The amount of a partnership's income and loss from operating activities is combined with separately stated income and expenses to determine the partnership's equivalent of taxable income. This amount is reconciled to book income on the partnership's Schedule M-1 or Schedule M-3.

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The partnership's total income and loss from operations, along with separately stated items, are combined to calculate the partnership's taxable income equivalent. This figure is then reconciled to the partnership's book income using Schedule M-1 or Schedule M-3, providing a clear picture of how taxable income differs from financial accounting income.

The Amount of a Partnership's Income and Loss from Operating