There are ways to remove a loss from your return without losing income tax

In civil law, entrepreneurial activity is an activity aimed at making a profit, carried out at one’s own risk. Few organizations or individual entrepreneurs started working immediately with financial returns, but absolutely everyone takes risks.

It doesn’t matter what you do - sell goods, build houses, provide intermediary services, produce spare parts or rent out real estate, there is always a chance that, at the end of the next year, you will see a loss in your report. How critical is the negative result between income and expenses for current affairs and the future, why does it arise at all, and is it possible to get rid of it - questions that I will try to answer today.

The concept of loss in accounting

The definition can be found in paragraph 79 of the PBU, approved by Order No. 34-n dated July 29, 1998. More precisely, it provides a joint definition of profit and loss - this is the result obtained in the reporting period when accounting for all business transactions as a result of assessing balance sheet items according to the rules adopted by law.

Those. To determine the result in the BU, two conditions must be met:

1. Fully reflect all transactions in accounting.
2. Correctly form the lines in the balance sheet and report (former form 2).

Why am I focusing on this? If the primary data was taken into account incorrectly in the accounting department or was not indicated at all, then the totals in the accounts will be distorted, and they form the balance sheet items. In turn, incorrect distribution of some balances among lines and sections will lead to distortion of the balance sheet and financial results statement.

Based on the initial meaning, a loss is a negative result of economic activity. Roughly speaking, when expenses exceed income. The results of the year show not only the effectiveness of work over the past period, but also form a strategy for the future. If there is no profit, you will have to figure out what went wrong.

Tip 3: How to reflect a loss

A company may experience a loss based on the results of the financial year. The accountant should remember that a loss in reporting attracts the attention of tax authorities to the company's activities.

Instruction 1 Not a single regulatory act requires taxpayers to justify a loss, but in order to satisfy the interest of the tax authorities, it is worthwhile to clearly formulate explanations regarding its occurrence and provide specific reasons as arguments. When applying the general taxation system and PBU 18/02 at the end of the year, use the following arguments as the reasons for the loss: 1. Difficulties have arisen with the sale of products, so revenue is falling faster than expenses are decreasing. 2. Due to a fall in demand, they are forced to reduce prices for products, sometimes even below cost. 3. The production premises were repaired, and its cost was immediately taken into account as part of the costs. 2 When closing the reporting period, create a balance in subaccount 90-9 and write it off to account 99 “Profits and losses”, subaccount “Profit (loss) before tax”. When receiving a loss, create the following entries: Debit 99 subaccount “Profit (loss) before tax” Credit 90-9 - reflects the loss by type of activity for the reporting period and Debit 99 subaccount “Profit (loss) before tax” Credit 91-9 - reflects the loss for other transactions for the reporting period. 3 When applying PBU 18/02, simultaneously with the closing of the reporting period, conditional income should be reflected in accounting. It occurs when a company suffers a loss. To calculate this indicator, multiply the total balance for subaccount 90-9 and subaccount 91-9 by the income tax rate (20%). Reflect the amount of conditional income with the following entries: Debit 68 “Calculations for income tax” Credit 99 “Conditional income for income tax” - the amount of conditional income for the reporting period is calculated and Debit 09 Credit 68 - the deferred tax asset from the loss is reflected. Please note that the balance on January 1 of the next year in subaccounts 90-1, 90-2, 90-3, 90-4, 90-9, 91-1, 91-2 should be equal to zero. To do this, it is necessary to reform the balance sheet at the end of the year.

How does a loss occur?

It arises differently in three types of accounting: accounting, tax and management (MA). What is the difference between reflecting transactions:

• The moment of reflection of operations. In accounting, as a rule, the accrual method is used, i.e. transactions are carried out at the time of their completion, regardless of the actual receipt of funds, but the cash method is rarely used. This is possible in accordance with the last paragraph of paragraph 12 of PBU 9/99 and paragraph two of paragraph 18 of PBU 10/99, if the company has the right to use simplified accounting methods.

In NU, both methods can be used depending on the taxation system. On OSNO it is traditionally the accrual method, on the simplified tax system it is always cash.

Management accounting reflects all real expenses, including those that for some reason were not included in official reports.

• Goals. Accounting is maintained for all documented transactions; its data forms reporting of interest to the Federal Tax Service, auditors, founders, shareholders, investors, i.e. external and internal users.

The tax office creates the basis for the preparation of declarations, calculations of insurance premiums, etc. It determines the amount of taxes to be accrued and paid to the budget.

Managerial is necessary for internal use, to provide an idea of ​​the real picture of expenses and income; for external users it is useless, because cannot always be documented and justified.

• By use. Accounting data is used for inventory, reconciliation of calculations, analysis of warehouse balances, settlements with employees, participants, and other counterparties. With complete, transparent accounting, its information will form the basis for planning and strategic development of the enterprise.

