Using business tax returns in business valuation

The role of business tax returns in business valuation

Why historical financial statements matter

A fundamental step in valuing a business is understanding its historical financial performance and financial position. Regardless of the valuation approach being considered, financial statements provide much of the information necessary to evaluate a company's earnings, profitability, assets, liabilities, and overall financial condition.

An income statement provides insight into how a business generates revenue, incurs expenses, and produces earnings. A balance sheet provides a snapshot of the company's assets, liabilities, and equity at a particular point in time. When analyzed across multiple years, these statements help valuation professionals identify trends, assess financial stability, and determine whether historical results are representative of the company's ongoing operations.

Historical financial statements also provide the foundation for identifying potential normalization adjustments, evaluating working capital requirements, and developing earnings or cash flow measures used in valuation.

Tax returns as a primary or supporting financial source

For privately held businesses, reliable internal financial statements are not always available. Smaller companies may maintain their records primarily for tax compliance, while others may have incomplete or inconsistently prepared financial reports, especially when the owner is also the bookkeeper.

Business tax returns can provide a valuable alternative or supplementary source of financial information. Forms 1120, 1120-S, and 1065 report significant portions of a company's historical income and expenses, while accompanying schedules and statements may provide additional information about assets, liabilities, and other financial activities.

When internal financial statements are unavailable or unreliable, tax returns can serve as the primary source for reconstructing historical income statements and balance sheets, subject to the information included in the returns. When internal statements are available, tax returns can also be used to compare reported results, investigate discrepancies, and corroborate financial information.

By extracting and organizing the relevant information across multiple years, valuation professionals can develop a consistent set of historical financial statements to serve as a starting point for further financial analysis and valuation adjustments.

Are tax returns more reliable than internal financial statements?

Why tax returns can be a more reliable starting point

For many privately held businesses, tax returns can provide a more reliable starting point for financial analysis than internally prepared financial statements. This is particularly true for smaller, owner-operated businesses where financial records are maintained by management or bookkeepers with limited accounting experience.

Internally prepared financial statements are generally generated from the company's own accounting records, often without an independent accounting professional reviewing the underlying transactions or account balances. In smaller businesses, the owner may also serve as the bookkeeper, increasing the potential for misclassified expenses, unreconciled accounts, and other reporting errors to carry through to the financial statements.

Business tax returns, on the other hand, are often prepared by an outside CPA or other qualified tax professional. During the preparation process, the accountant may identify and correct errors in the underlying records, reconcile significant accounts, and make adjustments necessary to properly report the company's financial activity. For example, discrepancies in cash balances, loan balances, or interest expense may be identified and addressed before the return is filed.

As a result, the financial information reflected in a professionally prepared tax return may incorporate corrections that were never posted to the company's internal accounting records. This can make the return a particularly valuable source when management-provided financial statements contain unresolved discrepancies or have not been updated for year-end adjustments.

Tax returns also follow a standardized reporting structure. Forms 1120, 1120-S, and 1065 provide relatively consistent categories for reporting income, deductions, and other financial information, which can help valuation professionals develop comparable historical financial statements across multiple years.

Limitations of tax return financial information

Despite these advantages, a professionally prepared tax return is not necessarily more accurate than a company's internal financial statements. Tax preparation does not constitute an audit or review, and the preparer may rely substantially on information supplied by management without independently verifying the underlying account balances. The extent of any reconciliation or correction depends on the preparer and the scope of the engagement.

Tax returns are also prepared under federal tax reporting requirements rather than solely to measure economic performance. Differences in expense deductibility, revenue recognition, and other tax treatments can cause reported taxable income to differ significantly from income recorded in the company's books.

Additionally, tax returns may summarize accounts that are presented in greater detail internally, and certain businesses may not be required to include a balance sheet with their returns.

For valuation purposes, the strongest approach is generally to evaluate all available financial records and reconcile material differences between them. However, when internal financial statements are prepared by inexperienced personnel or have not undergone meaningful review, a professionally prepared tax return can provide a more reliable foundation for reconstructing historical financial information.

Book income vs. taxable income: which matters for valuation?

Before extracting financial statements from a business tax return, it is important to understand the difference between taxable income and book income. Although both figures originate from the company's financial activity, they serve different purposes, and understanding these differences is essential when reconstructing financial statements for business valuation.

Why book income matters more than taxable income in valuation

Business tax returns are primarily prepared to report a company's financial activity under federal tax law. The return determines the income subject to taxation and reports the information necessary to calculate the applicable tax obligations.

