Michael Hastings
Well-known member
- Joined
- Dec 29, 2006
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Michael, it's not a fudge. In cash accounting, if you have sent away the cash, it is considered gone. You can pre-pay rent and deduct it. You can pre-pay editing services at your favorite post house and deduct it. You can pre-pay for a Red and deduct it. If you get the money back, you book it as income and pay taxes on it. On the other hand, if you pre-bill 50% of a shoot and haven't paid the crew yet, you are taxed on the whole 50%.
Talk to you accountant about it. There is nothing underhanded about it, it simply looks at the flow of cash in and out of your business rather than the accrual of debits and credits.
Sorry, I should have stated that I'm assuming accrual accounting.