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S-Corp: I have a difference between Schedule M-1, Line 8 and Schedule K, Line18

Mustapha Ratib
Level 3

Hi all,

I am working on an S-Corp Tax Return and I run into an issue: I have a difference between Schedule M-1, Line 8 and Schedule K, Line18, how can we make an adjustment to clear the issue. 

Thank you

Mo

 

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dkh
Level 11

Here are some suggestions. 

1) Verify all income/expenses have been entered by reconciling the P&L  with page 1, line 21. by adding/subtracting items that will be included on Schedule K   For example Sec179 depreciation, interest income, 50% meals, contributions, etc

2) Are there shareholder distributions?   If yes, were they entered on Schedule K 

View solution in original post

4 Replies 4
dkh
Level 11

What amount are you talking ?  $1  or $100,000    makes a big difference

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Mustapha Ratib
Level 3

difference of $7545, my Computed net income per books is off (higher)

thx

Mo

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dkh
Level 11

Here are some suggestions. 

1) Verify all income/expenses have been entered by reconciling the P&L  with page 1, line 21. by adding/subtracting items that will be included on Schedule K   For example Sec179 depreciation, interest income, 50% meals, contributions, etc

2) Are there shareholder distributions?   If yes, were they entered on Schedule K 

View solution in original post

Mustapha Ratib
Level 3

I did and I found out that there was a Health Insurance - Owner's in P&L not added to the Tax return. I did not included it because I thought that it shouldn't be included there as an expense. also I had to add it to the schedule K1 TO BALANCE it.

The other issue I had was the balance sheet, Assets vs Liability, So I had a difference of about 51,000

so I adjusted it using shareholder adjustment for that amount ot balance BS, What do you think?

NB: My balance sheet accounting is balanced.

Mo.

 

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