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CCH Axcess Tax
Schedule M-2
Use Schedule M-2 worksheet to complete the Form 1120S, Schedule M-2. In addition, Schedule M-2 worksheet is used for the beginning and ending balances of the Schedule M-2 accumulated adjustments account, other adjustments account, and shareholders' undistributed taxable income previously taxed.
This worksheet is also used to enter other additions and other reductions from Schedule M-2 and overrides of other additions and reductions to the accumulated adjustments account.
The system automatically carries passthrough Schedule K income and expense items to the Schedule M-2 accumulated adjustments account, other additions and other reductions lines, respectively, and prints accompanying statements for those lines The beginning balances of the Schedule M-2 accounts must be entered on this interview form. The current distributions must be entered on Distribution section.
If you wish to enter other additions and/or other reductions that carry to Schedule M-2, lines 3 and 5 respectively, in addition to the automatically carried items, use the "Other Additions to Schedule M-2" and "Other Reductions from Schedule M-2" sections on this worksheet. Be careful not to enter items that will duplicate automatically carried additions and reductions.
Automatic Adjustments
The following items carry automatically from Form 1120S, Schedule K to Schedule M-2, from your entries on other interview forms:
Accumulated Adjustments Account - Additions
- Net income from rental real estate activities
- Net income from other rental activities
- Interest income
- Dividends
- Royalty income
- Net short-term capital gains
- Net long-term capital gains
- Other portfolio income items
- Net gain under section 1231 (non-casualty)
- Other income items
- Section 179 expense recapture
- Depletion in excess of basis
Accumulated Adjustments Account - Subtractions
- Net loss from rental real estate activities
- Net loss from other rental activities
- Net short-term capital losses
- Net long-term capital losses
- Other portfolio loss items
- Net loss from Section 1231 (non-casualty)
- Other loss items
- Charitable contributions
- Section 179 expense deduction
- Deductions related to portfolio income (losses)
- Other deduction items
- Interest expense on investment debts
- Foreign taxes paid or accrued
- Total expenditures to which a Section 59(e) election may apply
- Excluded meals and entertainment expenses
- Excluded research expenses due to Form 6765 credit
- Excluded wage deduction due to employment credits
- Excluded tax deduction due to Form 8846 credits
- Officers' life insurance premiums
- Oil and gas depletion (optional)
Other Adjustments - Additions/Reductions (Based on the Pre- and Post-1982 Tax Act Status)
- Tax-exempt interest
- Nontaxable dividends
- Nontaxable income
Tax-exempt interest and non-taxable dividends and income are automatically carried to the Schedule M-2 other adjustments account (OAA), line 3. The nondeductible expenses are automatically carried to the accumulated adjustments account.
You may use this interview form along with other interview forms to process an S corporation consolidated income tax return. Boxes noted with an SCC are available to both regular and Consolidated/Combined Corporation products. The open line descriptions and amounts do not carry to the S corporation consolidated tax return. Please refer to the S corporation consolidated guide for specific instructions.