Question

Permanent adjustments on Schedule M-1 (form 1065) include

Answer 1

Adjustments on Schedule M-1 are regarding reconciliation of book income with taxable income. These adjustments include:

1. Net Income/Loss as per books

2. Income Subject to Tax Not Reported on the Books: This includes any income which was not reported in books, but needs to be considered for tax purposes.

3. Guaranteed payments: Includes payments made to partners as guaranteed payments

4. Expenses which are deducted in books but are not deductible for tax purposes: This line item includes depreciation, travel and entertainment.

5. Other income not on Schedule K: This includes any income which was reported in books, but will not be considered for tax purposes.

6. Adjustment for depreciation

7. Income/Loss for tax purposes