1120S (Item F)

[Dan]

I have a question about Item F (Total Assets) on page 1 of Form 1120S. How do you get total assets to show up in F here when the S-Corporation's total receipts and its total assets at the end of the year are less than $250,000?

When the assets are less than $250,000 you are not required to complete Schedules L and M-1.

How do you get the program to put in total assets in Item F on Form 1120S?

The instructions say: "Enter the corporation's total assets (as determined by the accounting method regularly used in keeping the corporation's book and records) at the end of the year. If there were no assets at the end of the tax year, enter -0-." There are some assets and I don't want -0- to show up.

Thanks for your reply!!!!!

[kcjenkins]

If you want to you can just type in the amount, as an override. Of course, if you read the instructions, the next line tells you "If the corporation is required to complete Schedule L, enter total assets..." So if they are not required to complete Sch L, you could leave it blank.

[JohnH]

I leave it blank when total assets & total receipts are under $250K. No need to provide any information that isn't required.

[Dan]

Thanks to KC and John

It seems when I leave (item F) blank, I have to override it to do so. If I left the -0- there it would mean according to the instructions that there were no assets at the end of the year which is not the case.

Do some of you fill out Schedule L and Schedule M-1 even though it is not required if total receipts and total assets are below $250,000 according to Schedule B, line 8?

[Randall]

Thanks to KC and John

Do some of you fill out Schedule L and Schedule M-1 even though it is not required if total receipts and total assets are below $250,000 according to Schedule B, line 8?

I do.

[JohnH]

I don't.

Giving them unrequired info is nothing but an invitation to ask more questions.

If they want anything not required on a form, they have the client's address and plenty of postage stamps.

(I apply this reasoning to all tax forms)

[OldJack]

I don't.

Giving them unrequired info is nothing but an invitation to ask more questions.

If they want anything not required on a form, they have the client's address and plenty of postage stamps.

(I apply this reasoning to all tax forms)

I fill-in the balance sheet on EVERY corporation tax return regardless of small amounts. I will not sign a corporate tax return without a page 4 balance sheet. A corporation is required to maintain proper bookkeeping and filing the actual results shows that the business is doing that. Reporting the balance sheet on the tax return could get you a pass on IRS initial review of the tax return and avoid selection for audit. I would NEVER prepare a corporate tax return without an accurate balance sheet in my workpapers. I have always attached additional information to all tax returns and I believe the results has been years of no IRS audits.

[lsowers]

I always fill in the L and M-1. I find doing so is also a good error check. I tend to agree with OldJack, I think IRS is more likely to look closer at a return that does NOT have that info filled in. I think it's an accountant thing, you know, everything must balance.

[Lion EA]

I like to fill out the L. Most of my clients don't have a balance sheet, except an inaccurate one in QB. Filling out the L turns up all sorts of information. If it doesn't balance, did money go in or out? Then, you know what questions to start asking. Besides, when they sell assets or sell the company, you need some of that information that your client hasn't been tracking!

[Gail in Virginia]

Not to mention that if you begin doing the balance sheet the very first year, then if you have to start doing balance sheets you have good beginning balances to work from.

[JohnH]

I don't advocate not DOING the balance sheets, but as stated before I don't FURNISH the info to IRS unless they have a right to it.

[Lion EA]

I too sometimes leave it out of the government copy after preparing the balance sheet. But, that's usually because I'm not convinced the client did what he said instead of what's necessary for a "balancing" entry -- not me, I didn't take any money out of the company...

[JohnH]

I also respectfully disagree with the proposition that completing the L and M-1 when not required has anything whatsoever to do with reducing audit probability. We are speculating here, right?

If the form is filled out incorrectly (whether required or not), then it certainly can flag the return for more scrutiny. But a properly filled-in L and M-1 when not required does nothing to decrease audit probability, and it could increase the probability slightly. I say this because even if the return is properly prepared, it's possible the data could be entered incorrectly when it reaches the service center. A data input error on their part could cause the return to be pulled for examination even though the preparer did everything correctly.

As I said, there's absolutely no reason to give them any info they don't require.

[Guest Evan S. Golar]

I fill in a balance sheet for EVERY return - whether it's required or not.

In many cases here, many preparers don't because they probably are not sophisticated accountants to understand double entry accounting and DON'T KNOW HOW TO, and use the $ 250,000 threshold as a convenient excuse not to.

But when the corporation is being considered to be sold, or the bank would like to see financial information for bank financing that non-CPAs aren't permitted by state law to prepare because they're not licensed - how are you going to recreate that information.

So there are reasons to complete that information that's not always connected with IRS disclosure.

[JohnH]

You make a great point.

Anyone who doesn't know their way around a balance sheet & double-entry accounting probably should not be preparing a corp tax return to begin with. But there is still a difference between having the information in your work papers and actually submitting it to the IRS. That's the distinction I make.