an accrual basis calendar year c corporation began

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Unformatted text preview: tions. Choices "a", "b", and "d" are incorrect, per the above explanation. CPA-02243 Type1 M/C 120. CPA-02243 A-D Nov 91 II #49 Corr Ans: B PM#26 R 3-99 Page 25 Would the following expense items be reported on Schedule M-1 of the corporation income tax return showing the reconciliation of income per books with income per return? a. b. c. d. Interest incurred on loan to carry U.S. obligations Yes No Yes No Provision for state corporation income tax Yes No No Yes CPA-02243 Explanation Choice "b" is correct. Schedule M-1 of the Form 1120 is used to reconcile the differences between book income and taxable income. Since the interest incurred on loans to carry U.S. obligations and the provision for state corporation income tax are treated the same for both book purposes and tax return purposes, no Schedule M-1 adjustment is required. However, if the interest expense were to carry nontaxable municipal obligations, then the interest would not be tax deductible and would be an adjustment on the Schedule M-1 reconciliation. Choices "...
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This note was uploaded on 06/14/2013 for the course ACCOUNTING Regulation taught by Professor Becker during the Fall '10 term at Keller Graduate School of Management.

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