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

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Question
Hello,

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!

Answer
Nathan,

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

Expertise

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 www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

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.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

Publications
The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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