NU transmits information to government bodies - the Federal Tax Service, the Pension Fund of the Russian Federation, the Social Insurance Fund, on the basis of which conclusions are drawn about the financial condition of the organization, reductions in certain types of costs or, conversely, about their increase, data from different reports are compared to identify unreliable or distorted data.

Management serves as a planning tool if accounting does not fully show real costs and resources.

Based on the foregoing, losses arise in each type of accounting in different ways. In NU it appears only in some taxation systems, when forming the tax base:

• BASIS for income tax.
• The simplified tax system is “income minus expenses” for a single tax.
• Unified Agricultural Tax under the unified agricultural tax.

In the operating system it is displayed almost similarly to accounting, maintained by the cash method. In general, the formula is simple: the balance of funds in the accounts (at the organization's cash desk) at the beginning of the period minus actual costs plus revenues. Sometimes forecast indicators are also added.

Accounting

In accounting, a loss occurs if one of the following situations occurs:

1. An inventory was taken and shortages were identified, including cash. As a result, write-off occurs due to the norms of natural loss (this applies, for example, to products - fresh vegetables, fruits, etc.), and the guilty persons (storekeeper, cashier, seller).

In other cases, when it is impossible to identify the culprit or as a result of the trial a decision is made not in favor of the organization, operations are carried out with the participation of account 94 in the following way:

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• D 20, 25, 23, 44... K 94 - the write-off of the shortage is reflected.
• D 90.2 K 20, 25, 23, 44... - when closing the period, costs are written off as cost.
• D 90.9 K 90.2 – a balance is formed.
• D 99 K 90.9 – the loss is written off to financial results.

Or Debit 91.2 Credit 94, Debit 91.9 Credit 91.2, Debit 99 Credit 91.9 - depending on the type of shortage.

• An increase in expenses while maintaining the same level of income. An increase in costs is associated with situations such as: installation of new fixed assets, when the equipment is launched, depreciation is included in expenses, but the products produced are not yet sold, or office space is rented for a separate division, rent is accrued, but the new office does not yet generate income. Accordingly, cost items (accounts 20, 44, 25, 26 and others) increase, but revenue (account 90.1) does not.

Note! Using faster depreciation write-offs increases the risk of losses. For example, if you purchased equipment belonging to the sixth depreciation group with a useful life of 10 to 15 years and set the minimum SPI to 10 years.

• The same level of expenses remains the same, but sales are falling. Sales have fallen or are nonexistent, as in 2021, due to the coronavirus pandemic, many organizations in the field of trade, catering, tourism, and transportation were forced to suspend work. The reasons may be poor marketing or personnel policies: ineffective advertising, errors in promotion, incorrect selection of personnel, outflow of highly qualified personnel, etc. The bills are the same as above, only costs do not increase, but revenue decreases.
• Accounts receivable are written off. The counterparty was liquidated, a court decision denied you the right to collect the debt, or the deadline for filing a claim has passed - in these cases, it is necessary to write off the debt in accounting. Organizations must create a reserve for this case, but it is not always enough, and then the remaining part is written off by posting D 91.2 K 62, 60, 76..., increasing costs.

Important! The accounting system must necessarily create a reserve for doubtful debts (clause 70 of the Accounting Regulations approved by Order 34-n); no exceptions are provided.

• New organization. Starting a business is always associated with significant investments, and you can wait a long time for the first sales and money to appear. As a result, there are expenses, but no revenue yet. This situation is normal for a newly registered company and is not a reason for interest even from the Federal Tax Service.
• Inactive organization. There are actually a lot of them. It would seem that you are not working, which means you need to close, but sometimes the organization finds itself in a period of “downtime” for objective reasons: The owner decided to temporarily cease operations, but retain the legal entity (the life of the company is important, and the founder does not want to open a new one in the future) .
• The organization has a status that will be difficult to restore. For example, he has membership in an SRO, a valid license, a certificate of the right to carry out any work, a contract for long-term lease of state property, etc.
• The company's assets are low-profitable at the moment, but will become highly profitable in the future. Let's say that it is now impossible to sell an entire factory building, because... it is located in an inaccessible area, but within a few years a new road will be built next to it, which will improve the infrastructure and allow the building to be sold for much more.

Moreover, even a non-working organization has expenses: a watchman’s salary, rent, land tax, etc. Some people maintain a bank account and pay for maintenance.

Probably the most common question that the chief accountant hears from the owner at the end of the next year and summing up the results is “Why is there money in the account, but there is no profit and I cannot receive dividends?” The points above are often the answer.

We reduce the loss in the “profitable” declaration for 2012.