One important distinction is how different business entities are taxed. C corporations (Form 1120) generally pay federal income taxes at the corporate level, while S corporations (Form 1120-S) and partnerships (Form 1065) generally pass their taxable income and other tax items through to their owners. These items are allocated through Schedule K and individual Schedules K-1, with owners generally reporting their respective shares on their personal income tax returns (Form 1040). Certain exceptions and entity-level taxes may apply.

Book income, on the other hand, represents the net income recorded in the company's accounting records. It includes revenues and expenses recognized under the company's accounting policies, regardless of whether those amounts receive the same treatment for tax purposes.

For business valuation, book income is generally a more useful starting point than taxable income. The objective of a valuation is to understand the company's underlying economic performance, not simply the amount of income subject to taxation. Certain legitimate business expenses, such as nondeductible meals or portions of entertainment expenses, may be reflected in the company's books but excluded from tax deductions. Likewise, certain income may be excluded from taxable income despite being recorded in the company's books.

As a result, relying solely on taxable income can produce an incomplete or misleading picture of the company's financial performance.

The goal when extracting an income statement from a tax return is therefore to reconstruct the company's book income, including financial activities and expenses that may have been treated differently for tax purposes. This provides a more comprehensive starting point for analyzing historical earnings and identifying adjustments necessary for valuation.

Book income is not necessarily normalized income. Additional adjustments may still be required to reflect the company's ongoing economic performance.

How accounting methods affect tax-return-derived financial statements

Another important consideration is the accounting method used to prepare the tax return. The three primary methods reported for federal income tax purposes are cash, accrual, and other permitted methods.

Under the cash method, revenue is generally recognized when received and expenses when paid. Under the accrual method, revenue is generally recognized when earned and expenses when incurred, regardless of when payment occurs.

For valuation purposes, the accounting method can materially affect reported earnings and the presentation of assets and liabilities. For example, a cash-basis business may have outstanding customer invoices or unpaid expenses that are not reflected in its cash-basis income statement, even though those amounts are relevant to understanding its financial position.

The accounting method used on the return may also differ from the method used to maintain the company's internal books. When reconstructing financial statements, the analyst should identify the applicable accounting basis and ensure that the resulting statements are consistently presented and appropriately labeled.

With these distinctions established, the next step is to extract the company's financial information from the return. This begins with the income and expense accounts reported on the first page, followed by separately stated items, supporting schedules, and the reconciliation of book income to income reported for tax purposes.

How do you reconstruct an income statement from a business tax return?

Once the differences between taxable income and book income are understood, the next step is to reconstruct the company's historical income statement. Although business tax returns contain much of the necessary financial information, that information is often spread across several pages, schedules, and supplemental statements.

Simply copying the income and deductions reported on the first page of the return will not always produce a complete income statement. To properly reconstruct the company's financial performance, the analyst must also identify separately stated items, account for book-to-tax differences, and incorporate additional detail from supporting statements.

Extracting ordinary business income and expenses from page one

The first page of Forms 1120, 1120-S, and 1065 provides the starting point for reconstructing the income statement. Although the layout and individual line items differ somewhat between forms, each reports the company's primary business income and deductions.

These typically include:

• Revenue: Gross receipts or sales, less returns and allowances, along with certain other business income.
• Cost of goods sold: Direct costs associated with producing or acquiring the goods sold by the business.
• Gross profit: Revenue less cost of goods sold.
• Operating expenses: Compensation, salaries and wages, rent, repairs, taxes and licenses, advertising, depreciation, and other business deductions.
• Interest expense: Financing costs reported separately from many other deductions.
• Ordinary business income: The resulting income or loss reported from the business's ordinary activities under applicable tax rules.

These accounts can be organized into a conventional income statement, with revenue at the top, followed by cost of goods sold, gross profit, operating expenses, and income.

However, ordinary business income reported on page one should not be confused with the company's total book income. Certain financial activities are reported elsewhere on the return because of their tax treatment. Additionally, expenses recognized in the company's books may be excluded or treated differently when calculating ordinary business income.

Page one therefore provides the foundation of the income statement, but additional schedules must be reviewed before the reconstruction is complete.

Schedule K: incorporating separately stated items

For S corporations and partnerships, Schedule K reports income, deductions, credits, and other items that must be separately stated for tax purposes. These items are allocated to shareholders or partners through their respective Schedules K-1.

