World Class Mergers & Acquisitions  |  For Companies $5 Million to $250 Million in Revenue

Mergers & Acquisition FAQ – October 2012

Q: Can the Section 179 expenses be carried forward into future years if all of the deduction cannot be used in the current year?

A: Yes, 179 expenses can be carried forward if enough income is not present to be used in the current year.

Q: I am a businessperson with accounts receivable owed to my business.  If my clients do not pay their obligations, can I “write off” the amounts clients do not pay?

A: This depends on whether you are a cash basis or accrual basis taxpayer.  If you are an accrual basis taxpayer, then yes, you may charge as an expense, the amount customers default on once it is certain they will default.  If you are a cash basis taxpayer, then the receivable is not booked until money is received.  It is therefore, not “written off”, but merely never booked to start with.  For these reasons, it is important that business not allow receivables to go much beyond the standard 10 or 30 day window in which they are due.

Q: My business is in arrears on its payments.  What is my best course of action?

A: There is no one standard answer for this situation.  With that said, generally it is best to not ignore the obligations in which you may be in default of.  Calling the creditor, being forthright, and knowing your rights are tantamount to survival and recovery in the process.  If a creditor does not know you’re willing to work with them, they have no choice but to pursue other legal options against you.

By: Basi & Basi at the Center for Financial, Legal and Tax Planning for Transworld M&A Advisors