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PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4677
Experience:  35 years tax experience, including four years at a Big 4 firm.
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M-2 on 1120 is out of balance by $9000 an adjustment was made

Customer Question

M-2 on 1120 is out of balance by $9000 an adjustment was made on prior year entries. what would be the proper description for an adjustment of that type?
Submitted: 2 years ago.
Category: Tax
Expert:  PDtax replied 2 years ago.
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Expert:  PDtax replied 2 years ago.
Let's say the prior year book income was adjusted, but tax was correct as filed. This year, tax income is still correct, but those adjustments from a prior year for books are revised. You could call them "correction of prior year book adjustments - $0 tax effect" if that's the case. If this describes the issue, that should be enough detail for IRS to pass on asking anything more. The key is not to over-describe the issue. It is likely small in comparison to the tax return, and as long as the tax effect is described, it should be fine. Thanks for asking at Just Answer. Follow up questions are welcome. Positive feedback is appreciated if I have answered your question. I'mCustomer