Financial Records: M-1 / M-2 / M-3, Methods, Related Parties
Free IRS Enrolled Agent SEE Part 2 (Businesses) lesson in Business Tax Preparation. 29 min read, ~4,362 words.
Schedule M-1 reconciles book to taxable income on Forms 1120, 1120-S, and 1065: add federal tax and permanent-difference expenses, subtract tax-exempt income and excess tax depreciation. Schedule M-2 rolls retained earnings / AAA / partners' capital from beginning to ending; on Form 1120-S, tax-exempt income flows to OAA, not AAA...
Read the full lesson, free →
Worked examples and practice. Free with a free account, no card.
What this lesson covers
- Content
- Example 1
- Example 2
- Common Mistakes
- Check Your Understanding
- Exam Shortcuts
Learning objectives
- 4
Browse all free EA Part 2 lessons or jump into free EA Part 2 practice questions.