Need help fixing mistake. We built “spec house,” but took draws and expenses off the year (2006,07) incurred but sold it 2008. Accountant said wrong, and redid our taxes. How do we move those expenses, draws, payroll amounts to 2008? Pro2006
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I’m not a tax preparer but I work with a lot of builders. In most cases, you are required to match up your revenue with your expenses, which means deferring your expenses until the house is sold.
The best way to do this is to use items that point to a WIP account on the balance sheet instead of an expense account. You can do the same thing using the expense tab instead of items, but I find using items gives you better information.
When you sell the home, you’ll need to prepare a journal entry to expense the WIP associated with that home off the balance sheet and onto the P&L.
This article is provided for informational purposes and is not intended to be construed as legal, accounting, or other professional advice. For further information, please consult appropriate professional advice from your attorney and certified public accountant.
Written by +Ruth Perryman
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