Question

Using the categories in the following legend, classify each transaction as a plus (+) or minus (-) on Schedule M-2 of Form 1120S. An answer might look like one of these: +AAA or -OAA.

AAA = Accumulated adjustments account

OAA = Other adjustments account

NA = No direct effect on Schedule M-2

a. Receipt of tax-exempt interest income

b. Administrative expenses

c. Depreciation recapture income

d. Nontaxable life insurance proceeds

e. Expenses related to tax-exempt securities

f. Charitable contributions

g. Business gifts in excess of $25

h. Nondeductible fines and penalties

Answer 1

Page-1 Answer:- The following are the transactions are classified as plus(t) oo minust) on schedule M-2 of from 1120s. OnA= Other adjustments account AAA= Accumulated ajuments accounts. NA = No direct effect on schedule M-2 a) Receipt of tax-exempt interest income to b) Unreasonable compensation determined =-AMA c) Depreciation recapture income tam d) Nontaxable life insurance proceeds=40AA e) Expenses related to tax-exempt Securities =-OAA el Charitable contributions = AAA g) Business gifts in excess of $25=-AMA h) Nondeductible fires and penalities = Aha - - X