Schedule M-2 is a reconciliation of your accumulated adjustments and other historical transactions. If this is the first year of your S-Corp, you should have no adjustments. The schedule should reflect income/loss and perhaps distributions.
Note that Schedule M-1 and M-2 are required only if the corporation's gross receipts or its total assets at the end of the year are greater than $250,000.
Retained earnings would equal your total assets on Schedule L column (d) only if you have no liabilities, capital stock, paid-in capital or adjustments.
See also: IRS: Instructions for Form 1120-S (2024)
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
