Calculating Schedules M-1 and M-2 (1120)

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To calculate Schedules M-1 and M-2 for C Corporations or Cooperative Associations and Schedule M-1 for S Corporations if total receipts for the year and year-end assets are less than $250,000, follow this procedure. If you do not follow the procedure, UltraTax CS does not calculate Schedules M-1 and M-2 for C Corporations if receipts and assets are less than $250,000.

  1. Choose Setup > 1120 Corporation.
  2. In the Federal tab, click the Other Return Options button.
  3. In the Return Presentation tab, mark the Complete Schedule M-1 and C Corporation Schedule M-2 when receipts and assets are less than $250,000 checkbox.

Notes

  • This option applies to all 1120 clients; however, the threshold for 1120-F, 1120-PC, and 1120-REIT filers is $25,000 instead of $250,000.
  • Schedule M-1 is also not completed for C Corporations, S Corporations, Cooperative Associations, Foreign Corporations, or Property and Casualty Insurance Companies when total assets are $10 million or greater and Schedule M-3 is required in lieu of Schedule M-1.
  • S Corporations with accumulated E&P must maintain the accumulated adjustments account (AAA) to determine the tax effect of distributions made by the S Corporation. An S Corporation without accumulated E&P is not required to maintain the AAA, but Form 1120S instructions recommend that all S Corporations maintain the AAA. If the S Corporation is not required to maintain the AAA and you want to suppress the printing of the S Corporation Schedule M-2, mark the Suppress printing of Schedule M-2 field in Screen Ms in the Balance Sheet folder.
  • To set this option on a client-by-client basis for C Corporations or Cooperative Associations, mark the Complete Schedules M-1 and M-2 when not required field in Screen Mc. The field in Screen Mc is not available to mark if the respective checkbox in the Setup > 1120 Corporation > Federal tab > Other Return Options > Return Presentation tab is marked.
  • To set this option on a client-by-client basis for S Corporations, mark the Complete Schedule M-1 when not required field in Screen Ms. The field in Screen Ms is not available to mark if the respective checkbox in the Setup > 1120 Corporation > Federal tab > Other Return Options > Return Presentation tab is marked.

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