Question from a web visitor: do I prorate income from a fiscal year K-1? Short answer: NO.
When a taxpayer receives a refund of state income taxes, and the taxpayer took a deduction on their federal tax return, and some of the payments made to the state were estimated payments that may have been made in a different calendar year ... well, it can require some math to determine the taxable refund and the deductible portion of the estimated payment.
This comes up every tax season and seems to be something people don't understand. On Schedule A, for itemized deductions, there's no such thing as a "$500 standard deduction for non-cash charitable contributions."
For nearly 4 months I've been posting excerpts from a presentation I give to entrepreneurs trying to get businesses off the ground. Because the posts are scattered across many weeks, this post serves as a reference point to pull them all together. Part 1: Proper Recordkeeping Part 2: Scanned Copies of Receipts Part 3: Bookkeeping Systems [...]