Video: Schedules Used for Reconciliation

In this lesson, Nick Palazzolo, CPA, dives into the world of corporate tax reconciliation using Schedules M1, M2, and M3. With a focus on Schedule M1, Nick clarifies how this form plays a critical role in aligning a corporation's book income with its taxable income. He presents a practical walkthrough of the tax forms, explaining adjustments and their implications for tax reporting. Further, he simplifies the reconciliation process for both small and large companies, noting that Schedule M3—with it's more detailed reporting requirements—is mandated for corporations with assets over $10 million. Nick emphasizes the importance of accurate tax reporting and how these schedules facilitate compliance with IRS regulations. By breaking down a sample calculation and discussing which items may or may not appear on the CPA exam, he equips viewers with a solid understanding of one of the essential tasks in corporate taxation.