The IRS requires certain activities to be separately reported because their tax treatment may depend on the individual owner's circumstances. However, being separately stated for tax purposes does not mean the activity should be excluded from the company's financial statements.

Common separately stated items include:

• Interest and dividend income.
• Rental real estate income or losses.
• Capital gains and losses.
• Gains and losses from the sale of certain business assets.
• Charitable contributions.
• Certain deductions, credits, and other tax-related items.

For example, a company may earn interest on excess cash held in a savings account. That interest may be reported separately on Schedule K rather than included in ordinary business income on page one. Nevertheless, the interest is still income earned by the company and may be reflected in its book income statement.

Similarly, charitable contributions may be separately stated for tax purposes even though the expenditures were recorded as expenses in the company's accounting records.

When reconstructing financial statements, the analyst should review these items to determine which represent actual book income or expenses and incorporate them into the appropriate financial statement categories.

Not every Schedule K item should be added directly to the income statement. Tax credits, certain deductions, and other tax attributes do not necessarily represent additional book income or expenses. Furthermore, income from investments, rental activities, or asset sales may be classified as nonoperating or analyzed separately for valuation purposes.

The objective is to capture the company's complete financial activity without duplicating amounts already included elsewhere in the return.

Note: Form 1120, filed by C corporations, generally incorporates income and deductions into the corporate tax calculation rather than using the same pass-through Schedule K reporting structure.

Schedule M-1: reconciling book income and income per return

After extracting the income and expenses reported throughout the return, the next step is to reconcile the reconstructed income statement to the company's book income.

For most smaller businesses that are required to report this information, Schedule M-1 provides the reconciliation between net income recorded in the company's books and income reported for tax purposes. Larger businesses may instead report these differences on Schedule M-3.

Schedule M-1 is particularly valuable when reconstructing financial statements because it identifies items that receive different treatment for book and tax purposes.

Common differences include:

• Nondeductible expenses: Expenses recorded in the books but not deductible for tax purposes, such as certain meals and entertainment expenses or life insurance premiums.
• Tax-exempt income: Income recorded in the books that is excluded from federal taxable income.
• Depreciation differences: Differences between depreciation recorded in the books and depreciation deducted for tax purposes.
• Timing differences: Income or expenses recognized in different periods for book and tax reporting.

Consider a business that incurred $10,000 of nondeductible expenses during the year. These expenses reduce book income but do not reduce taxable income. If the analyst relies solely on tax-return deductions, these expenses may be omitted, causing the reconstructed income statement to overstate book income.

Schedule M-1 helps identify and reconcile these differences.

The most important figure for this process is Schedule M-1, line 1: Net income (loss) per books.

This amount provides a reconciliation target for the reconstructed book-basis income statement. When all applicable financial activities and book-to-tax adjustments have been properly accounted for, the reconstructed net income should agree with the amount reported on line 1, assuming the underlying records and reported reconciliation are consistent.

For valuation professionals, this is one of the most useful checks available when financial statements are reconstructed from tax returns.

A successful reconciliation does not independently establish that the company's financial statements are accurate. However, it provides evidence that the extracted information is internally consistent with the book income reported on the return.

Supplemental statements and supporting schedules

Beyond the primary forms and schedules, business tax returns frequently include supplemental statements that provide additional detail behind summarized income and expense categories.

For example, the first page of Form 1120-S includes an account for other deductions. Rather than identifying each expense individually, the return may report a single total, with a supplemental statement listing the underlying accounts.

That statement may identify categories such as professional fees, insurance, utilities, office expenses, automobile expenses, and other operating costs.

For business valuation purposes, retaining this detail is important. Individual expense categories can provide insight into the company's cost structure and help identify accounts that may warrant further investigation or normalization adjustments.

Other useful supporting information may include:

• Form 1125-A: Additional information about cost of goods sold, where applicable.
• Form 1125-E: How officer compensation is split among the individual officers.
• Other income statements: Additional sources of business or nonoperating income.
• Other deduction statements: Detailed operating expenses summarized on the return.

The availability and level of detail of these statements vary by return. Where detail is unavailable, the reconstructed financial statements should preserve the reported amounts without inventing unsupported account classifications.

Reconciling the completed income statement

After extracting the relevant information, the analyst can organize the accounts into a conventional income statement and perform a final reconciliation.

The process generally involves combining the income and expense accounts reported on page one, incorporating applicable separately stated items, reviewing supporting statements, and accounting for the differences between book income and income reported for tax purposes.

