I'm having a similar problem the person asking the question about the conversion is. It's not my business but a client's. I like using accrual accounting, because it gives a clear picture of what your business is doing. In QBO, you can just select a cash basis I/S to get to cash basis(which I do for some clients who started on a cash basis), but I understand the answer regarding the equity except in the case where you are using accrual basis and have negative equity. You can't start with negative contributed capital, so I'm not sure about this answer. I'm a CPA and am currently researching using Bloomberg software, but have been unable to find an answer. I will probably have to ask someone with more tax experience than I do. If you treat it as cash basis and eliminate payable and receivables, you will have positive equity, so that might be the answer. As liabilities and receivables are realized, you would just realize them then if you had been using cash basis as a SMLLC sole proprietorship. However, if they were already booked, because you were using accrual, I don't know what the answer would be. Since liabilities other than loans to the shareholder do not affect shareholder basis in an S-Corp, it's more of an accounting issue than a tax it seems