You can either wait, allowing for some “profitable” expenses, or find some backup income. Of course, it would be better to do this before 2013. But even now you can:

1) do not create reserves for 2013 to pay for vacations, to pay remuneration for long service, for OS repairs, for warranty repairs, for doubtful debts. Since their reflection in tax accounting is the right of the organization, and not the obligation. Unused balances of reserves as of December 31, 2012 will need to be taken into account in non-operating income. This can be done if you did not mention the creation of these reserves in your accounting policy for 2013 or mentioned , but for some reason they did not submit it to the Federal Tax Service and are now ready to “correct” it. After all, controllers oppose making such changes to tax policy within a year

2) abandon the use of bonus depreciation. Here, too, corrections in accounting policies will be required;

3) if there are losses from previous years, do not take them into account in expenses or take into account a small part of them. But the period for carrying forward losses is limited to 10 years

4) do not take into account some expenses for profit tax purposes at all or try to transfer them to the future.

The first three methods are your company's in-house methods, so they are relatively safe. And the last method, although available to everyone, is the riskiest when it comes to transferring costs.

Usually they try to transfer costs to the future by “creating” artificial errors. It seems like they didn’t notice the expenses then, but the next year, when income appeared, they saw the expenses. But, according to the Federal Tax Service, reflecting such emerging expenses as the current period is permissible only if it is impossible to determine the period of the error. But the Ministry of Finance is more loyal and believes that this can be done in the case when the period of the error is established, but due to the error there was excess tax has been paid. That is, it is necessary to ensure that the period from which the expense is transferred becomes not even “zero”, but profitable. Only then will it be possible to take advantage of this norm

In practice, organizations have already managed to successfully account for expenses in later periods. Thus, the company was able to prove that it had discovered an expense due to its prescription in the current period, since it had only now carried out a debt reconciliation with the counterparty, thanks to which it became known that the expense had not been taken into account. You can take this into account.

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At the same time, everyone knows the requirement of the Tax Code, according to which expenses must be recognized in the reporting period to which they relate. And for example, as follows from one court decision, the tax authorities did not like the fact that the contract for the work was concluded in 2009, and expenses for it were recognized only in 2010. The organization defended its case by only presenting an invoice and signed certificates of work performed, also dated

Loss in reporting

All year you have been conscientiously accounting for all business transactions, and the time has come to create financial statements, which come in two types: complete and simplified. The complete set consists of 6 reports and applications. This does not mean that you have to take the entire set. Those who have not experienced changes in capital or target income do not submit the corresponding applications.

Only certain categories of organizations specified in paragraph 4 of Article 6 of the Accounting Law 402-FZ are entitled to submit simplified reporting:

1. SMP.
2. NPO.
3. Participants of the Skolkovo project.

However, organizations that are required to undergo an audit, some types of cooperatives, companies engaged in microfinance operations, public sector employees and a number of other organizations cannot use this right.

Many organizations, as small businesses, use their right. In this case, you only need to submit the first two reports: a balance sheet and a statement of financial results, as well as a report on targeted funds, if any (for non-profit organizations that cannot be classified as SMEs by definition, this is always mandatory).

Of course, you will not see the loss of the reporting period separately in the balance sheet; it records account balances at the end of the year. We are looking for all the information in the second report.

In a simplified form, there are only a few lines (their number is in brackets):

• revenue (excluding VAT and excise taxes) (2110);
• ordinary expenses (2120);
• interest payable (2330);
• other income (2340);
• other expenses (2350);
• tax (2410);
• net profit (loss) (2400).

Indicators are indicated in a generalized form; they are disclosed in more detail in the explanatory note (not always necessary). Organizations using the simplified tax system indicate a single tax in the income tax line. The total row is calculated by adding rows 2110 and 2340 and subtracting all the others from them.

The full report is somewhat broader, it reveals each indicator more fully. For example, it is not included in the cost price, but separately shows commercial and administrative expenses, reflects income from participation in other organizations, interest not only payable, but also received, and generates interim results.

The form also contains special lines: income tax and current and deferred taxes included in it. These are the formulations for those who apply PBU 18/02. Organizations on the general taxation system, if they can maintain simplified accounting, but have waived this right, or those who initially must maintain only complete ones, use the specified Regulations when calculating income tax.

The second part of the report contains lines of reference data: results from the revaluation of assets or from other transactions that were not included in the calculation, as well as profit (loss) per share (for joint-stock companies).

For comparison, the forms have two columns - according to the reporting period and the same period last year. This way you can track the dynamics of indicators.

Important! In some cases, when errors have been corrected in the financial statements, it is possible that the data indicated for the previous period in the current report will not coincide with last year’s (Part II of PBU 22/2010).

Net profit (loss) of the reporting period is located in line 2400 of the income statement form.

