Reconcile Schedule L and M-2 Equity Accounts for 1120 S Corporations
The
Retained earnings timing differences
(REU) fields in the Ms screen reconcile the Schedule M-2 balances to the total retained earnings on Schedule L. If you reconcile your Schedule M-2 on a book basis, you'll probably not use the REU account. If you reconcile your Schedule M-2 on a tax basis, the REU account is helpful in tracking book or tax timing differences.The sums of the end-of-year Schedule M-2 and REU accounts transfer to the Schedule L end-of-year Retained Earnings. If you don't use the REU account, you'll need to force the end-of-year retained earnings field in the L-2 screen.
Follow these steps to begin tracking the book and tax differences between the Schedule M-2 and the Schedule L retained earnings accounts.
- Enter the sum of the prior-year differences between the Schedule M-2 accounts and the Retained Earnings account in theBalance at beginning of year (REU)field in the Ms screen.
- Enter codeRin theCarry book/tax difference to Schedule M-2field in the Ms screen to transfer the current-year book and tax differences related to depreciation, amortization, or gain on sale of assets to the REU account.
- Enter codeRin the Sch M-2 column in the statements in the Ms screen to transfer any other book and tax differences to the REU account.
- Enter the detail of the prior-year differences between the Schedule M-2 and Schedule L retained earnings accounts in theReconciling detailstatement. UltraTax CS prints this detail and the current-year book and tax differences coded to the REU account in theSchedule M-2 and Schedule L Ending Retained Earnings Reconciliationstatement.
- UltraTax CS proformas the data entered in theReconciling detailstatement and the current-year book and tax differences coded to the REU account to the following year.
