Balance sheet adjustment
In the case of an incorrect balance sheet entry in the balance sheet , the legal term balance sheet correction means that the taxpayer can correct the error by notifying the tax office in accordance with Section 4 (2) sentence 1 EStG . The balance sheet approach is incorrect if it is inadmissible, i.e. h., when it against mandatory requirements of the income tax law or the commercial law or against the income tax law to be observed commercial law generally accepted accounting principles contrary. If the balance sheet adjustment is not possible, the wrong balance sheet entry must be corrected in the closing balance sheet of the first year, the assessment of which can be changed, with an effect on income.
The Federal Fiscal Court is of the opinion that a balance sheet adjustment is not only permissible if assets or prepaid expenses are incorrectly recognized, but also if withdrawals or deposits have been incorrectly posted or not posted at all. In such cases, a position in equity used to determine profit is changed. A change in the deposits and / or withdrawals does not affect the amount of equity, because the associated increase or decrease in profit balances out. This change in equity items with no effect on earnings does not constitute a correction in accordance with Section 4 of the Income Tax Act.
