The purpose of Schedule M-1 Reconciliation of Income (Loss) and Analysis of Unappropriated Retained Earnings per Books is to reconcile the entity’s accounting income (book income) with its taxable income. Because tax law is generally different from book reporting requirements, book income can differ from taxable income. Here is a list of common book-tax differences found on Schedule M-1. The list is not all-inclusive.
Income on tax return, not included on books
Expenses on books, not included on tax return
Income on books, not included on tax return
Deductions on tax return, not included on books
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