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Farm Credit Accounts Part III: Using the Credit Card Type for Other Accounts

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Farm Credit Accounts Part III:
Using the Credit Card Type for Other Accounts

September 22, 2017 - by Mark Wilsdorf

Part I of this series discussed QuickBooks' Credit Card account type, and the fact that the IRS considers credit card purchases to be deductible as of the date of the purchase, regardless of when the credit card balance is paid.

Part II explored whether common sources of agricultural point-of-sale credit can be handled like credit card accounts from the perspective of the IRS; that is, whether purchases made with an account from John Deere Financial or CNH Industrial Capital (or a dozen others) are immediately deductible as farm business expenses. The conclusion was that these accounts are equivalent to dealer credit, not credit cards. As a cash basis taxpayer, you can only deduct purchases made with those accounts as expense after you've paid for them.

But QuickBooks' Credit Card account type has handy features. Can you use it for working with credit accounts which don't qualify as credit cards yet work like credit cards? The answer is "Yes", though you need to be mindful of a couple things. Here in Part III we look at using the Credit Card account type for working with agricultural credit accounts.

Reminder:  Like most QB Ag Center articles this one assumes cash basis accounting, and that income taxes are also filed on a cash basis.

 

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