tax help

[dmufeed2]

i just want to confirm if i have a difference in beginning year cash to the actual amount on the books do i do an m1 adjustment line 2 or m2 adjustment?. 

[sjrcpa]

What caused the difference?

How much is it?

[IRonMaN]

If it is a cash based taxpayer, doesn't a difference in cash mean a difference in either revenues or expenses?  You don't plug equity to make it go away.  If it is $1, adjust through the current year income or expenses.  If it is $100,000, you are looking at amending the prior year return.

[Strongsilence-CPA]

If this software is in your control or if you have access to it, put a lock or password on it after you have finalized the 2023 tax return. QBO has this feature.  This will prevent prior year adjustments by bookkeepers or business owners.

[dmufeed2]

It is a messup in thier books, and the difference is less than 20k. I thaught it goes as an m1 adjustment because its 1065 return 

[dmufeed2]

Yes but wher would i put the adjustment so ot can reconcile to what they have in books m1 or m2 its a 1065 partnership 

[IRonMaN]

You need to find out what the difference is and amend the prior year return.

[dmufeed2]

But I would still need to adjust this year 

[IRonMaN]

You need to amend last year first and the amended return becomes your starting point for this year.

[dmufeed2]

The client does not want to do that, and for the past 5 year return he had done an m1 adjustment. 

[IRonMaN · Accepted solution]

Well, he has done it wrong for 5 years.  If it is my client and he doesn't want to do it the right way he gets transferred from my client list to my "former" client list.

[Strongsilence-CPA]

This could be a turning point in your relationship with your client.  Teach him to do it right. Start now. Then, if he does, your practice gets better.