Are Form 1120 Schedule M 3 Accordance 2019-2024

In this video, we're going to discuss the difference between book and tax income. So when we say book income, what we really mean is pre-tax financial income. This is the income that is required to be computed by Generally Accepted Accounting Principles (GAAP) in the United States. Book income ends up on the income statement and in the financial statements prepared by the firm for use by investors and creditors at the end of the fiscal year. Tax income, on the other hand, is the income that is computed for purposes of the corporation's tax return, which is submitted to the IRS. The taxable income is what is reported to the IRS, while the pre-tax financial income is reported to investors and creditors in the financial statements. These two types of income may have large differences because they are computed for different purposes and objectives, and are done so in slightly different manners. Book income, which is GAAP income, is reported on an accrual basis. This means that it accounts for events in the period in which they occur, rather than in the period in which they are settled in cash. The objective of book income is to track changes in the firm's wealth during the period, allowing investors and creditors to predict future cash flows. Taxable income, on the other hand, is used by the IRS to raise money for the United States government. It is based on the doctrine of the ability to pay. For example, let's say you're a landlord and your tenant pays you $800 rent in advance, before they even live in the apartment. For book purposes, this would not be recognized as revenue because it hasn't been earned yet. However, for tax purposes, the US government doesn't care whether it's been earned or not. They consider...