I have my M-1 in balance without overwriting any values. However, the M-2 does not seem to be bringing down the proper book value for line 3. The M-1 was able to reconcile this value properly on Line 1. On the M-2 worksheet section in Forms mode, it is only pulling in my non-deductible values and disregards the depreciation difference between books and taxes. Is this correct? Should not the M-2 Line 3 value be pulled from the M-1 Line 1?
I forgot to mention this is for an LLC using Tax Form 1065.
The amount on Schedule M-2 Line 3 is calculated in the Line 3 Smart Worksheet that appears above Line 1. To track how the values in this worksheet are entered, right-click any field and choose "Data Source." Values from other forms or schedules appear in the popup as hyperlinks, allowing you to view the source of each value.
It's possible you will need to make manual adjustments to Schedule M-2. When you right-click a field and choose "About..." the program will provide additional On-Demand Tax Guidance that may be helpful.
Note that numbers in green are imported and numbers in black are either calculated by the program or brought from another form. Direct entry numbers appear in blue. If any form has a red exclamation point beside the name in the left column, open the form and click on "Errors" at the top of the list. An explanation of the error will appear under the form in the large window.