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tax help

dmufeed2
Level 2

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?. 

1 Best Answer

Accepted Solutions
IRonMaN
Level 15

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.


Slava Ukraini!

View solution in original post

11 Comments 11
sjrcpa
Level 15

What caused the difference?

How much is it?

The more I know, the more I don't know.
IRonMaN
Level 15

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.


Slava Ukraini!

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
Level 2

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 

0 Cheers
dmufeed2
Level 2

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 

0 Cheers
IRonMaN
Level 15

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


Slava Ukraini!
dmufeed2
Level 2

But I would still need to adjust this year 

0 Cheers
IRonMaN
Level 15

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


Slava Ukraini!
dmufeed2
Level 2

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

IRonMaN
Level 15

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.


Slava Ukraini!

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.