Depreciation per books vs tax

[ILLMAS]

Can someone tell which is the correct retained earnings, I am disagreeing with another accountant:

Depreciation per books $50,000

Depreciation per Tax $48,000

Profit per Books $31,000

Profit per Tax $31,000 + $2,000 (Diff. between books vs tax) = $33,000

Retained earrings per books matches tax return $31,000

M-1

Profit/(loss) per books $31,000 matches my RE

Add difference between books vs tax $2,000

= $33,000

M-2

Ending balance = $31,000 Claims this should be $33,00

The other accountant claims the ending retained earnings should be $33,000 and I say no, it should be $31,000 because the balance sheet is prepared per books not tax, like most I am burnt out and I just want to make sure we don't need to amend 2019 1120S.  I prepared a fake return to show the numbers, he wants to propose an adjustment in 2020 for $2,000 so the retained earnings per tax adds $2,000 to 2020 RE.

 

[Lee B]

You are correct

[Abby Normal]

This is why I decided in the mid-90s to never have book depreciation. I don't have any publicly traded clients.

But, to answer your question, the balance sheet is supposed to match you books, so you are correct. But he is correct that AAA should be 33,000.

ATX has a reconciling worksheet for AAA to RE and get rid of the 2,000 other reduction in AAA (assuming that is your depreciation difference).

[Abby Normal]

Just now, cbslee said:

You are correct

For RE but not for AAA.

[ILLMAS]

Thanks, new twist from yesterday.

 

First year building depreciation, Pro Series depreciated the building for 11.5 months, the $2,000 he wants to add back is for the .5 month.  Did a a quick research and the 11.5 months seems to be correct per IRS pub., his adjustment is now in 2020 to correct the AAA to $33,000.  I still think this is wrong, your take?

thanks