Schedule M-1 of Form 1120 Is Used to Reconcile Financial

question 54

Multiple Choice

Schedule M-1 of Form 1120 is used to reconcile financial net income with taxable income reported on the corporation's income tax return as follows: net income per books + additions - subtractions = taxable income. Which of the following items is a subtraction on Schedule M-1?

• A) Book depreciation in excess of tax depreciation.
• B) Excess of capital losses over capital gains.
• C) Proceeds on key employee life insurance.
• D) Income subject to tax but not recorded on the books.
• E) None of the above.

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Definitions:

Jury's Finding

The determination or decision made by a jury regarding the facts of a case, which influences the final verdict.

Contingency-Fee Basis

An arrangement between a client and a service provider (often a lawyer) where the service provider is paid a percentage of the amounts recovered through legal action, only if the action is successful.

Personal-Injury

Legal term referring to injury to the body, mind, or emotions, as opposed to an injury to property.

Litigation Process

The procedure of taking legal action in court to enforce or defend a right or settle a dispute.