The resulting financial statements should retain sufficient account detail to support financial analysis while reconciling to reported book income when that information is available. For S corporations and partnerships, Schedule M-1 line 1 is the benchmark. Where Schedule M-1 is not provided, additional financial records or alternative reconciliation procedures may be necessary.

The result is a reconstructed historical income statement that can serve as a starting point for business valuation. The analyst can then evaluate revenue trends, profitability, and operating expenses while identifying potential normalization adjustments and items requiring further investigation.

How do you reconstruct a balance sheet from Schedule L?

In addition to income statement information, business tax returns can provide the financial data necessary to reconstruct a company's historical balance sheet. For Forms 1120, 1120-S, and 1065, this information is generally reported on Schedule L, Balance Sheets per Books.

Unlike the income statement, which often requires combining information from multiple schedules and reconciling book-to-tax differences, Schedule L provides a more direct starting point. However, the information is typically summarized into broad account categories, and supplemental statements may be necessary to prepare a more detailed balance sheet for valuation purposes.

Understanding Schedule L: balance sheets per books

Schedule L reports the company's assets, liabilities, and equity at the beginning and end of the tax year. When completed, these amounts are generally intended to agree with the company's underlying accounting records.

The schedule includes many of the same categories found on a conventional balance sheet:

• Current assets: Cash, accounts receivable, inventories, and other current assets.
• Long-term assets: Investments, buildings, depreciable assets, land, and other assets.
• Current liabilities: Accounts payable, short-term obligations, and other current liabilities.
• Long-term liabilities: Loans and other obligations payable beyond one year.
• Equity: Capital contributions, retained earnings, and other shareholder or partner equity accounts.

These balances can be organized into a conventional balance sheet, separating current and long-term accounts and presenting assets, liabilities, and equity in a format suitable for financial analysis.

Schedule L also provides both beginning- and end-of-year balances, allowing valuation professionals to analyze changes in the company's financial position. This can be particularly useful when evaluating working capital, identifying significant financing activity, and reviewing historical changes in assets and liabilities.

Accounting basis and balance sheet interpretation

As discussed previously, the accounting method used by a business can materially affect the financial information reported.

For example, a business maintaining its books on a cash basis may not record accounts receivable or accounts payable in the same manner as an accrual-basis business. This can affect the presentation of working capital and the interpretation of historical financial performance.

It is important to recognize that Schedule L reports balance sheet amounts per books, not necessarily the amounts determined under the tax accounting method identified on page one of the return. The analyst should consider the company's underlying accounting records when determining the basis of the reconstructed financial statements.

Another important distinction for valuation purposes is that book values do not necessarily represent fair market values. Fixed assets, real estate, investments, and other assets may have values substantially different from their recorded balances.

Therefore, while Schedule L provides a useful foundation for analyzing financial position, additional investigation or adjustments may be necessary depending on the valuation approach and purpose.

Incorporating supplemental statements and supporting detail

Similar to the income statement, Schedule L often reports certain account balances in summarized categories. Supplemental statements may provide additional information needed to reconstruct a more detailed balance sheet.

For example, other current assets, other assets, and other liabilities may represent several individual accounts that are combined into a single line on Schedule L.

Reviewing the attached statements can help identify specific balances such as prepaid expenses, shareholder loans, deposits, accrued liabilities, or other accounts that may require separate consideration.

This detail is particularly useful in business valuation, where identifying nonoperating assets, related-party balances, and interest-bearing debt may materially affect the analysis.

When reconstructing the balance sheet, the analyst should preserve available account detail rather than combining all amounts into broad categories. This makes the financial statements more useful for subsequent analysis and helps maintain a clear connection between the reported balances and their original sources.

Reconciling the completed balance sheet

Once the balance sheet accounts have been extracted and organized, the analyst should verify that total assets equal total liabilities and equity. Individual account balances should also reconcile to the corresponding amounts reported on Schedule L.

When multiple years of tax returns are available, beginning balances should be compared with the preceding year's ending balances, and significant discrepancies should be investigated.

Although certain smaller businesses are not required to complete Schedule L, most business tax returns encountered in valuation engagements will contain this information. When Schedule L is unavailable or lacks sufficient detail, additional financial records may be necessary.

The completed balance sheet, together with the reconstructed income statement, provides a foundation for evaluating the company's historical financial position and identifying assets, liabilities, and other items requiring further consideration in the valuation.

How are tax-return financial statements used in a valuation?

Once the historical income statements and balance sheets have been reconstructed, the financial information can be used as a foundation for business valuation. These statements provide the basis for evaluating historical performance, identifying potential normalization adjustments, and understanding the company's financial position.

