Retained Earnings that appear on Form 1120S Schedule L Line 24 by default are "unappropriated." You cannot edit Retained Earnings on a business return that includes Schedule M-2. This number is automatically calculated based on last year's ending balance plus this year's income or loss.
You can review the calculation of Retained Earnings on the Schedule M-2/Retained Earnings Worksheet (Sch M-2 Wks in the forms list using Forms Mode). If you need to change any of the adjustments to Retained Earnings, go to Schedule M-2 on Form 1120S pg3-5. Any number in a yellow box and a blue or green font can be changed.
You can skip the Balance Sheet section if:
- Total business income (before deductions) is under $250,000; and
- Your business is not filing an Alabama, Connecticut (non-partnership), District of Columbia, Georgia, Kentucky, Louisiana, Massachusetts, Mississippi, New Jersey (non-partnership), New York, North Carolina, Oklahoma, Pennsylvania, South Carolina, or Tennessee return; and
- Corporation year-end assets are under $250,000 or partnership/LLC year-end assets are under $1,000,000.
To remove the balance sheet from your return, go to Form 1120S p1-2 and scroll down to Schedule B Line 11(b). Check the box to remove Schedules L and M-1.
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