Reimbursement of legal fees

[hcomm]

Hi. I'd paid a law firm a retainer for work on trademark submission and received a check for the unused part of the retainer. How is that categorized? It's not income. And not an expense. I file as an SCorp/Form 1120S. 

Thanks

[tagteam]

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@hcomm wrote:

...How is that categorized? It's not income. And not an expense. I file as an SCorp/Form 1120S. 

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It is categorized as neither income nor an expense provided you did not deduct the returned amount as an expense in a previous tax year.

[hcomm]

I did, as an expense the previous year. So based on that would I now categorize it as an earning as it was previously deducted as an expense? I'm assuming that's correct? 

[tagteam · Accepted solution]

Yes - other income.

[hcomm]

Thank you!