My company is working with a consultant to generate Work Opportunity
follow up to deferred charges question - see detail
Answers
At a glance, it sounds like you could potentially book a receivable for the tax credits with an allowance rather than a deferred charge. The consultant fee would be expensed as services are provided. I wouldn't book a separate gain contingency for the fees paid. So even though these transactions are offsetting, they would need to be accounted for separately.
Company has an NOL and doesn't book the deferred tax asset, so i can't record the tax credits as a receivable. The consultant fee is contingent upon using the tax credit at some future date. if the credits can't be used, i.e. disallowed by the IRS, credits expire, or company changes ownership and new owners can't use the credits, then the consultant fees are reimbursed to the company. My question: as the fees are contingent upon the utilization of the tax credits at some future date can they be tied up on the balance sheet as a deferred charge or prepaid? thanks, comments welcome. fiscal year ends in two weeks so any help is appreciated before i meet with the auditors.