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Dr. Fiona Chen
Dr. Fiona Chen, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 355
Experience:  Former IRS Revenue Agent
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The amount on schedule M2 line 8 does not match the amount

Customer Question

the amount on schedule M2 line 8 does not match the amount on the schedule L Line 25 Column D
JA: The Accountant will know how to help. Please tell me more, so we can help you best.
Customer: i can I can't reconcille
JA: Is there anything else important you think the Accountant should know?
Customer: no
Submitted: 3 months ago.
Category: Finance
Expert:  Dr. Fiona Chen replied 3 months ago.

Dear Customer,

I am assuming that you are working on Form 1120S, based on the line numbers and columns you mentioned.

Did the computer software clue you that the two numbers do not equal, or are you working on this by hand?

Have you looked into the instruction page 42 of the worksheet for M-2, and how does it make sense to your situation?

Regards,

Fiona Chen, MPA, Ph.D., CPA, ABV, CFF, CITP

Expert:  Dr. Fiona Chen replied 3 months ago.

Dear Customer,

I am assuming that you are working on Form 1120S, based on the line numbers and columns you mentioned.

Did the computer software clue you that the two numbers do not equal, or are you working on this by hand?

Have you looked into the instruction page 42 of the worksheet for M-2, and how does it make sense to your situation?

The definition of adjustment is different at the two places. It is suggested that you may want to use this website link as instruction. The view of instruction is clearer here.

https://www.irs.gov/instructions/i1120s/ch02.html#d0e5108

Schedule L.

Line 25. Adjustments to Shareholders' Equity

The following are some examples of adjustments to report on this line.

  • Unrealized gains and losses on securities held “available for sale.”

  • Foreign currency translation adjustments.

  • The excess of additional pension liability over unrecognized prior service cost.

  • Guarantees of employee stock (ESOP) debt.

  • Compensation related to employee stock award plans.

If the total adjustment to be entered is a negative amount, enter the amount in parentheses.

Schedule M

Column (b). Other Adjustments Account

The other adjustments account is adjusted for tax-exempt income (and related expenses) and federal taxes attributable to a C corporation tax year. After these adjustments are made, the account is reduced for any distributions made during the year. See Distributions, later.

Regards,

Fiona Chen, MPA, Ph.D., CPA, ABV, CFF, CITP