Question

What is the purpose of Schedule M-1 on the Form 1120?

Answer 1

• Schedule M-1 is the list of common book-tax differences found in the Form 1120.
• The purpose is to reconcile the company's income in records to taxable income.
• With the list of Schedule M-1, one can easily understand what to include it not to include in tax return. It explains the list of the following:

1. Income not in records but taxable income.
2. Expenses in records which are exempt from tax.
3. Income in records which are exempt from tax.
4. Items deducted in tax return which are not recorded in books.