Retianed Earnings - Big Mistake?

[TAX]

Client is C corp

RE Beg of 2006 = -37920
Income of 2006 = 14084
RE ending of 2006 = -23,836

Return has been filed by previous accountant.

BUT ON PAGE 3 OF 2006 TAX RETURN, LINE 12 IT SHOWS THAT NOL AVAILABLE IS $79,663.

SHOULDN'T ENDING RE AND NOL CARRY OVER BE SAME?

I think ending RE for 2006 should be -79663+14084 = -65579

Thanks!

Client has 164,000 of income in 2007 and I like to use TRUE loss.

[Edsel]

The GAAP Trap

Don't know the specifics, but you may have fallen into the trap of trying to use "Sch L" of the corporate return, and measure the difference in retained earnings, then compare it to taxable income.

Remember that Schedule L MUST be at "book" measurement rather than "tax" measurement, and the NOL will be a "tax" loss.