On ways to reduce losses in accounting and tax accounting

In order to avoid losses in the financial statements, there must be real profit, and for this you need to work hard.
There are no normal options to show in accounting the profitability of an organization given its unhealthy financial situation. All methods of reducing accounting losses that are often proposed are either normal correct accounting or far from harmless violations 02/28/2012Russian tax portal Author: Vereshchagin S.A.
Take, for example, the advice not to take into account direct costs. Nobody explains how this can be done. In accounting, the costs that form the cost are reflected in account 20 “Main production” and form the cost of the finished product. As it is implemented, we write off direct expenses as current period expenses. As a result, direct expenses are taken into account when calculating the financial result only if there is income. Therefore, not taking into account direct expenses when there is no revenue is not an option to reduce losses. This is normal, correct accounting. And when there is revenue, this is a violation of accounting rules.

Another example of a harmless way to reduce losses, which, by the way, is one of the first things that comes to mind for many. Indeed, why not postpone writing off some impressive indirect expenses to cost and reflect them on one of the favorite accounts of the Russian accountant - account 97 “Deferred expenses”? Of course, it is possible to reflect it. But what will this give you? Everything that is listed on account 97 must be distributed in the reporting between the balance sheet and the profit and loss account. Any amount in account 97 is either an asset of yours that is used to generate income, or an expense that reduces income.

Question. And if I keep expenses as accounts receivable for some time, until our financial situation improves, what will I violate?

Firstly, we must not forget about the principle of accounting for expenses: they must be recognized when they arise, and not when you want. Secondly, by disguising expenses as assets, you violate the requirement of timely reflection of the facts of economic activity, which contradicts the requirement of prudence enshrined in paragraph 6 of PBU 1/2008. Thirdly, you distort your financial statements and mislead its users. After all, it may also happen that the revenue will never appear at all. What to do then? If all expenses are listed as receivable, at some point it will be revealed that your, at first glance, decent organization is essentially bankrupt. So this is not an option.

The next pseudo-option: “What if advances received are taken into account not as accounts payable, but as deferred income?” And here I also have to disappoint my respected colleagues. This is a temporary solution, which will again lead to distortion of the company’s reporting and will not help in any way. You shouldn’t “draw” figures in your financial statements that differ from your real financial indicators. This is too straightforward falsification of reporting, which threatens not only an administrative fine, but also a possible loss of reputation both for the company and for you as an accountant.

Some believe that the situation can be saved by the help of a participant, no matter what: ridding the organization of its debt to itself or contributing to its property. Such a contribution can be not only money, but also things, as well as property rights. Well, let's look at this option.

I’ll say right away that investing in property will not reduce the loss. But the balance sheet can become beautiful as net assets increase. Therefore, this is often exactly what happens: hard times have come, and it is no longer the organization that feeds the owner, but on the contrary, he feeds it, if, of course, he can. True, this is often done not so much because of possible problems with the tax authorities, but to obtain a loan or for some other business purposes. However, as far as taxes are concerned, such a contribution to the company's assets will not help reduce the tax loss. After all, it is not taken into account in income, because it always increases net assets. To say that such a contribution is not made for the purpose of increasing net assets, and to take it into account in income, is completely stupid. So I don’t see much point in this option.

With the forgiveness of an organization’s debt by a participant, everything looks like this. In accounting, the amount of the debt forgiven is included in other income, and the loss on the income statement is reduced. For tax purposes, forgiven debts will also increase income. After all, the company writes off its accounts payable. So for those who want to reduce accounting and tax losses, such good will of the participant is not a bad option at all.

So we've moved on to tax losses. Here, in my opinion, there are completely legal ways to reduce them.

The first way is to refuse to create any tax reserves and to refuse to use bonus depreciation. This may require a change or addition to accounting policies, but this is usually not a problem. True, the owner may not be very happy with this option. Because he pays taxes that he might not otherwise pay on amounts that could reduce his taxable income. Therefore, such options need to be implemented after first agreeing with management.

The second way is to calculate taxes based on the principle of full agreement with the tax authorities. That is, do not take into account in the income tax base any expenses that regulatory authorities prohibit from taking into account. And vice versa - include in income everything they require.

Let me give you an example. The organization received bonus products for a certain volume of purchases. It's clear that she doesn't consider them free. The bonus product was received only due to the fact that certain conditions for the volume of purchases for which money was paid were met. And property is considered received free of charge only if, with its appearance, the recipient does not have a reciprocal obligation to transfer the property, perform work or provide services.

In such a situation, controllers naturally demand that tax be paid. The organization, if it were in a different position, would have argued, but, sitting at a loss, decided to pay income tax on the cost of the bonus product received. The balance sheet, of course, remains unprofitable, because no income needs to be shown in accounting. But nevertheless, profit for tax purposes will appear and tax on it will go to the budget. And naturally, the inspection will be pleased. Although the accountant will have to reflect differences arising from differences between accounting and tax accounting. In our example, a permanent tax liability will be accrued.

