I tried the above work-around. First the only way my Balance Sheet and Retained earnings balances is if I have my PPP of $23000, entered in as Other Income. This was forgiven in full in 2021. I did the work around, exactly as specified. On 1120S line 5 is the Other income that I entered which results in the Ordinary business income on line 21, agreeing with my books. On the 1120S Page 2, line 16b has $23000, 16c also has $23000 which resulted from the work around. The balance sheet agrees. The M-1 shows line 1 income from 1120s , the PPP funded expenses shows up in 3b after Travel & Entertainment. The total on line 4, = total of them both, (which is really adding the $23000 in twice, once in my Other Income and the work around) line 5 PPP loan forgiveness = $23000, as well as the total on line 7. Line 8 is back to my Net income loss per books. M-2 column a shows PPP funded expenses as a neg $23,000, resulting in a loss on line 8 for balance at end of tax yr. In column d other adjustments line 3 shows 23,000, There is no negative in row 5 in column d, it is in column a.. The resulting total in column d, is totally foreign to anything on my books. On to the K1 - 1 Ordinary business income is my book income (only because I entered the $23000 in Other Income to make everything balance. 16 B is $23000, 16 C is $23000 and D16 D is my Distribution. Is any of this correct, or do I need to take the $23000 out of other income, and then nothing else agrees to my books? Thanks.
