Closing an S corp. Retained earnings is negative $9392 due to shareholder loans. To report zero balance sheet at 12-31-21 how do I get rid of the negative RE $9392?

Forum|Forum|4 years ago
March 15, 2022
1 reply
20 views

I'm in scd m-2 but can't figure this out in pro series
and how does it flow through to the k-1?

ProSeries Professional

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J

jeffmcpa2010

Level 10

I always try to finish the "Accounting Work" before trying to figure out how to get things on to the tax return.

A lot of times I end up with an old fashioned columnar pad, to work out problems, and have a final trial balance before I even start entry for a return.

I this case look at the balance sheet. You can't have a final return if you have any assets or liabilities left, so you need to figure out what the correct journal entries are to get rid of anything remaining. (You have to have a reason for the accounting entries you make - don't just plug stuff to make it go away.) Might need to dig out an old accounting theory text book.

L

lizfidorukAuthor

Level 3

Thanks for the response Jeff. Yes I know my entries. My problem is that pro series carries forward the negative retained earnings from 2020 and I have to get rid of it in pro series as zero is the ending balance.

The smart worksheet that ties to the retained earnings line is scd m-2 but I don't know how to code or describe the closing of the company and of course this can affect the k-1 reporting.

Do I just write in closing corporation as an add back?

IRonMaN

Level 15

That will work.

Slava Ukraini!

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