I would have said that reimbursable expenses are deducted from the revenue before tax. Is this correct?
In one of the case studies, we had to choose reimbursable expenses for the project and renderings were considered reimbursable.
In my opinion, renderings are additional services with regular taxation for revenue.
Hey Oana,
@coachjoshmings or @coachzachhoffman, are either of you able to help with this question on reimbursable expenses?
In regards to renderings, those are considered a professional service as well and therefore typically not taxed (depending on jurisdiction). Reimbursables are after taxes/no taxes due to being professional service - think about when you get reimbursed for spending from your firm, it is typically a separate check with no taxes involved - reimbursables typically aren’t counted as income.
Josh,
Thanks for your response!
Could you please clarify why professional services are not taxed and what other services would be similar?
I’m not sure I make the distinction between drawings and 3D models/ visualization services. I would have said that all the instruments of service are professional services, since architecture is a professional practice.
It is usually in the tax code of the various states so it could be a number of reasons why professional services are not taxed - for example Illinois has been floating a tax on professional services to help shore up finances for a number of years but it hasn’t been enacted. Professional services are any services from those considered professionals - doctors, architects, lawyers, accountants, etc… You’re right that all instruments of service would be considered professional service - the way the question is worded appears to assume the rendering came from an outside vendor and therefore is a reimbursable.