Accrual basis books, cash basis tax return

[cpabsd]

I have an S corporation running accrual basis books and cash basis tax return.  For the balance sheet on the tax return, is this allowed to be done on the accrual basis of accounting even though the tax return is cash basis? I don't really have a cash basis balance sheet.  

 

Also, I thought I heard in a seminar but wanted to make certain that the Schedule M-2 does not have to tie to the Schedule L, even though my software thinks it must. 

 

Thanks

[Lee B]

Yes, I have had several clients where that was the case. I reported the balance sheet on an accrual basis,

 

then showed all the adjustments between cash basis income and accrual basis income on the M - 1.

[kcjenkins]

Yes, that was my solution as well.