There is also a way to get rid of tax losses altogether - to transfer part of the expenses of the current year to the next year.

I want to immediately warn you that this game should not be played to reduce losses. That is, when, regardless of whether you take into account expenses this year or not, the income tax base will be zero. Article 54 of the Tax Code of the Russian Federation allows reducing the tax base of the current period for expenses of previous years only if failure to take into account these expenses led in the past to excessive payment of tax. But since the loss is not eliminated at all, but only reduced, your income tax will be zero. And since you don’t pay anything, then you cannot apply this rule of Article 54. In this case, expenses can only be taken into account in the periods in which they are incurred, and thus they will increase the losses of previous years. This is exactly what the Ministry of Finance has repeatedly explained.

But let’s say you don’t take into account some expenses and as a result, profit appears on your tax return instead of a loss. It is clear that accountants do this in an effort to protect themselves from inspectors’ demands to explain the cause of losses and from possible on-site inspections.

But it was not there! Your gift to the budget can easily turn against you. The tax inspector will insist that expenses that were incurred and supported by documents this year must be taken into account this year. And in general, he will be right, since Chapter 25 does not give the taxpayer the right to choose the moment of accounting for expenses.

Question. Sergei Alexandrovich, forgive me, but this, as they say, is a double-edged sword. After all, tax authorities themselves consider an expense to be economically unjustified if the taxpayer did not receive income or incurred a loss in a certain tax period. I thought, on the contrary, it would be good to hold back expenses a little in such a situation.

Indeed, there is such a problem. Yes, both the Federal Tax Service and the Ministry of Finance unanimously explain that losses and lack of income are not a reason for not accounting for expenses. However, local tax inspectors become very nervous if they see that an unprofitable organization continues to spend money. And if they find a clue to challenge such expenses as economically unjustified, that’s it! Consider the dispute guaranteed. This can be seen in many court decisions. It is clear that the taxpayer will win such a dispute, because the presence of a loss or lack of income does not prevent the accounting of expenses.

But whether it will be possible to defend the transfer of documented and justified expenses of the current year to future periods is a big question. After all, inspectors, when it is beneficial for them, remember the explanations of their superior department. So, not accounting for expenses on time is not an option. Today you will not take into account expenses so as not to increase losses, and tomorrow, when checking, tax authorities will easily exclude expenses taken into account later than necessary. And they will be right, because the Tax Code prescribes the procedure for accounting for expenses.

And finally, the last way. Let's say you have a loss from previous years. If you fully take it into account in the current year, your income tax amount will be reset to zero. But is it possible to show the loss of previous years only partially, so as not to attract the attention of tax authorities? Conventionally, if the loss for 2010 was 100 rubles, in 2011 we will show not the entire 100 rubles of the loss, but only 50.

The Tax Code of the Russian Federation directly permits this. You have the right to reduce the tax base of the current reporting period by the entire amount of the resulting loss or by part of this amount, that is, transfer the loss to the future. We will discuss in more detail how to do this correctly.

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Impact on activities

How the presence of a loss in accounting will affect the organization is the question that owners and managers primarily ask. If your management stubbornly believes that you need to pay taxes as little as possible, therefore there should be as many expenses as possible (by the way, not always real), and a loss is generally super (yes, there are many of those too), show them the following list of reasons why it’s bad such situation:

• Dividends . Despite the fact that the founder is pleased with the income in management accounting, a loss in accounting will not allow the accrual and payment of dividends. Even if there are millions in the account. Part or all of the retained earnings from previous years (if any) can be used to cover this; this allows the indicators to be leveled (although dividends still cannot be paid), but makes it impossible to distribute the available profits for other purposes.
• Loans. Would you give a loan to a person who spends more than he earns and is in the red? Hardly. The bank will have the same attitude towards the organization if you decide to take out a loan; even collateral is unlikely to help in this matter.
• Bank guarantees . Participation in public procurement under 44-FZ involves in some cases the use of bank guarantees: when submitting an application, concluding a contract, providing guarantee obligations to the customer. This allows you not to distract or freeze working capital. This is especially true for large contracts, when the security amounts are substantial, you may simply not have that kind of money, and state employees do not indulge performers with advances. The bank will again evaluate the financial position of the procurement participant, and negative indicators will not be beneficial.
• Participation in procurement. Participation in trading itself is called into question if you have unprofitable activities. According to 44-FZ, accounting reports are not required, but according to 223-FZ they are, because customers set their own requirements (federal law gives such a right) in relation to a potential participant and performer. These include the submission of reports for the previous year, confirming the reliability of the future supplier or contractor (availability of assets, absence of debts, etc.)
• Checks and requirements. The Federal Tax Service checks not only the loss in the income tax return or the simplified tax system, it will also be interested in the “accounting” negative result. Most likely, the service will inquire about the reasons, perhaps request documents. In particularly advanced cases (if you ignore the requirements), an on-site inspection is possible.
• Bankruptcy. Losses go hand in hand with bankruptcy. By themselves, of course, they do not indicate insolvency, but indirectly they do. If you are delaying payments to the supplier, he checked your statements (this can really be done, even the consents are open data) and found out that there has been a loss for a couple of years, there is a possibility that the creditor will go to court with a demand to declare the organization bankrupt. You will have to prove your worth to the judge or negotiate.
• Liquidation. Again, losses do not necessarily mean that net assets have fallen below share capital, but most likely they have. The tax service has the right to initiate a liquidation procedure by going to court (clause 11 of Article 7 of the Law “On Tax Authorities of the Russian Federation”), and the organization is obliged to make a decision if the situation does not change for three years in a row.

