Reducing Taxable Income FAQ
Question – We would like to reduce our projected taxable income but due to current cash flow volume, we are unable to reduce all of our accounts payable. Would it be wise to take money from our line of credit to pay vendors?
Or are we better off not taking out additional debt?
Answer – Yes, you can tap the Line of Credit to pay down vendors at year-end vendor as this will create additional permitted deductions for 2009.
My view is that this is not a “bad” use of debt. This recommendation assumes your company will be able to pay down the advance with the significant accounts receivable expected within the next 30 to 45 days. These amounts should be in excess of your daily operating needs.
