schedule L problem

[here2learn]

Hello Everyone!

I filed few 1120s returns from financial statements i got from an bookkeeper. I noticed that no depreciation was taken on those returns. So in order to match my m1 to the financials provided. i manually made sure no book depreciation was taken. I did that by going into "balance sheet misc" tab and put "-1" for current year book deprec. and amort. 

is that a problem? should i amend these returns?

i further noticed that 2 returns were rejected because by following the above steps i took... my schedule L had shown "-1" as accumulated deprec. and accumulated amort. on my Schedule L.  i was allowed to file my federal return by my state return got rejected. I fixed the return by taking out the -1's and now my state return and federal return's schedule L are off by $1. 

please provide guidance as to how i should handle this. 

Thank you very much. 

[qbteachmt]

"i manually made sure no book depreciation was taken"

Did you follow up with the bookkeeper? Many of my clients tell me they wait for the tax return prep and make those entries per the tax preparer's direction. You might have done this backwards.

[here2learn]

no I did not follow up with the bookkeeper. 

I was thinking we can book the depreciation in the following year. but does this cause any issues with the tax return? at the moment i was thinking no... but when i saw the state rejection. i am thinking more about it.

[abctax55]

*Book* and *tax* depreciation generally don't have anything to do with each other.

I highly suspect that you have some amended returns to prepare if there was any undepreciated assets.

And ya' might want to let the various shareholders know there may be amended K-1's (unless you prepare those F 1040's)

[here2learn]

undepreciated assets for tax purposes.. no i have none of those.

there was no book depreciation recorded.

[sjrcpa]

When no book depreciation is recorded by client, we typically compute it and give them the AJE for it.

Then when we prepare the tax return we compute tax depreciation.

[qbteachmt]

"I was thinking we can book the depreciation in the following year. but does this cause any issues with the tax return?"

Well, you want everything to be accurate. You told us the returns had no depreciation; was there supposed to be some on them?

You can catch up the bookkeeping any time, but the entries should be dated for when they apply, of course. And if they then affect something else you used for the tax return, then the sequence of your work would be reviewed, to see if it was done out of order.

[here2learn]

I apologize if I am not clear. 

Schedule L-- is based on the books. My financials had no depreciation on it when it was given to me. i mistakenly prepared the returns the way i got them. with no book depreciation. I forced Lacerte to show no book depreciation for the current year. 

The tax return has depreciation expense on it on page 1 of 1120s. The tax depreciation is properly recorded on the return. 

My concern is that schedule L's accumulated depreciation field is not correct. I should left it to default and not overridden it with "-1" under the "balance sheet misc" tab in lacerte. 

i understand i should have left it default and given the bookkeeper the deprec. entries. my question is should i amend these returns because of this book world error?

[here2learn]

Thanks for the response. I understand this. It is error i have made. Should i amend my returns because of this?

[PhoebeRoberts]

I personally would not amend a return for that.