Which profit figure to use

Which profit figure to use

Didn't find your answer?

Hi

I have inherited a partnership (not LLP) where the partners are an individual and a Ltd company.

The share split was 100% Ltd co.  Now changed to 50:50.

All the trade goes through the partnership.  However there is an intangible asset on which the amortisation is not allowable.

So for ease say the profit per partnership accounts after amortisation is £50k.

Taxable profits allocated to Ltd company from tax comp and ptr'p return is £100k.

When preparing the Ltd co Accounts do you show:

A - share of profit 100k in the accounts

b - Share of profit 50K in the accounts with an adjustment on the tax comp to get back to the 100k taxable profit.

This was set up by tax specialist and they are still dealing with all of that, its purely the accounting entry above i am unsure of.  I have researched and asked a few individuals i know and they are all unsure

thanks.

Replies (2)

Please login or register to join the discussion.

By johngroganjga
23rd Sep 2014 11:04

Think of it this way:

If you don't show the actual profit in the company's accounts you won't have the correct balance with the LLP in the company's balance sheet will you?

So yes of course the company's profit and loss account will show the actual profit share of £50,000.  The difference between that and the taxable equivalent will, as you say, be dealt with on the company's tax return.

Thanks (0)
Replying to paulwakefield1:
avatar
By Fidodido
23rd Sep 2014 15:49

thanks

Thanks John

That is the way i have drafted them as that's what was logical to me.

Thanks for being a sounding board.

 

Thanks (0)