The net income (loss) per books amount that appears on Line 1 of Schedule M-1 Reconciliation of Income (Loss) per Books With Income (Loss) per Return is a calculated field and will change when an adjustment amount is entered on the other lines of the Schedule M-1. The calculation of line 1 is as follows:
If the Schedule M-1 net income (loss) per books amount does not match the net income per books, an adjustment amount will need to be entered on the predetermined adjustment lines and/or the other adjustment worksheet.
The few predetermined adjustment lines on Schedule M-1 would include items such as the deductible portions of travel and entertainment expenses, depreciation, tax exempt interest and a worksheet to enter other adjustment amounts.
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