Options for solutions: liquidation or reduction of the capital. Moreover, if it is minimal, then, on the contrary, it may be necessary to increase it, bringing it to the level of the average.

Probably not a single item will please the owners. Cost reduction and optimization can be carried out without bringing the company to a crisis (even a formal one).

Tip 4: How to reflect losses from previous years in your income statement

When the company's financial result for the reporting period is a loss, completing and submitting a profit declaration is a mandatory requirement. This is explained in Article 265 of the Tax Code of the Russian Federation. Previously incurred losses are reflected in line 090 of this declaration and are included in non-operating expenses.

You will need

• — profit declaration;
• — reporting for previous years;
• — Tax Code of the Russian Federation;
• - calculator.

Instruction 1 When a company receives losses, negative financial results are often carried over to the following reporting periods. This can be done within three quarters of the calendar year from the moment the loss was incurred. 2 If you receive a negative financial result in previous periods, include them in additional expenses. On sheet 02 of the income statement, in line 040, where the accountant calculates non-operating expenses, include losses from previous years. 3 Please note that you have the right to include losses in additional expenses gradually, that is, as negative financial results arise. Carry out losses in the order in which they arose. Accordingly, if losses were incurred in the first or second quarter, they can be attributed to non-operating expenses as follows. First, include losses for the first quarter in the reporting for the third quarter, and then transfer the negative financial result for the second quarter to the profit declaration for the fourth. 4 When filing profit reports, in addition to the tax, which is calculated by multiplying the base by 24%, an advance is calculated and paid. If you incurred losses in past periods, you are exempt from payments. If you make a profit in the previous quarter, but a loss in the reporting quarter, advances must be paid in the sequence as established in tax legislation. 5 For previous reporting periods, include losses in the statements. To do this, enter the amount of the negative financial result in line 090 of Appendix 2 of sheet 02 of the profit declaration. 6 Expenses that you discovered in the reporting year cannot be included in the loss. Errors from past periods are corrected by submitting an updated declaration. Moreover, you must fill out and submit updated reports within three years. Otherwise, you will not be able to refund the overpaid tax amount. Sources:

• Income tax: loss of previous years or clarification?
• if there is a loss in the income statement

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How to avoid losses

Are there ways to get rid of a loss in accounting? Actually yes. Let's consider the best options that are feasible in any organization:

• Distribute expenses. If you notice that you are approaching a critical level at the end of the year, try to transfer part of the costs to the next year: do not hastily write off materials just so that “remains do not dangle,” increase the useful life of the operating system by reducing the amount of depreciation, do not torment employees at the end year, reporting persons can submit reports in the next year (expenses are recognized at the reporting date).
• Reject doubts. Do not accept, remove expenses that raise doubts, leave only reliable ones. Yes, this may entail correction of declarations (but not always) - agree with the manager what is more important to him, but do not forget to formulate and voice your own opinion.
• Revision of accounting policies. Inventory and equipment worth up to 40 thousand can be recognized as fixed assets in accounting (clause 5 of PBU 6/01), this needs to be fixed in the accounting policy, then the costs of inexpensive fixed assets will be distributed more evenly.

You can write off inventories using the FIFO method (clause 16 of PBU 5/01), i.e. starting with the cost of the first batch and moving on to the last. Since prices for many goods rise regularly, this will allow, with a large turnover of materials, to reduce the costs included in the cost price.

Don’t forget about computer programs, systems, digital signatures, antiviruses; they can be reflected in accounting as deferred expenses for the duration of keys, certificates, licenses, etc., and not written off at once.

