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Depreciable assets aren't included on the beginning balance sheet on Form 1120S

SOLVEDby IntuitProConnect Tax6Updated July 27, 2021

Assets added to the Depreciation screen aren't included in the beginning column on the balance sheet. Why?

Why are the Beginning and Ending columns on the Balance Sheet (Schedule L), Beginning of the tax year blank for the following items?:

  • Buildings and other depreciable assets*
  • Less accumulated depreciation*
  • Depletable assets*
  • Less accumulated depletion*
  • Land*
  • Intangible assets*
  • Less accumulated amortization*

Make sure you're entering beginning amounts on the Balance Sheet screen

For newly acquired clients (not initial tax returns), the balance sheet beginning amounts won't generate automatically from the Depreciation screen. Instead, you must manually enter the beginning amounts for the balance sheet on the Balance Sheet screen.

The program calculates ending balance sheet amounts from beginning balance sheet amounts, taking into account all current-year activity calculated from the Depreciation screen.

Current year activity includes:

  • Current year depreciation/amortization, special depreciation allowance, and elected Section 179 expenses (added to balance sheet ending depreciation).
  • Assets placed in service in the current year (basis added to balance sheet ending basis).
  • Assets disposed of during the current year (subtract the basis and accumulated depreciation from the ending balance sheet).

Current year activity doesn't include:

  • Basis of assets added to the Depreciation screen, but with "date placed in service" not in the current year.
  • Basis or depreciation of assets simply deleted from the Depreciation screen.
  • Basis or depreciation of assets with entries 1 (delete this year), or 2 (delete next year).

How to correctly enter balance sheet amounts:

  1. Select Balance Sheets, M-1, M-2, M-3.
  2. Select Balance Sheet, then Federal.
  3. In the Assets window, enter the applicable amounts in:
    • Buildings and other depreciable assets* 
    • Less accumulated depreciation* 
    • Depletable assets*
    • Less accumulated depletion*
    • Land (net of any amortization)*
    • Intangible assets* 
    • Less accumulated amortization* 

If it's the first year you've prepared your client's business return in ProConnect Tax:

  • Enter all assets on the Depreciation screen. The program will automatically calculate the end-of-year amounts on the balance sheet based on current accumulated depreciation, amortization, and depletion.
  • Ensure that for all assets, Date Placed in Service is the date depreciation actually began (whether in the current or prior year).
  • Enter Prior Depreciation/Amortization, Prior Section 179, and Prior Special Depreciation Allowance for all assets.
  • Ensure that all assets have a Type.
  • Ensure that all amortization assets use a non recovery Depreciation Method (91-98).
  • Ensure that assets of all other types use the modified accelerated cost recovery system  (MACRS) depreciation method (30–88). (Use the accelerated cost recovery system (ACRS) for older assets.)

Keep in mind the following:

  • State balance calculation follows the same approach, although there are variations in the input screens caused by differences in the way different state forms categorize assets on their balance sheets.
  • Only use the Ending column on the Balance Sheet screen if you plan on overriding your end-of-year balance sheet amounts. The asterisk on the input fields indicates that the Ending column will override the program's automatic calculation.

The current year's ending balances will transfer to the Beginning column on next year's return.

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