Topic 2: M-1 Reconciliation

In a corporate income tax return, Schedule M-1 must be completed to reconcile book income to tax income. If a corporation is not publicly traded, book income is not available outside the firm, so why does this reconciliation matter? What are some of the major items that show up in the reconciliation that increase or decrease book income to get it to tax income? What are the implications if the reconciliation does not work? In other words, what do you think is the real purpose of the government in requiring the reconciliation?