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 tax depreciation.
B) Excess of capital losses over capital gains.
C) Proceeds on key employee life insurance.
D) Income subject to tax but not recorded on the books.
E) None of the above.

Question

Quizplus · Accepted Answer

Proceeds on key employee life insurance are typically not taxable and thus would be subtracted from book income to reconcile to taxable income on Schedule M-1.

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