On December 31, 2018, Emerald, Inc., a calendar year, accrual method C corporation, accrues a bonus of $50,000 to its president (a cash basis taxpayer), who owns 75 percent of the corporation's outstanding stock. The $50,000 bonus is paid to the president on February 1, 2019. For Emerald's 2018 Form 1120, the $50,000 bonus will be a subtraction item on Schedule M-1.

a. trueb. false

Question

Jenna Faulkner

Social Studies

3 December, 21:43

On December 31, 2018, Emerald, Inc., a calendar year, accrual method C corporation, accrues a bonus of $50,000 to its president (a cash basis taxpayer), who owns 75 percent of the corporation's outstanding stock. The $50,000 bonus is paid to the president on February 1, 2019. For Emerald's 2018 Form 1120, the $50,000 bonus will be a subtraction item on Schedule M-1.

a. trueb. false

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Jeremy Reynolds · Answer 1

Answer: false

Explanation:

Schedule M-1 is required when the corporation's gross receipts or its total assets at the end of the year are greater than $250,000. The calculation for Schedule M-1 is done in reverse from the form itself. The taxable income reported on Schedule M-1, line 10, is available from on form 1120