How to enter Non deductible expenses?

Forum|Forum|5 years ago
September 16, 2020
2 replies
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I have expenses I paid for out of my company account, which is not deductible. These aren't your typical 50% of meals. These are things like an entire meal that I don't proper documentation for so I'm not going to deduct it at all. Since I'm doing a balance sheet this affects the income reconciliation.

I've read that using forms mode I can just adjust the values, however, in order to adjust the retained earnings, I have to click the checkbox that prevents M-2 from being filled out. So I'm sort of stuck since I assuming I need to fill out M-2 since I have undistributed earnings in the companies bank account. I'm new to all this so I might be missing something. Thanks for your help. Trying to get this thing submitted tonight.

Best answer by Anonymous_

@B0555555 wrote:
....I'm sort of stuck since I assuming I need to fill out M-2 since I have undistributed earnings in the companies bank account.

The link below (albeit for different software) provides an explanation of the adjustments made when the AAA distribution amount differs from that entered into the program.

https://kb.drakesoftware.com/Site/Browse/11549/1120S-AAA-Distributions

I doubt it will be illuminating but it is rather difficult to provide any direction with respect to balance sheet issues without seeing the entire return.

Carl11_2

Employee

I have expenses I paid for out of my company account, which is not deductible

There are so many ways to interpret your post, I don't know where to begin.

What kind of business? Sole proprietorship? Single member LLC? Multi-member LLC? S-Corp? C-Corp? Partnership? Something else?

What expenses? Business expenses? Personal expenses? Maybe it's an unqualified reimbursement?

Where are you trying to claim this deduction? Your personal tax return? The SCH C on your personal tax return? On a 1065 Partnership return? Maybe an 1120 or 1120-S corporate return?

Without more details, I've have to write a novel to cover all the possibilities.

B0555555Author

Sorry, I'm an s corp and the expenses were for meals that I don't have proper records for so I can't claim them as deductible per the IRS rules. One item is a gift I bought for an employee for doing a good job, which I later learned is not deductible. That's about it.

I'm not trying to claim anything regarding these purchases on my business or personal return. The only place this appears to come in to play is reconciling my income statement/balance sheet in TT.

From what I gather, it appears I should simply add these additional expenses to the M-1 Worksheet so things reconcile. Does that sound right?

Thanks for the help.

Anonymous_Answer

Employee

@B0555555 wrote:
....I'm sort of stuck since I assuming I need to fill out M-2 since I have undistributed earnings in the companies bank account.

The link below (albeit for different software) provides an explanation of the adjustments made when the AAA distribution amount differs from that entered into the program.

https://kb.drakesoftware.com/Site/Browse/11549/1120S-AAA-Distributions

I doubt it will be illuminating but it is rather difficult to provide any direction with respect to balance sheet issues without seeing the entire return.