SEE-2 - Business Tax Preparation - Section 2.4

Reconcile book income to taxable income using Schedule M-1 and Schedule M-3 and interpret the balance sheet on Schedule L.

Reconcile book income to taxable income on Schedule M-1 (or Schedule M-3 for larger entities), adding back nondeductible items such as 50% of meals, federal income tax, and book-tax depreciation differences. Interpret the balance sheet on Schedule L, and recognise how permanent versus temporary differences affect the reconciliation and which items create deferred amounts.

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