Filed S-Corp but books are C-Corp

[AZ-Tax]

Prospective client wants a quote for bookkeeping and tax prep so I had them bring their 2011 business tax return which was filed as an S-Corp and QB back up file. Upon looking at the QB backup under "Co Info", the income tax form used is: Form 1120(Corporation). I went to "find" within QB and located acct: "3050-dividends paid" for which it says the sole shareholder recieved $77K of dividends.

1st one I ever came across.

[JohnH]

It may be mathematically correct and accurate with respect to the tax laws, but just using the wrong account names. If the shareholder reported the S-corp income correctly, then the amounts listed as "dividends" may just be distributions of PTI and/or current earnings. If so, then there's no harm/no foul.

On the other hand, I can envision lots of other really ugly scenarios which QB makes possible in the wrong hands.

[DMICPA]

QB in hands of business owner

I would agree with John. If in fact the Company is a real S-Corp., the QB is just not correctly set up for an S-Corp.

You could work it as long as you undeerstand the client coding.

You should try to get the client to straighten out the books as in the event of an audit, the agent may not be as forgiving.