S-Corp other Income & Casulty Loss

[Terry D EA]

S-Corp client, recycler, reported in other income 9k grant from NC Dept of Environmental Services. This is a below the line item and is it reported on the 1120S? If so, where? There are expenses for items involving the grant. Same client had a loss due to a fire. All insurance deposits were entered in the other income account with expenses for the same were debited. Should the casulty thefts and loss form be filled out? If so, should the loss (if any) be reported with the line 19 items on the 1120S? Thanks for help with this.

Terry D.

[Terry D EA]

Okay, found the answer for the fire and the 4684 is used and the loss or gain reported on form 4797. Still don't know what to do with the grant money. IMHO it is a separate account and not related to any normal operating activities.

Terry D.

[kcjenkins]

Terry, the question is whether the grant is taxable or not, or may be taxable on Feds but not state. Depends on what it was for. That is what you need to research. The department that gave the grant should be able to answer these questions, and then you will know what to do with it. Line 5?

[Terry D EA]

Thanks KC for the reply. I have done exactly as you stated. I have inquired as to the nature of the grant and what it was for. Hopefully I will get that information tomorrow. If taxable then line 5 it is.

Terry D.

[kcjenkins]

And be sure to keep the response in the client's file, in case you have to answer a question about it two years from now. <_<