Question
S Corp Accumulated Adjustments Account
I have an S Corp return where the only book to tax difference is non-deductible travel & entertainment for $331. I'm confused why on Schedule M-2 the non-deductible amount is deducted from the "Ordinary income from page 1, line 22", which excludes this non-deductible amount. I thought the AAA account was supposed to reflect the impact of permanent differences like this such that book retained earnings on Schedule L would differ from the AAA balance by the non-deductible amount? Just for reference, this entity has NO other book to tax (temporary) differences, no non-taxable income, and was never a C Corp.
Thanks!
