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The 2018 Form 1120S includes a column for Accumulated Earnings & profits on the Schedule M-2. Prior to 2018, the Retained earnings – Unappropriated field in Screen L-2 represented any prior C Corporation retained earnings and any book/tax timing differences for the S Corporation.

Beginning in 2018, the Retained earnings – Unappropriated field in Screen L-2 will represent prior C Corporation retained earnings only. This field will be synonymous with the Accumulated E&P field on Schedule M-2.

A Retained earnings timing differences field was added to Screens L-2 and Ms. This field will represent any book/tax timing differences between the S Corporation Retained Earnings and the sum of the Schedule M-2 accounts. 

When the S Corporation is proforma’d to 2018, the prior-year balance in the Retained earnings – Unappropriated field will proforma to the Retained earnings timing differences field in Screen L-2, and an informational diagnostic message displays.

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