1120-US: Completing S Corporation Schedule M-2 (FAQ)

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Question

If the corporation was always an S Corporation, is Schedule M-2 still required?

Answer

S Corporations with accumulated E&P must maintain the AAA to determine the tax effect of distributions made by the S Corporation. An S Corporation without accumulated E&P does not need to maintain the AAA, however, based on the Form 1120S instructions it is recommended the AAA be maintained by all S Corporations. If the S Corporation is not required to maintain the AAA, and you want to suppress the printing of the S Corporation Schedule M-2, mark the Suppress printing of Schedule M-2 field in Screen Ms in the Balance Sheet folder.

Note: UltraTax/1120 does not verify whether or not the S corporation must maintain AAA. An informational diagnostic message prints when the Suppress printing of Schedule M-2 field is marked.

Related topic: 1120-US: Form 1120S - common FAQs

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