Below are the M-1 items for Brown Corp for 2014. You need to complete the Schedule L, Schedule M-1, and M-2. M-1 and M-2 are very short compared to schedule L.

The following information for 2014 relates to Brown Corp, a calendar year, accrual method taxpayer.

Net Income per books (after-tax) $250,000 Federal income tax per books 122,250 Meals & Entertainment (amount deducted on GAAP financial statements) 8,400 Depreciation (amount deducted on GAAP financial statements) 145,000 Depreciation (amount calculated for tax purposes under MACRS) 130,000 Fine for Speeding tickets 6,250 Amortization (GAAP) 0 Amortization (Tax) 10,750 Country Club Dues 11,000 Accrued Vacation not deducted on 12/31/13 Return 15,000 Accrued Vacation @ 12/31/14 (7,500 paid by 3/15/15) 25,000 Allowance for Bad Debts on Balance Sheet @ 12/31/13 13,200 Allowance for Bad Debts on Balance Sheet @ 12/31/14 15,750

The M-1s for most of the Income Statement items (expenses) are just the amount of the expense, but for the Balance Sheet items we usually have to take the change in the value from the prior year to the current year.

My professor has informed me that taxable income should be 403,000.