Rounding and Balance Sheet Diagnostics in UltraTax CS
UltraTax defaults to a $10 rounding tolerance for new clients, so differences inside that may be absorbed rather than reported. Larger differences generate a diagnostic, and the Return Summary shows the amount. Use that figure as the starting point: search the trial balance for it, and for half of it.
- Review the diagnostics
- Return Summary
- Balance sheet difference
| Trial balance account | UltraTax CS screen and field | Lands on |
|---|---|---|
| Difference under $10 on a new client | Default rounding tolerance | Absorbed, not reported |
| Larger difference | Diagnostic, with the amount in the Return Summary | Schedule L |
| Difference equals an account balance | That account was never entered | Wherever it belongs |
| Difference equals twice an account | A sign is reversed on that account | Schedule L |
| Shareholder loan mismatch | Its own diagnostic against Schedule L line 19(d) | Schedule L line 19 |
| Retained earnings populated on Screen L-2 | Clear the fields so M-2 drives it | Schedule L versus M-2 |
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Try it freeRounding and Balance Sheet Diagnostics in UltraTax CS on a trial balance
| Acct # | Account | Debit | Credit |
|---|---|---|---|
| 1000 | Cash | 42,800.00 | |
| 1200 | Accounts receivable | 68,500.00 | |
| 1300 | Inventory | 55,000.00 | |
| 1500 | Equipment | 145,000.00 | |
| 1510 | Accumulated depreciation (the account this page is about) | 47,500.00 | |
| 2000 | Accounts payable | 28,400.00 | |
| 2100 | Accrued expenses | 9,200.00 | |
| 2400 | Notes payable | 92,000.00 | |
| 2450 | Due to shareholder | 15,000.00 | |
| 3000 | Common stock | 10,000.00 | |
| 3900 | Retained earnings | 86,300.00 | |
| 3950 | Shareholder distributions | 52,000.00 | |
| 4000 | Gross receipts | 612,000.00 | |
| 5000 | Cost of goods sold | 318,000.00 | |
| 6000 | Salaries and wages | 88,000.00 | |
| 6050 | Officer compensation | 72,000.00 | |
| 6300 | Depreciation expense | 21,500.00 | |
| 6900 | Other operating expenses | 37,600.00 | |
| Total | 900,400.00 | 900,400.00 |
The tolerance exists, and it has a size
For new clients the default rounding tolerance is $10. That is why a return can look clean while the underlying figures are a few dollars apart, and why chasing a $3 difference is usually wasted effort.
It also means a genuine small error can be absorbed. A difference of $8 from a transposed cent somewhere will not announce itself.
Use the number the software gives you
When the balance sheet is out beyond the tolerance, UltraTax generates a diagnostic and the Return Summary shows the difference. Read that figure before changing any input, because the amount is the best evidence available.
Then do arithmetic rather than re-reading:
- Search the trial balance for the exact difference. One large difference is usually one account that never made it in
- Search for half of it. A difference equal to twice an account balance means that account went in with the wrong sign, so correcting it moves the balance sheet by twice the amount
- Compare it to accumulated depreciation. The most common single cause of a first year imbalance is beginning accumulated depreciation, which is not on the current year trial balance at all
- Compare it to the distributions. If they match, the distributions were never entered
The diagnostics worth not dismissing
The shareholder loan check. UltraTax compares total shareholder loan principal from the basis detail against Schedule L line 19(d) and complains when they disagree. That is a real reconciliation between two independent records.
Retained earnings on Screen L-2. Populated fields there, or tax codes 467 to 470 assigned to them, make Schedule L and Schedule M-2 disagree in a way that looks like a balance sheet error but is a data entry choice.
Partner allocation totals. On a 1065, a field with Ptr Alloc allocations but no total entered directly is the documented reason M-2 lines 3, 4 and 7 fail to match item L of the K-1s.
Do not force the balance
An override that makes Schedule L tie converts this year's unexplained difference into next year's beginning balance, with a year less context for whoever finds it.
If the client's books genuinely do not balance, that is a conversation with the client, not an adjustment to the return. The trial balance is their record, and a balance sheet that does not foot is their problem to resolve before it becomes a filed position.
Tax return treatment
| Form | Line |
|---|---|
| Form 1120 | Schedule L, with the difference shown in the Return Summary |
| Form 1120S | Schedule L, with Schedule M-2 from Screen Ms |
| Form 1065 | Schedule L line 21, with capital from Screen M1M2 |
Common questions
What is the default rounding tolerance in UltraTax CS?
$10 for new clients. Differences inside that may be absorbed rather than reported, which is why very small discrepancies do not generate a diagnostic and are usually not worth chasing.
Where does UltraTax show how much the balance sheet is out by?
In the Return Summary, alongside a diagnostic when the difference exceeds the rounding tolerance. That figure is the starting point for finding the cause.
How do I use the out of balance amount to find the error?
Search the trial balance for the exact figure, then for half of it. Compare it to accumulated depreciation, which is the most common first year omission, and to the distributions, which are the second. One large difference is usually one missing account.
Should I override Schedule L to make it balance?
No. The override turns this year unexplained difference into next year beginning balance, with less context for whoever finds it. If the client books do not balance, that needs resolving with the client before it becomes a filed position.
Related answers
Go deeper
This page is the short answer. These articles work through the same ground in detail.
Last reviewed October 18, 2026.