Question

      Corporations are required to detail their book/tax differences on either Schedule M-1 or Schedule M-3...

      Corporations are required to detail their book/tax differences on either Schedule M-1 or Schedule M-3 attached to the corporate income tax return. Why is the IRS interested in this information?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Ans : the difference in book or tax are refereed as timing difference and it arises due to recognisation of revenue and expenses in one period and in taxes in another period. The differences might be temporary or permanent. Temporary difference get set off in subsequent periods.

It's is interested in such information for the following purposes.

1. Firstly in books all expenditure are booked but in tax not all expenses are allowed so this difference are to be located so correct amount of tax is being paid to government.

2. Secondly some times in tax expenses are allowed in subsequent period and books is recognised in current period or vice versa. so to ensure taxes are correctly paid in the period in which it is assessee liability such differences are important.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
What is Favorable / Unfavorable Book-Tax Differences? I don't understand when an item is favorable or...
What is Favorable / Unfavorable Book-Tax Differences? I don't understand when an item is favorable or unfavorable. For example (from my book), Interest income from municipal bonds. The income is included in book income, but excluded from taxable income for regular tax purposes... and it is a Favorable difference. Question: Why is it a favorable difference and how exactly does it effect book and tax income? Please give detail information that is easy to understand! THANK YOU
The dividends received deduction is an adjustment on the Schedule M-1. a. True. b. False. The...
The dividends received deduction is an adjustment on the Schedule M-1. a. True. b. False. The ABC Corporation’s depreciation for tax purposes was $100,000. Its depreciation for book purposes was $120,000. This item will be an addition on Schedule M-1. a. True. b. False. One of the purposes of the qualified business income deduction is to increase taxes on businesses that are operating in non-corporate business forms (e.g., sole proprietors, partnerships, and S corporations). True False
Problem 11-7 (Algorithmic) Schedule M-1 (LO 11.4) The Loquat Corporation has book net income of $163,000...
Problem 11-7 (Algorithmic) Schedule M-1 (LO 11.4) The Loquat Corporation has book net income of $163,000 for the current year. Included in this figure are the following items, which are reported on the corporation's Schedule M-1, Reconciliation of Income (Loss) per Books with Income per Return. • Federal income tax expense $24,450 • Depreciation deducted on the books which is not deductible for tax purposes 32,600 • Deduction for 50 percent of meals and entertainment expense which is not allowed...
M-1: Determine the amounts to be included on Reliant's current year Schedule M-1, and if so,...
M-1: Determine the amounts to be included on Reliant's current year Schedule M-1, and if so, whether to add or to subtract from Reliant's book income in order to determine their taxable income: Amount (if any) Added or Subtracted 1. Reliant's disbursements included reimbursed employees' expenses for business meals of $25,000. The reimbursements were not treated as employee compensation. 2. Reliant's books indicate interest income of $15,000; $8,000 is from corporate bonds and $7,000 is from state governmental bonds. 3....
Frigga Industries, which faces a marginal tax rate of 40%, reported the following book-tax differences for...
Frigga Industries, which faces a marginal tax rate of 40%, reported the following book-tax differences for the year underlying accounts of its balance sheet: 12/31/16 12/31/17 12/31/18 Carrying value of fixed assets – book basis $2,200,000 $1,800,000 $1,400,000 Carrying value of fixed assets – tax basis $2,200,000 $1,500,000 $1,300,000 In addition, Frigga recorded a loss contingency in 2016 for $3,000,000 that will not be tax deductible until 2018 when the settlement is expected to be paid in cash. Frigga also...
The Loquat Corporation has book net income of $91,000 for the current year. Included in this...
The Loquat Corporation has book net income of $91,000 for the current year. Included in this figure are the following items, which are reported on the corporation's Schedule M-1, Reconciliation of Income (Loss) per Books with Income per Return. • Federal income tax expense $13,650 • Depreciation deducted on the books which is not deductible for tax purposes 18,200 • Deduction for 50 percent of meals and entertainment expense which is not allowed for tax purposes 8,190 • Deduction for...
The Loquat Corporation has book net income of $217,000 for the current year. Included in this...
The Loquat Corporation has book net income of $217,000 for the current year. Included in this figure are the following items, which are reported on the corporation's Schedule M-1, Reconciliation of Income (Loss) per Books with Income per Return. • Federal income tax expense $32,550 • Depreciation deducted on the books which is not deductible for tax purposes 43,400 • Deduction for 50 percent of meals expense which is not allowed for tax purposes 19,530 • Deduction for a tax...
Required information Andrea would like to organize SHO as either an LLC or as a C...
Required information Andrea would like to organize SHO as either an LLC or as a C corporation generating an 18 percent annual before-tax return on a $300,000 investment. Assume individual and corporate tax rates are both 35 percent and individual capital gains and dividend tax rates are 15 percent. SHO will pay out its after-tax earnings every year as a dividend if it is formed as a C corporation. Assume Andrea is the sole owner of the entity. Ignore self-employment...
Which of the following taxpayers is required to file schedule B with their 2019 tax return?...
Which of the following taxpayers is required to file schedule B with their 2019 tax return? 1.) Arthur received $943 in ordinary dividends from his mutual fund. 2.) Han has accrued interest from a bond he sold during the year. 3.) Makeeda received $1,479 in interest on her money market account. 4.) Olivia received $236 in interest when she cashed in her U.S. Savings Bond.
Exercise 16-22 (Algo) Multiple temporary differences; record income taxes [LO16-2, 16-3] The information that follows pertains...
Exercise 16-22 (Algo) Multiple temporary differences; record income taxes [LO16-2, 16-3] The information that follows pertains to Richards Refrigeration, Inc.: At December 31, 2021, temporary differences existed between the financial statement book values and the tax bases of the following: ($ in millions) Book Value Tax Basis Future Taxable (Deductible) Amount Buildings and equipment (net of accumulated depreciation) $ 128 $ 94 $ 34 Prepaid insurance 54 0 54 Liability—loss contingency 29 0 (29 ) No temporary differences existed at...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT