How to Record Unallowable Federal Income Tax
How to record federal income tax payments which must be excluded from all indirect cost pools per FAR 31.205-41.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Unallowable Tax Expense - Federal | Debit | 50,000.00 | - |
| Cash | Credit | - | 50,000.00 |
💡 Accountant's Note
Federal income taxes and excess profits taxes are unallowable costs under FAR regulations and must be recorded in accounts excluded from any indirect cost rate calculations.
Practitioner & Systems Framework
💻 ERP Architecture
Use a specific 'Unallowable' account range (e.g., 9000 series) in the chart of accounts.
⚠️ Audit Flags
Verification that the G&A pool does not include any account balances labeled 'Income Tax'.
📄 Required Documentation
Tax return filings and estimated tax payment vouchers.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.
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