• Carry out a thorough inventory. It is not for nothing that it must be held by the end of the year. If an unaccounted object is found, other income will increase.
• Get debt forgiveness. If there is a noble person or organization that is willing to forgive the accounts payable (for example, the owner who provided the loan), then the benefit received will also increase other income.
• Do not write off accounts receivable. The situation is completely opposite - creating a burden both in tax and accounting by writing off debt that is about to become hopeless is not always useful. Sign a reconciliation report with your counterparty or file an application to court for collection and the statute of limitations will be extended.
• Accept work. There are only a few days left until the new year, the work on site has been completed, but your customer is ready to accept work only after the holidays - agree to sign the act in December and reflect the revenue in the closing year. By the way, this can also be beneficial for the customer. The manager does not always understand this, so try talking with the chief accountant or economist. Although maybe they are also trying to cut their costs.

This article is in no way a call to hide any transactions or provide false data. A competent specialist distinguishes between concealment of facts of economic activity and optimization, and the chief accountant must be able to optimize accounting without violating the law.

The main way to reduce tax is to convert capital costs into current ones

The company cannot immediately write off capital costs as cost. This applies to the acquisition of fixed assets, machinery, equipment, buildings and structures that the entrepreneur uses in commercial activities.

Read more: How to prove that a witness is giving false testimony

In this case, capital costs are not written off as cost immediately, but gradually, over the useful life of this capital property.

This happens through depreciation. For example, if the service life of a building is 20 years, then the costs of its acquisition or construction will be written off as cost over the entire 20 years. Cars, equipment, and machines are usually written off within 5-10 years.

Convert major repairs to current ones

When it is necessary to carry out a major overhaul of an office space - change windows, add an entrance, redesign something, then the costs of this overhaul increase the cost of the building itself and will also be written off along with the cost of the building.

That is, if you spend a certain amount this month on major repairs, you can write it off as expenses over several years. Although it is economically feasible to write off immediately and, accordingly, receive a reduction in income tax in the current year, and not over the next few years.

This can be done, for example, by concluding an agreement with a construction (repair) organization to provide services not for capital repairs, but for current repairs.

It would seem that the amount spent on major repairs will in any case be written off as expenses and, in any case, will reduce the cost and it seems - what difference does it make when this happens? The general rule of the value of money applies here: money today is always more expensive than tomorrow.

Important! By saving money on income taxes now, you can use it for development tomorrow!

However, in the case of transferring “capital” into current expenses, you need to be careful: not all expenses can be written off as current expenses - there is a clear division of which expenses go where and the gap for making a decision “overhaul or routine repairs” is actually small.

The tax inspectorate may have questions that you will have to answer and prove the correctness of your actions.

Convert fixed assets into leased ones

To do this, you need to transfer (or sell) your fixed assets, including buildings and structures, to another company, and then rent them from that company.

You will continue to use your equipment in your normal activities, but you will write off its cost not in small parts over several years, but in the form of rental payments, which are significantly greater than depreciation amounts.

A company that you create yourself can act as a lessor; this company will operate under a simplified taxation system. In this case, it will not yet be subject to property tax paid on the residual value of fixed assets.

Of course, the amount of rental payments that you write off as the cost of your company will at the same time be the income of your other company operating under the simplified tax system. But even taking into account paying 6% on the income of that company, your savings will be impressive.

And if you transfer to that company fixed assets for which depreciation has already been completed, then you will receive a double benefit effect: you will write off as expenses the cost of renting property, the cost of which was already taken into account in the cost price and when reducing income tax.

When applying this scheme, it is necessary to take into account that all costs written off as cost and reduced by income tax must be economically justified.

The fact is that the tax service may recognize the transaction of transferring property to another company and leasing it back as imaginary and you will have to pay income tax “in full.” To prevent this from happening, you will need to prove that everything you did was justified.

To do this, you can make sure that the established company operating under the simplified tax system does something else besides renting out your property to you, and uses this property in this other activity.

How to reduce income tax for individual entrepreneurs

Tax reduction due to leasing

If you are going to purchase fixed assets or equipment, it is better to do it on lease. Leasing, or financial lease, allows you to apply accelerated depreciation to the acquired property, writing it off as expenses and thereby reducing income tax faster and in a larger amount than writing off the cost of fixed assets as expenses according to the usual depreciation scheme.

Read more: When a purchase and sale transaction is considered completed

Accelerated depreciation is not applied by you, but by the leasing company from which you purchase the fixed asset. You write off the lease payments you make as expenses in the same period when you pay.

Using leasing, you write off the property as a cost during the term of the leasing agreement (usually 1-3 years). If you purchased the property yourself and wrote it off using normal depreciation rates, then this write-off would take you 10 years or more.

One of the advantages of using leasing is that you do not spend the entire amount necessary for this on purchasing property at once, but in parts. And even by paying the leasing company its commission (ensuring its profitability of work) and compensating it for the interest on the bank loan, which the leasing company most often uses, you still remain in the black.

