I paid off a loan. Now 1120 Schedule L is out of balance...

[byrnt]

For the last couple of years, we had a "note payable in 1 year or more" under liabilities on our 1120 Schedule L. We didn't just plunk it in this box - our CPA did. Then she went AWOL and has not returned any contacts in over 3 years. So it's in our return history. We carried it forward in the same blank for a couple of years. In the most recent  tax year, we paid off the loan - $0 in this box at end of the year. Schedule L will not balance. I can't find any actual answers to where you report on a return that you paid off a loan. I'm not talking about deducting the interest, nor about whether "loan payments are not deductible." I'm talking about reporting where the money went. If I put the amount that we paid off into the "end of tax year" box, the sheet balances, so it is obviously looking for a liability entry, or a lower retained earnings (which would make retained earnings a negative number). But, we paid it off during that tax year - no liability to carry forward. And we used money to pay for it, so there is less money in retained earnings...I just can't find where to enter it. I have been researching this for hours and can't find any straight answers. Not in the IRS instruction sheets. Not in the IRS audit tutorials, not in any aftermarket blogs, accountant training materials, and def not in the TurboTax help files. TurboTax won't e-file the return as long as Schedule L is out of balance. TIA for any tips - I'll buy you a beer!

[Anonymous_]

The first question might be whether you even have to complete Schedule L.

See https://www.irs.gov/instructions/i1120s#en_US_2021_publink11515kd0e6836

If you are required to do so, then what, exactly, is out of balance? Did you credit your Cash account when you paid the balance of the loan?

[byrnt]

Thanks for replying! Yes, we have to file a schedule L. No, we did not credit a Cash account when we paid off the loan. Our CPA took off for parts unknown during that year. She set it up in QuickBooks as a "Long Term Liability." I can't tell what is out of balance. TurboTax doesn't make this specific. It just won't e-file the return "until you correct the errors", but doesn't say exactly where it is finding an error. Just a red number in the "Balance Sheet out of balance by___" at the bottom of Schedule L. The ONLY possible discrepancy I can find is the beginning of the year liability for the remaining balance of this loan is $0 at the end of the year. If I plug in a fake liability amount, it corrects the "out of balance," but I can not find anywhere in the TurboTax interview or forms to enter or change a short or long-term liability. I COULD deduct it from Cash on Hand, which will put that in the negative, but it is not technically accurate. 

[byrnt]

Update - I was able to find where to move "Note payable in more than 1 year" to "Note payable in less than 1 year." Now the balance sheet is out of balance by the total it was before PLUS the amount of the payoff made during the year. TurboTax is saying "based on our calculations [which it doesn't show] your retained earnings are a massive negative number." But Schedule L is even more out of balance, and we could not have operated with negative cash flow, so Massive Negative Number is inaccurate and TT doesn't show how or where to examine it. 

FWIW this was a very small business operated by people who were completely dependent on an accountant. Since she bolted, we are really in the dark, are behind on several years' tax returns, there is no staff or inventory left since the pandemic, and I'm just trying to get these overdue returns filed any way I can so I can close the corporation. We can't afford a CPA any more to go back and figure out what she did. It's a very simple operation - sales pay for replacement inventory and very minimal wages. Nothing else. No assets, salaries, benefits, depreciation, equipment, land, other businesses, credit cards, shareholders, dividends, interest, etc. One bank account. Quickbooks is more of a complication than a help. Just looking to get it over with.