I called Lacerte, and the person I spoke with agreed that an M-1 shouldn't be created. He recommended entering a negative amount for the M-1 adjustment that is showing up in screen 31.1 under Expenses Recorded on Books Not Included on Schedule K (+) > Other > Other. This made me in balance and my Schedule M-1 is correct. However, my Schedule M-2 still isn't correct, and is off by the credit.