Hi, I was looking for a quick review of an 1120S return I just…

Hi, I believe the difference in the numbers is due to forming the LLC mid-year. Would there be a way to send you a copy of the return with names/personal information blacked out? Thank you.

Ok, I've added the file to Dropbox, is there a way to send you the link privately?

Hi, here is the link. https://www.dropbox.com/s/flohw9qkqtevfhd/LLCReturn2012.pdf. I'm still a bit unsure about the state E&P account on the last page, I initially entered $0 since 2012 is the first year but received an alert that information for that account was omitted. Thank you

Hey, sorry about that, there was an error with the file.

I can approximate the numbers here

~$60,000 gross profit minus:

~$30,000 officer salary
~$1,500 business expenses
~$7,500 Employer contribution plan
~$2,500 Federal Payroll Taxes (FUTA, SS, MED)
~$1,300 State Payroll Taxes (SUI, SDI)
~$400 CBT Minimum Tax
=$16,800 ordinary income ($10,000 cash left as retained earnings)

For the AAA account:
Beginning Balance: $0
Income/Loss: $18,500 (already calculated by the software from $16,800 income + $1300 State Payroll Taxes + $400 CBT Tax)
Deductions/Distributions: $0
Ending Balance $18,500


Then, the software asks to enter a value for the state Earnings and Profits account. I believe the beginning balance for this E&P account
should be $0, since it's the LLC's first year and it filed the S-election upon formation. Also the instructions on the state revenue site state "a newly incorporated federal S corporation should not have any accumulated E&P. Consequently the initial beginning balance of your E&P account will be zero".


E&P account:
Beginning Balance: $0
Additions/Adjustments: ?
Dividends: $0
Ending Balance: ?

Would the E&P additions be the $10,000 cash left as retained earnings, the $16,800 income, or the $18,500 AAA balance? Also, I'm guessing for 2013 it would be better to take a large distribution at the end of the year to reduce the AAA and E&P accounts to zero. Lastly, the SUI for a one person company seems a bit excessive, do you know of any ways to receive a partial refund or credit for this? Thanks for your patience, hope this clarifies things.

"Expert--I disagree with this math. AAA should be $16,800. Both the payroll taxes and CBT tax are deductible to determine AAA."

My mistake, should have mentioned this is for NJ AAA and NJ E&P. The tax software automatically calculated the $18,500 and there is no option to change this line. I had also initially entered $0 for the NJ E&P account, but when reviewing the return received an alert that "information for the NJ E&P account may have been omitted". Then again, I also received the same alert for the NJ AAA account since that beginning balance is also $0.

So just to confirm before rating your service, based on the information provided these numbers below should be fine?

NJ AAA Account:

Beginning Balance: $0
Income/Loss: $18,500
Deductions/Distributions: $0
Ending Balance $18,500

NJ E&P Account:
Beginning Balance: $0
Additions/Adjustments: $0
Dividends: $0
Ending Balance: $0

Right, the only reasons I can think of why it's calculating the AAA as $18,500 are:

On the federal 1120S under Deductions the "State and Local Taxes and Licenses" line lists $1700 total for the State Payroll Taxes + CBT, and the next line "Other Taxes and License Fees" lists the $2500 for the Federal Payroll Taxes.

On the NJ Return Schedule H to enter all NJ taxes paid or accrued, the $400 CBT is listed under "Corporation Franchise/Business Taxes" and the $1300 State Payroll Taxes are listed under "U.C.C. or Payroll taxes" for a total of $1700.

Do you believe the $1300 should be moved to another line on either of these two forms to properly reflect the $17,200 NJ AAA? Thank you.

Thanks, XXXXX XXXXX the "State and Local Taxes and Licenses" line on the federal 1120S to only $400 for the CBT and the "Other Taxes and License Fees" line to $3800 for the $2500 Federal + $1300 State Payroll Taxes. The NJ AAA now accurately shows the $17,200.

So if you believe these final numbers look to be correct, I will go ahead and rate service as excellent. Thanks again for your help.

NJ AAA Account:

Beginning Balance: $0
Income/Loss: $17,200
Deductions/Distributions: $0
Ending Balance $17,200

NJ E&P Account:
Beginning Balance: $0
Additions/Adjustments: $0
Dividends: $0
Ending Balance: $0

Awesome, thanks. Take care.