"2018 and 2019 AGI's affected the EIP which in turn affected the balance of RRC on the 2020 return."

That's not how to understand it. 

Perhaps we're talking about the same thing but in different angles.

We know RRC are computed based on 2020 AGI.  When I said "the balance of the RRC", this was what I meant:

Two families, same filing status, same 2020 AGI and same everything else that's relevant.  They both were eligible for the same amount of RRC - say $2,900 - based on their 2020 tax info.

Family 1 had much higher AGI's for both 2018 and 2019.  NO EIP's.  Family 1's "Balance of RRC" on Line 30 of the 2020 return would be $2,900.

Family 2's 2018 and 2019 AGI's were comparable to 2020.   The family got $2,900 from the two EIP's.  The family's "Balance of RRC" on Line 30 would be zero. 

That was how I approached it when I prepared the 2020 returns.  I made sure my clients' EIP info - the numbers they provided to me - were in line with their 2018 and 2019 AGI's. 

In most cases, the EIP's received by my clients were consistent with the approaches published by the IRS.  In some cases, clients told me zero 2nd EIP, but turned out they just mishandled the debit cards.  I was able to catch it.  I didn't take their words for it.

Enough said.  No need to clarify the rest of my points.  Chalked it all off as tomaito, tomahto.

Back to PPECPA, I gave it some more thoughts since my last post.

I doubt the IRS made a mistake in this regard.  As I pointed out, the disallowed amount  was $1,581, which happened to be the amount Client received in EIP.  Now that I've doubled up my daily regimen, I think I got it.

The discussion so far was based on the presumption that the return was correctly prepared. 

Now, I would be interested to know the amounts entered  on Lacerte screen  38.2 for that client. 

Economic impact payment 1

Economic impact payment 2

Were the entries for the taxpayer and spouse boxes:

A.  blank,

B.  -1's or

C.  such that the totals were $1,066 and $515, respectively?

If A,  someone had ignored the Lacerte diagnostic.

If B,  I'm speechless.

If C, I'm clueless in what else to say.

I don't need further info.  I just need another shot and digress from this topic.