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Form 1065 Schedule L is out of balance by gross profit amount line 16 form 6252 Installment Sale

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Level 2

I prepared Form 1065 with related schedules including two new Forms 6252. After linking the fixed asset worksheets to the forms 6252 (the fixed asset worksheets were created from importing information from Fixed Asset Manager), the schedule L balance sheet is out of balance by the exact amount of the installment sales gross profit from line 16 on the two 6252’s. The Liabilities + Capital is off by this amount. I’ve been over and over the forms and can’t find the error. The M-1 and M-2 schedules appear correct, as does form 4797 page 1 and 2. Schedule K and the K-1's also appear to be correct. The same client had an installment sale in 2015 and everything tied perfectly. I would appreciate any help you can provide to correct the out of balance situation created from the installment sales.

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Level 8

There should be an adjustment on your Schedule M1, line 6 for the gross profit  (Income recorded on books not on Schedule K).      

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Level 8

You've included these two 6252's on your asset side as receivables? 

 

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Level 2

Yes, both 6252 sales are included as receivables in the asset side of the balance sheet.

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Level 8

There should be an adjustment on your Schedule M1, line 6 for the gross profit  (Income recorded on books not on Schedule K).      

View solution in original post

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Level 2

Yes, M-1 Line 6a already has the amount of income from installment sales included. It was automatically entered within the Proseries software. I'm not able to come up with a solution but will keep trying. Any additional thoughts and ideas are appreciated.

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Level 8

I entered a 6252 into one of my clients balanced/completed 1065.  Two things I had to do to balance 

 1) increase my M1, line 1  Net income per books for the total selling price

2) enter the receivable to my assets

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Level 2

There was an additional book income amount to include on the M-1 related to the installment sales. Thank you! The balance sheet is now in balance.

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Level 8

You're very welcome.