Expert: Arthur Naman - 3/27/2009

Question

"An officer of a C-corp client deferred salary for the past two years. He now wants to waive the salary for both years. What is the accounting entry for that? Is it kosher?"  

Answer
First, what has been the entry to record the deferred salary for the past couple of years. You may be able to simply reverse those transactions. Keep in mind that there could be a difference between the entries made for financial accounting and for tax accounting as recorded on your tax return.

As for what's kosher, the whole thing is probably not kosher. Generally I believe that deferred compensation like this are not acceptable under the tax code.