Loan account transaction showing as a Sale in Tax reports

I paid some costs to set up the company, which I paid myself so my journal was:
a. Dr (Asset) Formation expense 1
b. Dr (Asset) Formation expense 2
c. Cr (Asset) Loan account total 1+2

In the tax reports, a & b show as purchases, which I agree with.

However, the loan account transaction (line c above) is showing as a Sale, and I don’t understand why. It is not a sale in the P&L reports,

This is my first quarter, and I have very few transactions so It’s easy to see now.

Why is the loan account credit shown as a Sale in the tax report?

First, expenses you paid with your own funds on behalf of the company should be entered with expense claims, not journal entries. See https://www.manager.io/guides/6898.

Second, your situation cannot be diagnosed without knowing what “tax report” you are referring to.

Third, depending on your legal form of organization, there may not be a loan involved at all. This sounds like a contribution of capital, which belongs in a capital account or owner’s equity.

Once you have these entered properly as expense claims, then come back with questions and illustrating screen shots.

OK thanks for the referral to the Expense Claim area.

Because you probably gave the loan account a tax code in the journal transaction. I understand that you have probably resolved your query using Expense Claims, however to explain the tax report sales/purchases v’s P&L sales/purchases.

A tax report “sale” is where you have received the tax, e.g. if you sell a fixed asset (1,000 + 10% tax = 1,100) the transaction is a tax “sale” even though its not a P&L sale.

Similarly, a tax report “purchase” is where you have paid the tax, a fixed asset purchase.