Although the reconstructed financial statements may accurately reflect the company's reported book income and account balances, additional analysis is generally necessary before the information can be used to estimate the value of the business.

Historical earnings and profitability analysis

Historical financial statements allow valuation professionals to evaluate a company's financial performance over multiple years. Common areas of analysis include revenue growth, gross profit margins, operating expenses, EBITDA, and other measures of earnings and cash flow.

Analyzing these figures across several years can help identify trends, unusual fluctuations, and changes in the company's operations. For example, declining gross margins may indicate increased costs, pricing pressures, or changes in the company's revenue mix.

Tax-return-derived financial statements can also provide a consistent presentation of historical results, particularly when the company's internal financial reporting has changed over time.

Normalizing historical financial performance

One of the most important steps in business valuation is determining whether historical earnings are representative of the company's ongoing operations.

Normalization adjustments may be necessary to account for expenses or income that are unusual, nonrecurring, discretionary, or otherwise not representative of the business's expected future performance.

Business tax returns and their supporting schedules can provide useful information for identifying potential adjustments, particularly when detailed internal accounting records are unavailable.

Common areas of consideration include:

• Owner and officer compensation: Adjustments may be necessary when compensation paid to business owners differs from reasonable market compensation for the services they perform. Form 1125-E, Compensation of Officers, when included with the return, provides a breakdown of compensation paid to individual officers. This information can serve as a starting point for evaluating owner compensation and determining whether normalization adjustments are appropriate.
• Discretionary expenses: Personal or discretionary expenditures recorded through the business may require adjustment when evaluating ongoing earnings. Some of these expenses may be nondeductible for tax purposes but still represent actual expenses recorded in the company's books. Without reviewing Schedule M-1 and reconciling taxable income to book income, these expenses could be omitted from the reconstructed income statement and overlooked during the normalization process.
• Nonrecurring items: Unusual expenses or income that are not expected to continue may require adjustment. Reviewing detailed expense accounts, supplemental statements, and historical financial results can help identify potential nonrecurring items that warrant further investigation.
• Nonoperating income and expenses: Financial activities unrelated to the company's primary operations may need to be evaluated separately from operating earnings. For S corporations and partnerships, certain items, such as investment income, rental income, and gains or losses from asset sales, are reported separately on Schedule K. Without incorporating these items into the financial statement reconstruction, the analyst could overlook financial activities relevant to the valuation or fail to identify amounts that should be excluded from normalized operating earnings.

These examples demonstrate why reconstructing a complete income statement from the tax return is important beyond simply determining historical net income. Information reported across different schedules can help identify potential valuation adjustments that might otherwise be missed.

However, the presence of an expense or separately stated item does not automatically justify a normalization adjustment. Supporting documentation, management interviews, and professional judgment are generally necessary to determine whether an adjustment is appropriate and to substantiate its amount.

Balance sheet and financial position analysis

The reconstructed balance sheet provides information about the company's assets, liabilities, financing structure, and working capital.

Valuation professionals can use this information to evaluate historical working capital requirements, identify interest-bearing debt, and assess assets or liabilities that may require separate consideration.

For example, excess cash, investments unrelated to operations, shareholder loans, or other nonoperating assets may need to be evaluated separately from the company's operating earnings.

While tax-return-derived financial statements provide a useful starting point, reported book values do not necessarily represent fair market values. Additional analysis may therefore be required depending on the valuation approach being applied.

Ultimately, reconstructing financial statements from business tax returns is the beginning of the valuation analysis, not the conclusion. By organizing the financial information into consistent historical statements, valuation professionals establish a foundation for evaluating earnings, assessing financial condition, and developing the appropriate adjustments used in determining business value.

How Sidesheet automates the extraction

Reconstructing financial statements from business tax returns is an important but often time-consuming part of the valuation process. Analysts must review multiple years of tax returns, extract income and balance sheet information, identify relevant supplemental statements, reconcile book income, and organize the resulting financial information into a consistent format.

While these procedures are necessary, much of the work involves repetitive data extraction, formatting, and reconciliation rather than valuation analysis itself.

Sidesheet is being developed to automate this process, allowing valuation professionals to spend less time preparing historical financial statements and more time analyzing the businesses they value.

Reducing hours of manual financial statement preparation

Sidesheet is built with a practising valuation CPA. In that work, and in early conversations with valuation professionals considering Sidesheet, manually extracting and organizing financial statements from tax returns has taken several hours per engagement.

