ProConnect HelpIntuit HelpIntuit

How does Lacerte calculate the Schedule M-1?

SOLVEDby IntuitLacerte Tax5Updated September 09, 2021

This article will help you understand how the M-1 is calculated and where to enter adjustments for the Schedule M-1. Click on your tax type below to get started.

The Form 1120 Schedule M-1, line 1, net income per books, is calculated as follows:

  • Schedule M-1, line 10 (income or loss from page 1, line 28)
  • + Schedule M-1, Lines 7 & 8 (increases)
  • -  Schedule M-1, Lines 2-5 (decreases)
  • = Schedule M-1, Line 1 (net income per books)

Lacerte will automatically generate most increases and decreases based on your entries throughout the return that indicate a difference between book and tax amounts. 

If you need to enter an M-1 adjustment manually, or override an automatic increase or decrease:

  1. Go to Screen 39.1, Schedule M-1 (Book-Tax Adjustments).
  2. To alter the M-1, line 2, enter an amount in Federal income tax (automatic if accruing).
  3. To alter the M-1, line 3, enter an amount in Excess of capital losses over capital gains [O].
  4. To alter the M-1, line 4, enter an amount in the Income Subject to Tax Not Recorded on Books subsection.
  5. To alter the M-1, line 5, enter an amount in the Expenses Recorded on Books not Included on this Return subsection.
  6. To alter the M-1, line 7, enter an amount in the Income Recorded on Books not Included on this Return subsection.
  7. To alter the M-1, line 8, enter an amount in the Deductions not Charged Against Book Income subsection.

The Form 1120S Schedule M-1, line 1, net income per books, is calculated as follows:

  • Schedule M-1, line 8 (income or loss from Schedule K, line 18)
  • + Schedule M-1, Lines 5 & 6 (increases)
  • -  Schedule M-1, Lines 2 & 3 (decreases)
  • = Schedule M-1, Line 1 (net income per books)

Lacerte will automatically generate most increases and decreases based on your entries throughout the return that indicate a difference between book and tax amounts. 

If you need to enter an M-1 adjustment manually, or override an automatic increase or decrease:

  1. Go to Screen 31.1, Schedule M-1.
  2. To alter the M-1, line 2, enter an amount in the Income on Schedule K Not Recorded on Books section.
  3. To alter the M-1, line 3, enter an amount in the Expenses Recorded on Books not Included on Schedule K section.
  4. To alter the M-1, line 5, enter an amount in the Income Recorded on Books not Included on Schedule K section. 
  5. To alter M-1, line 6, enter an amount in the Deductions on Schedule K not Charged Against Book Income section.

The Form 1065 Schedule M-1, line 1, net income per books, is calculated as follows:

  • Schedule M-1, line 9 (income or loss from Form 1065, page 5, line 1)
  • + Schedule M-1, Lines 6 & 7 (increases)
  • -  Schedule M-1, Lines 2-4 (decreases)
  • = Schedule M-1, Line 1 (net income per books)

Lacerte will automatically generate most increases and decreases based on your entries throughout the return that indicate a difference between book and tax amounts. 

If you need to enter an M-1 adjustment manually, or override an automatic increase or decrease:

  1. Go to Screen 27.1, Schedule M-1.
  2. To alter the M-1, line 2, enter an amount in the Income on Schedule K Not Recorded on Books section.
  3. To alter the M-1, line 3, see Entering and allocating guaranteed payments in Lacerte.
  4. To alter the M-1, line 4, enter an amount in the Expenses Recorded on Books not Included on Schedule K section.
  5. To alter the M-1, line 6, enter an amount in the Income Recorded on Books not Included on Schedule K section. 
  6. To alter M-1, line 7, enter an amount in the Deductions on Schedule K not Charged Against Book Income section.

Was this helpful?

You must sign in to vote, reply, or post
Lacerte Tax

Sign in for the best experience

Ask questions, get answers, and join our large community of Intuit Accountants users.