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Income tax return if loss

So, you have summed up the results of the year and discovered a loss, two options for the development of events:

3.1 Show actual loss in income tax return

Let's consider what awaits the manager if he was not afraid of additional questions from the tax authorities, decided not to hide the real state of affairs and filed a declaration with a loss. This will be followed by a request for clarification from inspection staff, to which the manager will have to respond within five days in any form. We advise you to describe the expenses in as much detail as possible (provide balance sheets broken down by expense items of accounts 26, 44, 91.2), explain the reason for the financial result and talk about what activities you plan to carry out and take measures to make a profit in the future.

Reasons for the formation of a loss in the income tax return:

• Lack of sales revenue or its insignificant volume. Typical for newly created organizations and organizations with a long production cycle.
• Development of new sales markets, which requires significant expenses for marketing activities, drawing up business plans, etc.
• Reduced prices due to a drop in demand, seasonality of products, etc.
• Decrease in sales volumes, for example, due to the loss of large customers.
• Large one-time expenses in the reporting period, for example, the acquisition and commissioning of fixed assets, major repairs of premises.
• Force majeure, for example, a vehicle burned down during the transportation of products, and a warehouse was flooded.
• Accounting policies for tax purposes, for example, the use of bonus depreciation, non-linear depreciation method, creation of reserves.

If an organization submits a “loss-making” declaration for more than two reporting periods in a row, then the tax authorities will offer to reduce the loss and submit adjustments or invite you to a “loss-making” commission. The manager is called, but an accountant or other authorized person can represent his interests instead (take your passport and power of attorney with you). It is better for two representatives of the company to come to a special commission at the Federal Tax Service - the director and the chief accountant, because at such a meeting inspectors ask serious financial questions. There is no need to worry or worry. Try to have a constructive dialogue with the inspector. If the organization is new to the market, then to justify the reasons for the loss, use the arguments “most of the costs are related to advertising and marketing activities that help develop the market” or “large costs for the purchase of equipment.” If the organization has been operating for a long time, then explain the reduction in revenue by the repair or modernization of equipment, as a result of which you expect a positive economic effect in the future.

Employees of the Federal Tax Service analyze such indicators as:

• the structure of income and expenses in the context of ordinary and other (unfavorable, according to tax authorities, are higher growth rates of expenses for ordinary activities compared to the growth rate of corresponding income, as well as losses due to non-operating losses);
• solvency of the company (the main indicators of insolvency are the lack of funds in the current account and the presence of overdue accounts payable);
• balance sheet indicators (according to inspectors, equity capital should exceed borrowed capital, the growth rate of current assets should be higher than the growth rate of non-current assets, the growth rate of receivables and payables should be approximately the same).

Tax authorities are always interested in how a loss-making organization lives. Therefore, be prepared to talk about sources of financing (loans, credits, financial assistance from the owner). If the tax authorities are interested in any documents, then ask them to formalize the request in writing.

3.2 Show profit in the income tax return when there is an actual loss

If a manager decides to protect himself from unnecessary interrogations and trips to the tax office, thereby not attracting the attention of tax authorities to his organization, then he may decide to pay income tax. To do this, you need to adjust the declaration

A. either By increasing income

B. either by reducing (increasing) expenses

What are the consequences of a loss-making income tax return?

July 22, 2015

• 20221
• income tax return

You have received a request from the tax office to provide explanations regarding the loss in your income tax return. What to do with such a request? How to answer it? What might such requests lead to? And was it worth showing this loss at all?

The income tax return is under the control of tax inspectors. If a declaration is unprofitable for an organization, it will not go unnoticed by the tax authorities, who have the right to:

• demand clarification on such (unprofitable) declarations,
• call for a loss-making commission,
• include the organization in the on-site inspection plan.

There is definitely little pleasant in every event. Therefore, we will try to tell the manager what to do if at the end of the year after calculation there is a loss, whether to reflect it in the declaration or not, what explanations to give to the tax office, how to explain the loss and what risks there may be.

Is it profitable for a company to show a loss?

You summarize the financial year and discover that the company has made a loss. The first thing you'll probably think about is hiding it. A positive tax base will save the organization from the prospect of commissions and on-site audits. But if you can document and justify expenses, is it really important to adjust the financial result? There are no safe maneuvers for distorting tax reporting.

But if you still decide to adjust your reporting, carefully analyze the possible options. We need to find a way that will help increase income or reduce the organization’s expenses with minimal risks. The most harmless option is to re-issue documents for expenses for a different period. Or, conversely, increase income and sign certificates for completed work from customers. Don't forget to check how the VAT amount will change in the reporting period. After all, you need to pay tax on additional sales. Well, if you transfer expenses, then take into account the input VAT on them in another quarter.

Couldn't you reach an agreement with your counterparties? Then consider other adjustment methods (see table below. – Ed. note).

How to hide a loss on your tax return