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BH2012
Returning Member

1120S Capital Stock.

Our last year turbo tax all of a sudden added capital stock. I let this go in balance sheet section and now we have an even larger discrepancy for 2021. We have had losses for the past few years. Our balance sheet and retained earnings are unable to balance in turbo tax. Please help.

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6 Replies

1120S Capital Stock.

Balance sheet issues are difficult to diagnose give this format (they are difficult to diagnose sometimes, period).

 

Regardless, you will have to supply more information.

 

@Rick19744 

BH2012
Returning Member

1120S Capital Stock.

2020 balance sheet was off $72,350 which is the amount put in capital stock. With the loss in our business, capital stock should be difference. Our QuickBooks balance sheet is in balance. It's the Turbo Tax balance sheet and Retained Earnings that is off.

What other information would be helpful?

1120S Capital Stock.

As noted by @tagteam this area is difficult to diagnose in a forum such as this.

A few thoughts / comments:

  • If 2020 was off by the amount of capital stock, did you not adjust for this in the beginning of the year balance sheet?
  • Yes, technically beginning of the year should agree to end of the year, but adjusting the balance sheet does not impact the bottom line.  If you can't adjust beginning of the year, then add this to the end of the year.
  • I am not in a Windows environment so I can't operate the software.  Having said that, I am not sure that TT balance sheet always rolls forward correctly.  You may have to manually adjust an item on the balance sheet.
  • You mention the 2020 differential, but you don't say what the 2021 differential is.
  • How are you keeping the books in QuickBooks?  Tax basis?
  • How about some other key items
    • Is your net income correct?
    • Does your Schedule M-1 balance?
    • Not sure what you mean by "With the loss in our business, capital stock should be difference"
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
BH2012
Returning Member

1120S Capital Stock.

QuickBooks is kept in accrual basis.

 

My beginning 2021 retained earnings is off the amount in capital stock of 72,350. instead of -107,000, it is showing -180,000. Capital stock should be zero as the LLC (2 member) started with negative cash balance (not cashing payroll checks) and no initial investment besides loans to the business. No distributions have ever been made. 

 

My schedule M1 is in balance. 

In 2021, there is an additional loss of 61,449. My ending equity for 2021 should be -169888, but in TT is showing as -241675.

 

Hope this helps to help me with my issue, I just don't know why the capital stock has a beginning balance for 2020 as it just appeared and I just left it out of frustration in figuring it out. Now I need to somehow correct this.

1120S Capital Stock.

Turbotax does not just enter numbers.   you did something so that the $72K was entered. we have no access to the return so you need to go back and review what you did. 

 

do you believe your QB numbers are correct? 

 

if so change the opening balance sheet to reflect the QB numbers.

 

however, I would suggest that you use a pro to review 2020 to make sure the numbers make sense

did you import from QB to TT?  then likely something was missing a tax link or had a bad tax link.

 

 

 

 

 

1120S Capital Stock.

Follow-Up Comments:

  • Apparently based on your follow-up response, this is an LLC that elected to be taxed as an S Corp?
  • One of your issues is you shouldn't have negative capital stock; assuming you are referring to line 22 on the balance sheet.  I do see your comment that you agree with this.  Can you not adjust this amount?
  • The payroll check issue is a liability and should not impact the capital account.
  • If you made no initial investment, as you state, then line 22 should be zero.
  • You should then have the loan amounts on line 19.
  • Based on what I am reading, somehow figures were entered into the capital account (or transferred incorrectly).
  • Just remove the $72,350.  What happens then?  Is everything all good?
  • If you just adjust balance sheet items, and your net income was correct last year and is correct this year, I would make the adjustments and move forward.
  • The differential you are noting in your response is not $72,350; it is $71,787 (ending equity)?
  • In addition, the differential you are noting in beginning retained earnings is not the $72,350; it is $73,000
  • There appears to be more to this than just the $72,350.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
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