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

question 62

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 allowable tax depreciation.
• B)Federal income tax per books.
• C)Premiums paid on life insurance policy on key employee.
• D)Tax-exempt interest.
• E)None of the above.

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Definitions:

Discount Rate

This is the interest rate applied in calculating the present value of cash flows that are expected in the future, using the discounted cash flow approach.

Valuation Purposes

The process of determining the present worth of an asset or a company, often for investment analysis, buying or selling.

Total Premium

The complete amount paid for an insurance policy, encompassing all charges and fees.

Pre-Merger Value

The market capitalization or estimated value of a company before it enters into a merger or acquisition deal.