Q: Are billings in excess of cost considered current or non-current?
A: Billings in excess of cost are classified as current liabilities – an obligation for a contractor to honor in the short-term. From a contractor's perspective, billings in excess of cost represent potential, advance cash inflows that help pay for the labor and materials needed in completing a project.
Q: Can you repeat why preliminary site costs as intangibles?
A: Preliminary site development cost usually reflect surveys, soil tests, ground water identification, hazard waste checks, and so on – all intangible events but critical to the subsequent construction of houses, condos, apartments or office buildings.
Q: Distributions and owner draws are non-taxable as personal income at the federal level. Does that carry through to State returns?
A: Yes. Distributions and withdrawals (or “draws”) are non-taxable cash inflows to the owners at both the federal and state level. Note, however, that some states will levy a marginal "franchise" tax on a Subchapter S corporation and limited liability company income, but, even so, distributions and withdrawals in those states remain non-taxable cash inflows to owners or partners.
Q: Would the fact that Larry indicated the business was on a fiscal year indicate it might be a Subchapter C corporation? I thought Subchapter S corporations, limited liability companies, and sole proprietorships all had a December 31 financial year-end.
A: Depends on what he means by fiscal year. But, yes, the non-Subchapter S corporations are invariably on calendar year basis to coincide with the personal income tax return reporting period. Subchapter C corporations get to pick their own fiscal year.