Hey everyone
We have picked up a number of law firms as clients over the past year. On most I see the iola and associated liabilities zeroed out on prior returns as they reconcile and match on the books and there is no reporting for this on 1120s / 1065. That makes sense to me since it isn’t really cash as they don’t have the rights to it. But now I have one I am looking at which does show the cash on sched L, multi- millions, and a huge liability account to offset.
My initial reaction is that this is incorrect but I thought I would ask this fantastic community we have here. If it is wrong and I remove for 2019, do I also correct the beginning balance on L or take it as it was. And does the big change raise any flags. Thoughts?
Thanks!
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James Hall
HALL CPA GROUP LLP
Kings Park NY
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