Tax Law (Questions About Taxes)/Wages vs Cost of Labor



Greetings from a fellow expert on All-Experts (Excel category - you perfectly answered a questions for me last week... I hope I remembered to rate your response!).

I'm preparing my first 1120S for a new Veterinary Practice I purchased in 2014.

My question is, does it matter where I put non-shareholder/non-officer wages?  

I see a spot on 1125A for Cost of Labor (not sure this applies to service industry or not - the IRS instructions for 1125A actually skip line 3 - weird).  I could put them there, or I could alternatively put them on line 8 of 1120S, Salaries and Wages.  

Maybe the IRS actually doesn't care as long as I am consistent from year-to-year and as long as I don't, obviously, list it in both places :).

What is your opinion on the matter?

Thanks a bundle!


Thanks for your question and the kind words.

Form 1125A is for Cost of Goods Sold.  Since you are not a manufacturer or otherwise involved in the sale of goods (other than incidentally - food, medications, etc) you don't use this form. Line 8 Salaries and Wages is the proper place for your non-shareholder pay.

Hope this helps.

John Stancil, CPA  

Tax Law (Questions About Taxes)

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John Stancil, CPA


I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at I also offer seminars and consultations to churches and clergy on their tax issues at Also visit my blog, I am listed on Tax Connections at Prepare and file your own taxes at


I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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