### Question
What is the definition of accumulated adjustments account?


### Answer
The definition of **accumulated adjustments account** is as follows in *26 U.S.C. § 1368*:

> an account of the S corporation which is adjusted for the S period in a manner similar to the adjustments under section 1367 (except that no adjustment shall be made for income (and related expenses) which is exempt from tax under this title and the phrase “(but not below zero)” shall be disregarded in section 1367(b)(2)(A)) and no adjustment shall be made for Federal taxes attributable to any taxable year in which the corporation was a C corporation

#### Citation:
  - *26 U.S.C. § 1368*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter S-Tax Treatment of S Corporations and Their Shareholders > PART II-TAX TREATMENT OF SHAREHOLDERS**

