A Minnesota Restaurant Is Putting The Cost Of A Minimum Wage Increase On Customer Checks

[Cerridwen]

11. line 13; form 1120 - line 8; form 1120S - deductions; wages

Form 1120 - http://www.irs.gov/pub/irs-pdf/f1120.pdf

Line 13; Deductions against taxable income (of an incorporated C corp), Salaries and wages

Form 1120S - http://www.irs.gov/pub/irs-pdf/f1120s.pdf

Line 8; Deductions against taxable income (of an incorporated S corp), Salaries and wages

This is by needs, an extremely simplistic response to a business owner who is lying or is amazingly ignorant of tax law and definitely needs a new CPA who understands business taxes. If they are not incorporated (C, S or LLC) they are especially stupid.

It would appear that the more they pay in wages and salaries, the more they are able to deduct against their taxable income. In short, if done correctly, it would be a wash.

The same can be said for health care costs as those are on line 24, form 1120; Employee Benefit Programs and line 18, form 1120S; Employee Benefit programs also under Deductions against taxable income.

Now, as I noted above, this is simplistic to the extreme. Decades of congresses playing havoc with US tax code has created 10s of thousands of pages of code that is so byzantine the Byzantines would be speechless. However, it's also true that a talented and experienced CPA who specializes in taxes could ensure higher wages (or higher payments toward health care/insurance) would do little if any damage to their "bottom line." Wages and salaries are considered "the cost of doing business."

Perhaps the business owner(s) needs to take up another hobby. Running a business appears to be beyond their, uh, skill set.