Description
Identify book and tax differences in computing taxable income and how these differences are reported in the tax return.
Taxpayers maintain their books and records on various methods of accounting and have different objectives when preparing financial statements and completing tax returns. Taxpayers are generally required to provide a reconciliation of book and taxable income in their business tax returns, as well as a reconciliation of their equity. This presents many issues for tax return preparers and their clients. This topic will help you identify book and tax differences in computing taxable income and how these differences are reported in the tax return. We will identify the starting point, book income, and common differences in computing book and taxable income. As Schedule M1 presents a bridge between book and taxable income which the IRS uses in ascertaining whether taxable income is properly stated, and Schedule M2 is a reconciliation of equity, it is important for tax return preparers and their clients to understand how to complete these schedules. Failure to properly complete these schedules can result in increased IRS scrutiny and questioning.
Date: 2023-01-19 Start Time: 1:00 PM ET End Time: 2:30 PM ET
Learning Objectives
* You will be able to identify what entities are required to complete Schedules M1 and M2.
* You will be able to describe booktax differences and how they affect the reconciliation of book to taxable income.
* You will be able to review a business entity tax return and understand the Schedule M1 and M2 reconciliations.
* You will be able to discuss how to complete Schedules M1 and Schedule M2 for business entities.