mli Posted April 5, 2019 Report Share Posted April 5, 2019 For an S corp who has accrual books and cash basis tax return, how do you prepare schedule M-2? Schedule L is book "accrual". Accrual to cash differences are on M-1. But ATX software prepares M-2 to match schedule L retained earnings. My understanding is that M-2 would not agree to schedule L retained earning (accrual) in this instance. Instead it is based on Tax (cash basis). It appears that the only way to do this is to enter a lot of overrides. Essentially, overriding every number on Sch M2. Is there another way? Am I doing this right? Quote Link to comment Share on other sites More sharing options...
Abby Normal Posted April 5, 2019 Report Share Posted April 5, 2019 M-2 has a worksheet with an adjustments column. Just use that. 1 Quote Link to comment Share on other sites More sharing options...
mli Posted April 5, 2019 Author Report Share Posted April 5, 2019 Okay, figured it out! First Step - you have to adjust the Other additions And other reductions worksheet to eliminated the timing differences. That makes Column A correct (i.e. cash basis AAA). Then you can make entries in the adjustment column to get accrual RE to balance. It was that first step that I was missing. Thanks Abby! 1 Quote Link to comment Share on other sites More sharing options...
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