Tax Basis

Enter the amount on which taxes will be calculated for this item. Initially defaults as follows:

  • If you do not track retainage tax separately (the Distribute Tax to Retainage box is unchecked in AR Company Parameters), defaults the total billing amount for this item (work complete plus stored materials).

Work Complete + Stored Materials = Tax Basis

  • If you track retainage tax separately (the Distribute Tax to Retainage box is checked in AR Company Parameters), this amount will exclude retainage amounts for work complete or store materials.

(Work Complete + Stored Materials) – (WC Retg + SM Retg) = Tax Basis

Intercompany Invoices

If you post intercompany invoices (e.g., the AR company in JC Company Parameters differs from the JC/JB company), and tax is applied to an invoice (billing), the tax liability remains with the AR company. For example, if JB Co #1 posts an invoice of $1050 (includes $50 tax), AR Co #2 receives a debit of $1050 to its Receivables account, a credit of $50 to its Sales Tax Payable account, and a credit of $1000 to its Intercompany Payables account. JB Co #1 receives a debit of $1000 to its Intercompany Receivables account and a credit of $1000 to its Contract Revenue account.