Schedule M-1 and the Accrual Income Statement
4.74
501 Reviews
In this 5th course of the Federal Tax Return Analysis Skill Series, participants will explore Schedule M-1 to understand differences between accrual net income and taxable income, examine guaranteed payments and Section 179 deductions, and transform tax return information into accrual income statements for accurate performance analysis.
Certificate
1 credit or $295
Cost
1.5 - 2 Hrs.
Duration
1 hr.
Prep Time
1
Quiz
Overview
In the fifth webinar session, participants explore in detail the information captured in Schedule M-1 and the use of that information in explaining reasons for differences between accrual net income on a company's accrual financial statements and the taxable income its partners and owners must report on their personal income tax returns. In the process of examining the information content in Schedule M-1, they address the roles of guaranteed payments to partners and the Section 179 deductions in establishing net taxable income for partners and owners of partnerships and Subchapter S corporations. In addition, participants examine the process for transforming information in the business income tax returns for a partnership or Subchapter S corporation into an accrual income statement, which then allows proper computation of performance ratios, cash flow proxies, and the Uniform Credit Analysis (UCA) cash flow statement.
Who Should Attend
This Course is ideal for participants currently in or aspiring to enter the following job functions:
- Credit Management
- Commercial Credit Administration
- Commercial Loan Administration
- Commercial Loan Portfolio Management
- C & I Lending
- Corporate Lending
- Loan Review
- Special Assets
- Internal Audit
- Non-Profit and Municipality Lending
- Health Care Provider Lending
- Specialized Lending
- Credit Analysis
Prerequisites
Familiarity with accrual financial statements and the use of ratios and cash flow statements in assessing borrower risk.
Objectives
By the end of the webinar session, participants will be able to:
- Understand the information content of Schedule M-1 for partnerships and limited liability companies and, therefore, provide the reasons for differences between accrual net income on a partnership's financial statement and taxable income reported at Line 9 on Schedule M-1 in Form 1065.
- Understand the information content of Schedule M-1 for a Subchapter S corporation and, therefore, provide the reasons for differences between accrual net income on a company's financial statement and taxable income reported at Line 8 on Schedule M-1 in Form 1120S.
- Identify the role that guaranteed payments to partners plays in establishing accrual net income on a partnership's financial statement and on its taxable income reported at Line 9 on Schedule M-1 in Form 1065.
- Identify the role that Section 179 deductions plays in establishing accrual net income on a partnership's and Subchapter S corporation's financial statements and on taxable income reported at Line 9 and Line 8 on Schedule M-1 in Form 1065 and Form 1120S, respectively.
- Identify adjustments to Schedule 1065 and Schedule 1120S, using only information in the business income tax returns, necessary to transform both schedules to accrual income statements.
- Implement the process for constructing accrual income statements from information in Schedule 1065 or Schedule 1120S, along with information in Schedule K and Schedule M-1 in business income tax returns, which, in turn, allow proper ratio and cash flow analysis.
Materials(access provided with registration)
- Credit Refresher on Schedule M-1 (Form 1120S)
- Credit Refresher on Guaranteed Payments to Partners
- Credit Refresher on The Section 179 Deduction
- Excerpts from Form 1065 for D & J Installation Contractors
- Financial Statements for D & J Installation Contractors
- Exercise for the Session 5 Webinar
- Webinar Presentation Slides
- Webinar Poll Questions
- Webinar Poll Solutions
- Exercise Solutions
This is Course 5 of 8 in the Federal Tax Return Analysis Skill Series
Business Income Tax Returns
The Section 179 Deduction
Understanding Schedules K-1
Personal Income Tax Returns and Cash Flow
Schedule M-1 and the Accrual Income Statement
Business Income Tax Returns and Ratio Analysis
Business Income Tax Returns and Cash Flow Analysis
Cash Based Income Tax Returns
