My S-corp owns a brokerage account that is managed by an advisor. Every quarter, I receive a statement showing the advisor fee taken out, any interest and/or dividends applied, and any loss/gain to the market value of the account. There is buying and selling by the advisor going on all the time in the account, so I do have tax ramifications that must be accounted for on Form 8949 of my 1040 return as a result of a 1099-B which I received.

Do I need to record any of this in Quickbooks for the S-corp? For instance, in the first quarter after the account was opened, there was $143.44 advisor fee, $.92 interest & dividends, and $860.66 in loss of market value. Do I just keep showing the opening balance of the account on the balance sheet, or should I adjust it every quarter to reflect its true value? If the latter, what accounts should I debit/credit to accurately record these intra-brokerage-account transactions?

Any help would be most appreciated!

#1; You need to create your adjustments.


#2;As you know, S-Corps can choose an accounting method best suited to report the income and expenses of the company. S-Corps are not required to use the accrual method of accounting; they may choose the cash method or a hybrid method of accounting if those methods of accounting. A bookkeeper's job is to accurately/timely record all inflows and outflows of cash into the S corp so shareholders may report profit and loss statements to the IRS. Keeping track of financial information is essential for any business. Once the balance sheet is done, that doesn't always mean it's done. Businesses are constantly changing and not only does the business need to be flexible and adapt to the changes -- whether good or bad -- but the business's financial documents must reflect those changes. Reviewing your financial documents at least once a month and making the necessary changes will keep you up-to-date and avoid trouble once tax time or a shareholder meeting comes along.

Hypothetically, if the investment account has a gain and I record the adjustments in Quickbooks for the S-corp, the increase in net income will flow through to me, and I will be taxed for it. But if I already am going to need to fill out a form 8949 (as a result of receiving 1099-B) on my 1040, won't that create a scenario where I will be double-taxed? Or is the Form 8949 supposed to be filled out and submitted as a part of the S-corp's tax return?

#1;Correct; QuickBooks does not prepare tax return. But it does interface with tax software for business. Sch K-1 of Form 1120S is used to report each shareholder's pro-rated share of net income or loss from an S-Corp, along with various separately stated income and deduction items and Shareholders report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. Sch K-1 can also be used to summarize a shareholder's beginning and ending stock basis for the year.

#2;Your LT(ST)CG is reported on Sch K1 of 1120S line 7 or 8a and is reported on Sch D line 12 for the net long-term capital gain (loss) or on line 5 for Net Short-Term Capital and is also reported on form 894


#3;correct as mentioned above.

I'm still fuzzy on the exact mechanics of how to record the adjustments in Quickbooks. Using the amounts given in my original post, what accounts should I debit and credit?

I guess adj journal entries be;
Advisor’s exp $143.44
A/P $143.44

If you pay, then

A/P $143.44
Cash $143.44

Intreset/Dividend fee $.92
Interest/Dividend Rev $.92
Other assets like Marketable securities are generally increased or decreased to match market value, in which case the offsetting entry is made to an equity account called something like "Unrealized Appreciation of Investments". There would also be an entry for the deferred taxes on the increase/decrease.If yu are a securities dealer, then, you need to apply mark-to-market accounting to reflect market valuation of available-for-sale securities. Securities that are not classified as either trading or held to maturity are classified as available for sale. These investments are reported at fair value, with any unrealized gains or losses bypassing the income statement and instead being reported in a special area of stockholders' equity. For example, if available-for-sale securities decline in value, credit the available-for-sale securities account and debit stockholders' equity.
available-for-sale securities $XXX
stockholders' equity $XXX


You may contact the software vendor for more info.