Home Forums Money matters How to handle unearned revenue on tax return if this the final tax return?

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  • #1000256
    novak
    Member
    • Total posts: 1

    Just have a quick question I was hoping someone could help me with. I am looking to wind up a company for which on the balance sheet it has unearned revenue.

    Do you know how I need to go about dealing with this in the final tax return?

    The revenue has been received, but we are no longer able to meet our obligations ‘to earn the revenue’ due to Covid, which under the contract meets the force majore clause. Given that it is the final return, would this complicate matters? Do I need to treat this revenue as earned revenue even though the company has not been able to meet its full obligations (due to Covid).

    What is the best way to handle this issue?

    Thanks for any responses!

    #1223607
    Paul – FS Concierge
    Moderator
    • Total posts: 3,117

    Hi and welcome to Flying Solo [USER=118198]@novak[/USER]

    Hopefully some helpful members will be along soon with some advice to point you in the right direction.

    Cheers

    #1223608
    JamesMillar
    Participant
    • Total posts: 1,675
    novak, post: 270242, member: 118198 wrote:
    Just have a quick question I was hoping someone could help me with. I am looking to wind up a company for which on the balance sheet it has unearned revenue.

    Do you know how I need to go about dealing with this in the final tax return?

    The revenue has been received, but we are no longer able to meet our obligations ‘to earn the revenue’ due to Covid, which under the contract meets the force majore clause. Given that it is the final return, would this complicate matters? Do I need to treat this revenue as earned revenue even though the company has not been able to meet its full obligations (due to Covid).

    What is the best way to handle this issue?

    Thanks for any responses!

    Presumably, you have to refund the money to the client which means its not income. Also worth mentioning that you are not allowed to apply to deregister a company until all debts are settled.

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