im trying to complete a 2019 corporate tax return form 1120 for my class, ill try...

im trying to complete a 2019 corporate tax return form 1120 for my class, ill try to post this in as many questions as i can.

	2019		2018
Property and Equipment:
Equipment	$ 1,301,267		931,764
Less: Accumulated depreciation	397,056	904,211	293,233	638,531

the company's depreciation expense for tax purposes is $115,000.

book depreciation expense was not given, if i were to use the difference of accumulated depreciation then the book depreciation would be $103,823

should the difference between tax and book depreciation be input on the schedule M1? if so is it line 5a, or 8a?

or am i way over thinking this?

Expert Solution

Concept:

Schedule M-1 is the reconciliation of book Income to taxable income. Differently for generally accepted accounting principles and tax purposes.

Schedule M-1 is part of form 1120 also known as C-CORPORATION Income tax return.

Difference between depreciation as per book and depreciation as per tax rules is called temporary difference which can be charged against or revered from taxable income in future.

Main Answer:

In given case depreciation as per tax is higher than depreciation as per book by $ 11,177 ( $ 115,000 depreciation as per tax - $ 103,823 depreciation as per book ) must be reported in schedule M-1 on LINE 8 a because the amount of book depreciation is lower than tax so it is charged against book income. But we claim that as deduction in tax return

.

Additional information:

Line 5 a will be applicable in reverse situation in which depreciation as per book will be higher than depreciation as per tax which means expenses recorded in book but not claimed as deduction in the return.

ekkarill92 answered 2 years ago

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