[Anonymous]

Having alot of trouble with reconciling book and tax return schedule m-1 (1120) amounts for REG. Wiley test bank gives some examples that I can memorize but I keep getting thrown off by items that either have no effect or are not as common and thus not listed in by Becker or wiley, so I don’t know what to do with them.

Anyone have any advice to help me make sense of this or a resource that explains it in simpler terms?

I think I’m missing the big picture here..

[Vlakmir]

The big picture is much easier than you are probably making it out to be,

The M-1 Starts with Book income. So All things are included. Tax exempt interest, Non-deductible items, etc…

Because you are going from Book income to tax income, you need to subtract out tax exempt items, and Add back in non-deductible expenses to get to tax income. It's just algebra and knowing the variables.

A = book income. Included in A is Tax exempt interest (B), and Life insurance expenses of a key officer (C).

For book income, you would go

Gross income + B – C = Book income.

To get to tax income, you go

“Book income -B + C = Taxable income”..

In short:

That M-1 goes from Book income to taxable income. Add Non-deductible expenses that you deducted to get to book income, subtract out tax exemt items included in book income. Be aware of whether or not the company recorded them into book income (ie; the question might say they did not include taxable income in book income, so it's already taken out, you do nothing with it to get from book to taxable income)

REG - 92
AUD - 90
BEC - 82
FAR - 82
BISK Review Materials
DONE! /Happydance

[Vlakmir]

The big picture is much easier than you are probably making it out to be,

The M-1 Starts with Book income. So All things are included. Tax exempt interest, Non-deductible items, etc…

Because you are going from Book income to tax income, you need to subtract out tax exempt items, and Add back in non-deductible expenses to get to tax income. It's just algebra and knowing the variables.

A = book income. Included in A is Tax exempt interest (B), and Life insurance expenses of a key officer (C).

For book income, you would go

Gross income + B – C = Book income.

To get to tax income, you go

“Book income -B + C = Taxable income”..

In short:

That M-1 goes from Book income to taxable income. Add Non-deductible expenses that you deducted to get to book income, subtract out tax exemt items included in book income. Be aware of whether or not the company recorded them into book income (ie; the question might say they did not include taxable income in book income, so it's already taken out, you do nothing with it to get from book to taxable income)

REG - 92
AUD - 90
BEC - 82
FAR - 82
BISK Review Materials
DONE! /Happydance

[Author]

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