Tax Reconciliation (1120, 1120S, and 1065)

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Important reminder!

Licenses for Payroll CS, Trial Balance CS, and Write-Up CS (but not Engagement CS) permanently expired on March 1, 2017. CSA will not include 2017 tax rates or payroll forms, so, for 2017 and beyond, you will need to process payroll in another application. We recommend Accounting CS Payroll and myPay Solutions. For more information, see the following topics.

The Tax Reconciliation feature in CSA enables you to create adjusting journal entries that directly adjust tax codes. These entries can be used to record and reconcile differences between Net Income per Books (Adjusted Net Income) and Net Income per Tax Return (Tax Net Income). The Tax Reconciliation window is available for clients with the entity type of 1120, 1120S or 1065 and is unavailable for consolidation clients. Because of the variance between 1120, 1120S, and 1065 entities in the tax return and related calculations for taxable net income, the Tax Reconciliation window is made up of separate tabs for each of these entity types.

Note: When tax adjustments are entered and posted in the Tax Reconciliation window, adjusting journal entries by tax code are created. These journal entries create tax balances that can be exported to a tax program.

Prior to making entries in the Tax Reconciliation window, all revenue and expense accounts should be assigned an income statement tax code. These income statement tax codes are then increased or decreased and offset to an M-1 or M-3 tax code in the tax reconciliation to account for book-to-tax differences in net income. See Tax Reconciliation entries (examples) for details.

Summary tab descriptions

The items on the Summary tab provide a summary of Adjusted Net Income, total adjustments from the other tabs in the Tax Reconciliation window, and other tax adjustments that are not included. Items that appear on the Summary tab depend on which entity type is selected on the Trial Balance tab or General Ledger tab of the New Client or Client Properties dialog.

Fields & buttons

Notes

  • Amount fields in the Summary tab cannot be edited, and any modifications to amounts must be made on the applicable detail tab.
  • The Tax Reconciliation window is only available if the Trial Balance CS client is in the last period of the year and there are multiple processing periods available.

    Example 1

    Example 2
  • Rows can be deleted in the detail tabs of the Tax Reconciliation window by highlighting the row and pressing the Delete key.
  • Adjusting Journal entries that are created in the Tax Reconciliation window can only be edited or deleted there and not in the Trial Balance or Adjusting Journal Entrieswindows.
  • Adjustments that are entered in the Tax Reconciliation window are carried forward to the next year when the client is closed to the next year for the first time. Amounts for adjustments are set to zero when they are carried forward.
  • An adjusting journal entry by tax code will not be created for adjustments made in the Tax Reconciliation window without a Income Statement Tax Code, a Schedule M-1/M-3 Tax Code, or an amount.
  • Adjusting journal entries by tax code are included in the balances that are exported to a tax program by default. An entry can be marked as Exclude in cases where the tax program automatically creates the M-1/M-3 amount.

    For example, because UltraTax CS automatically calculates the M-1/M-3 amount, the adjusting journal entry by tax code for meals & entertainment would be marked as Exclude in the detail tabs of the Tax Reconciliation window. Therefore, where the amount is already calculated in the tax program, the effect of the entry is not exported, but the change in tax net income is accounted for in Trial Balance CS.

  • Adjusting journal entries that are posted to tax codes are not included in consolidation for consolidated clients.

Related topics

Tax Reconciliation entries (examples)

Adjusting journal entries by tax code (examples)

Adjusting Journal Entries [Tasks menu] > Detail version

Adjusting Journal Entries [Tasks menu]

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