, NC. I called Mr. Bodeand explained our situation and asked if he could help. He spoke very knowledgeably regarding the situation and stated that yes; he felt he could help us. As Mr. Bode was in North Carolina and we were in New York I scanned all of our documents including back-up documents for all of our claims and forwarded all to him. Mr. Bode kept in touch with us via email; we have spoken on the telephone several times and have become very comfortable with his knowledge and professionalism. Also, as I am a true "worrier" I have continued looking into information regarding our tax situation and I came upon another web page for Mr. Bode that included testimonials which spoke of his experience with this type of tax situation as it became prevalent during the recession. This reinforced in our minds that we had made the right decision in hiring this person as our tax preparer.

I share all of this as our taxes are now ready to be filed (we do owe tax for 2012 but not the astronomical figure we thought we were facing), and we are confident that they have been prepared with the utmost care by a gentleman who has an excellent working knowledge of the situation we faced and the tax laws that were applicable to said situation.

 

Bill and Carol

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Even though Gary enjoys helping colleagues, we no longer provide free consults to other tax preparers. He's happy to consult on an hourly billing basis if our schedule allows.

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S Corporation CPA discusses Advance Payments as Income | 2012 IRS Form 1120-S Accrual Method Accounting

S Corporation CPA Form 1120-S

Gary Bode, CPA: our firm is an S Corporation, so  I stay current on Form 1120-S issues. (910) 399-2705.

S Corporation CPAs say paying your taxes later is better than paying them now. Several Form 1120-S accounting methods exist that allow S Corporations to shift advance customer payments to a future year. This shifts the income, and associated tax liability, to a future tax year. These accounting methods include:

  • Accrual method of accounting.
  • Completed Contract accounting method.
  • Percentage of Completion accounting method.

We’ll discuss Form 1120-S accrual accounting using a dance studio that takes payment in advance for dance lessons.

Consult with your own S Corporation CPA before implementing this strategy. Your S Corporation’s accounting method has multiple ramifications. If you don’t have an S Corporation CPA, consider calling us for a free phone consult. Don’t let distance dissuade you; our virtual CPA office makes dealing with us easy.

What is the Accrual Method and how is it Different than the Cash Method?

  • The cash method counts income when it’s received, and expense when it’s paid.
  • The accrual method counts income when it’s earned, and expense when it’s incurred.

Points your S Corporation CPA should consider:

  • Does your S Corporation have enough unearned income to make the accrual method worthwhile?
  • Does your S Corporation have good bookkeeping skills?
  • Tax savings are greatest in the first few years of operations, generally speaking.
  • The S Corporation has to prepare accrual based Financial Statements. Some small S Corporations never prepare any Financial Statements.
  • The accrual method of accounting uses accounting conventions that can make Financial Statements harder to understand.
  • The accrual method of accounting can make cash flow management more difficult.
  • Your CPA will have problems switching accounting methods in the future. IRS Form 3115 is required. Best to choose the ideal accounting method during the first year of operations.

S Corporation CPAs should provide supplemental information with your Accrual Method Form 1120-S

The accrual accounting method is perfectly legitimate. But make sure your S Corporation CPA includes a supplemental Schedule on Form 1120-S covering issues that would otherwise raise audit flags.

“Tax savings in the first year of operations are crucial to cash flow.”
– Gary Bode, S Corporation CPA

When is the accrual method allowed for Form 1120-S?

  • Your CPA elects the accrual method on the first Form 1120-S.
  • Your CPA files Form 3115 to change the current accounting method to the accrual method, and, the IRS approves it.
  • Your S Corporation produces accrual based Financial Statements.

An Example for Advance Payments on an Accrual Method Form 1120-S

  • Your dance studio, an S Corporation, sells pre-paid blocks of dance lessons, say 30 lessons at $20 each, that can be used up to nine months in the future.
  • Plus you sell gift cards for dance lessons.
  • Plus you book the studio out for children’s parties with payment in advance.
  • On December 31st, 2012 your records show pre-payment for 400 lessons not yet given.
  • On December 31st, 2012 there are $1,400 of unredeemed gift cards.
  • On December 31st, 2012 there’s $600 of pre-payment for birthday parties in early 2013.

So, your studio can shift $10,000 of income from 2012 to 2013 using the accrual method of accounting:

  • 400 block sale dance lessons at $20 each = $8,000.
  • $1,400 unredeemed gift cards.
  • $600 for the birthday party.

What are the tax savings are in 2012 for the $10,000? It depends on the S Corporation shareholders, but at a 30% total tax rate, it’s $3,000. A big cash flow consideration, at least in the first year of operations. But of course, the $10,000 never goes away; it has to be declared as income on the 2013 Form 1120-S. Unless you refund some of the advance payments.

I’m an S Corporation CPA that does business as an S Corporation. So I stay abreast on Form 1120-S developments. Our virtual office serves long distance and international clients. Plus it allows greater convenience for our local friends. For a free phone consult, please call (910) 399-2705.

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