Based on that experience and feedback, we estimate that Sidesheet has the potential to save approximately 2–3 hours per engagement, depending on the number of tax returns, their complexity, and the analyst's existing workflow. This is an estimate from practice, not a measurement of Sidesheet's performance; we will publish measured numbers as firms in the beta report them.

For firms preparing dozens or hundreds of valuations each year, these savings could represent a meaningful reduction in time spent on financial statement preparation.

How much time could Sidesheet save you?

At 2–3 hours saved per engagement.

Engagements a year

Hourly rate (USD)

Hours saved a year

200–300

Value of that time

$30,000–$45,000

The 2–3 hours is an estimate from our own valuation work and early conversations with practitioners, not a measurement of Sidesheet. The dollar figure illustrates the value of that time; it is not a promise of savings or revenue.

Sidesheet is designed to automate much of the initial extraction, organization, and reconciliation process while allowing professionals to review the results before incorporating them into their analysis.

From tax returns to Excel-ready financial statements

Sidesheet is designed to convert business tax returns, including Forms 1120, 1120-S, and 1065, into standardized, multi-year income statements and balance sheets.

Rather than extracting only the primary figures reported on page one, the software is being developed to analyze supporting schedules and statements, including Schedule K, Schedule M-1, Schedule L, and detailed income and expense statements.

The objective is to preserve the financial detail necessary to reconstruct the company's historical book income and financial position while presenting the information consistently across multiple years.

Once processed, users will be able to export the reconstructed statements into Excel. The exported financial statements are designed to be readily incorporated into existing valuation models and workpapers, reducing the need to manually reenter figures or reformat financial information.

By standardizing account classifications and financial statement presentation, Sidesheet also aims to simplify historical trend analysis when a company's tax return reporting changes from year to year.

Verification, reconciliation, and audit trails

Accuracy and traceability are essential when using financial information in business valuation.

For this reason, Sidesheet is being designed to provide more than a completed income statement and balance sheet. Its Excel exports will include supporting audit trails and validation checks to help professionals verify the extracted information.

Planned verification features include:

• Income statement reconciliation: Comparing reconstructed book income to Schedule M-1, line 1, when available.
• Balance sheet validation: Checking that assets equal liabilities and equity.
• Source audit trails: Identifying the source of extracted financial information so users can trace amounts back to the relevant tax return schedules and statements.
• Data validation: Identifying discrepancies or incomplete reconciliations that may require further review.

These features are intended to make the financial statement preparation process more transparent and auditable, rather than requiring users to accept extracted figures without supporting documentation.

Automated extraction does not eliminate the need for professional review, but it can reduce the time required to prepare and verify the underlying financial statements.

Protecting confidential financial information

Business tax returns contain confidential financial information and personal identifiers such as EINs and Social Security numbers. How a tool handles them matters as much as what it extracts.

Sidesheet processes and stores returns only in the United States. Your clients' returns are never used to train any model, ours or our provider's, and the provider keeps no copy of what it reads. Each firm's data is walled off from every other firm's, sign-in requires a second factor unless your firm turns it off, everyone in your firm confirms the client consent notice before they can upload, and files are deleted after seven years or whenever you remove a return.

The full picture, written for whoever reviews your firm's vendors, is on our Security page. The binding commitments are in our Security policy, How we read returns and Data Processing Addendum.

Join the Sidesheet waitlist

Sidesheet is currently in private beta, with the goal of simplifying financial statement preparation for business valuation professionals, forensic accountants, and others who regularly work with business tax returns.

Our objective is straightforward: reduce the time spent manually extracting, organizing, and reconciling financial information so professionals can focus on the analysis that matters.

Join the waitlist for founding firm pricing and a place in the beta.

Download the sample return and export

Every figure in this guide comes from one set of returns: Anytown Heating & Air, Inc., a fictional S corporation, for tax years 2021 through 2025. Once our beta launches, the returns and the Excel workbook Sidesheet produces from them will be here to read in the page or download, so you can follow a line from page one through Schedule M-1 to the income statement, or open the audit trail to see where every number came from.

Downloads open when our beta launches, so the export you get is one Sidesheet actually produced from these returns.

Form 1120-S, tax years 2021 to 2025

Five returns in one PDF, with Schedules K, L, M-1 and the supporting statements.

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The Sidesheet export for those returns

Five-year income statement, balance sheet and tax-basis income statement, with the audit trail that sources every line.

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