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Accumulated Adjustment Account - Explained

What is an Accumulated Adjustment Account?

Written by Jason Gordon

Updated at April 7th, 2022

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Table of Contents

What is an Accumulated Adjustment Account?

What is an Accumulated Adjustment Account?

The Accumulated Adjustments Account (AAA) is a balance sheet account that contains the net (post-tax) retained earnings of a corporation that is taxed under Subsection S of the Internal Revenue Code.

 Profits of the S Corporation pass through to the shareholders for taxation. If the actual funds are retained by the corporation, shareholders are still subject to taxation. These post-tax funds are retained in the Accumulated Adjustments Account.

The Accumulated Adjustments Account keeps these funds separate from the original contributed capital and non-taxable income of the corporation. 

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accumulated adjustment account

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