M-2 work around? book=accrual, tax=cash

[mli]

For an S corp who has accrual books and cash basis tax return, how do you prepare schedule M-2?

Schedule L is book "accrual".

Accrual to cash differences are on M-1.

But ATX software prepares M-2 to match schedule L retained earnings.

My understanding is that M-2 would not agree to schedule L retained earning (accrual) in this instance. Instead it is based on Tax (cash basis).

It appears that the only way to do this is to enter a lot of overrides. Essentially, overriding every number on Sch M2.

Is there another way? Am I doing this right?

[Abby Normal]

M-2 has a worksheet with an adjustments column. Just use that.

[mli]

Okay, figured it out!

First Step - you have to adjust the Other additions And other reductions worksheet to eliminated the timing differences. That makes Column A correct (i.e. cash basis AAA).

Then you  can make entries in the adjustment column to get accrual RE to balance.

It was that first step that I was missing.

 Thanks Abby!