PY Tax return cash balance does not equal Quickbooks

[Florida_EA]

Client provides a PY tax return (12/31/2017) for a 1120 S done by an outside firm that does not match the Schedule L cash balance vs QB GL balance (12/31/2017). In doing the 2018 tax return what are some of the ways to rectify this situation assuming that that the starting point for cash is the tax return balance of 12/31/2017.

[Uncle Sam]

Aren't bank reconciliations done in Quickbooks?

[Florida_EA]

Yes bank reconciliations are done in Quickbooks. However there is a difference in the 12/31/2017 QB GL balance and the 12/31/2017 tax return cash balance.

[Maribeth]

This happens all the time with QB and clients. Your client has added/subtracted an item after giving the books to the outside firm. So, In the QB,as of 12/31/17, dr/cr the bank account to agree to the tax return and dr/cr retained earnings. Now your QB balance sheet = the tax return. Then as of 1/1/18, dr/cr the bank account so that the bank account is now back to the "book" basis, and the offsetting dr/cr is going to be to an expense account. That way the unrecorded item for tax purposes for 2017 will flow into 2018.

[kathyc2]

If the cash balance is different, at least one other account needs to be different than reported on TR. If the difference was to a P/L account(s) in 2017 then Maribeth's suggestion will work, but first check that the RE on TR is off by the same amount as QB RE after 2017 net income/loss and dividends are closed out to it. The cash difference may be coming from another balance sheet account(s).