Question

Schedule M–1 of Form 1120 is used to reconcile financial accounting net income with taxable income reported on the corporation’s income tax return as follows: Net income per books + Additions - Subtractions = Taxable income. Classify the following items as additions or subtractions in the Schedule M–1 reconciliation.
A. Life insurance proceeds received upon death of covered executive.

B. Tax depreciation in excess of book depreciation.

C. Federal income tax per books.

D. Capital loss in excess of capital gain.

E. Charitable contributions in excess of taxable income limitation.

F. Premiums paid on life insurance policies covering executives (corporation is beneficiary).

G. Domestic production activities deduction.

Answer 1

Answer:

Explanation:

The following items were deducted and added in the Schedule M–1 reconciliation

Additions:

C. Federal income tax per books.

D. Capital loss in excess of capital gain.

F. Premiums paid on life insurance policies covering executives (corporation is beneficiary).

Subtractions:

A. Life insurance proceeds received upon death of covered executive.

B. Tax depreciation in excess of book depreciation.

E. Charitable contributions in excess of taxable income limitation.

G. Domestic production activities deduction.