This article applies to:

Let distributions reduce the Accumulated Adjustment Account below 0

Follow these steps to let distributions reduce the Accumulated Adjustment Account (AAA) below 0.

Open the client.

Select the Balance Sheet folder, then the

Ms

screen.

Go to the Schedule M-2 - Analysis of Accumulated and Other Adjustments section on the

Ms

screen.

Enter 1
in the Allow distributions to reduce AAA below zero
field.

You can let the AAA on Form 1120-S, Schedule M-2 reduce below 0 automatically for any new client you create (doesn't apply to existing clients).

Select Setup
, then 1120 Corporation
.

Select the Federal
tab, then New Client Options
.

Select the Return Presentation
tab and enter 1
in the Allow distributions to reduce AAA below zero
field.