ACCT410-1404B-01 Advanced Tax 3IP

In practice, the first step in preparing a corporate income tax return is to analyze the Income Statement and determine what items need to be adjusted for tax purposes. The preparer may create a summary of these differences for the file to support the Form 1120 that he or she prepares. The differences are reported on the Form 1120 Schedule M-1 or Form 1120 Schedule M-3 depending on the size of the company.

Part 1

Deliverable Length: 800–1,000 words

Use the following Web site to download the Form 1120 and Form 1120 (Schedule M-3) along with the instructions:

• IRS Forms and Publications

Prepare a memo to the file that explains the following:

• What is the Schedule M-1 and what is its purpose?
• How is the information reported on the Schedule M-1? (Describe the components.)
• Describe 2 book or tax differences that may be reported on the Schedule M-1.
• When is the Schedule M-1 to be prepared?
• Who must file a Schedule M-3? How is it filed?
• What is the purpose of the Schedule M-3?
• How is the information reported on the Schedule M-3? (Describe the sections or components.)
• Describe how the Schedule M-3 differs from the Schedule M-1.
• What are temporary differences and permanent differences?

Part 2

Deliverable Length: Completed Form 1120 (Schedule M-1)

Go to the IRS Forms and Publications Web site to download the Form 1120 (Schedule M-1). Prepare the Schedule M-1 using the taxable income that you calculated in the Week 2 Individual Project.