I have a book/tax difference that I believe is related to non-deductible meals and entertainment. How can I reconcile on the return?

Forum|Forum|7 years ago
June 4, 2019
2 replies
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Can I file the return with a book/tax difference? I believe it's related to the non-deductible meals. My books show the entire amount spent, but the return is disallowing about $1800, resulting in an overage on net income of about $1200. Or, should I amend my books? I'm not really sure what to do here.

TurboTax Business Windows

Best answer by DavidD66

Yes you can file with a book - tax difference. When you have non-deductible expenses like 50% of meals it creates a permanent book- tax difference. If your business is filing as an S-Corp, the difference is shown on Schedule M-3 - Reconciliation of Income (Loss) per Books With Income (Loss) per Return. If your business is filing a Form 1065, that is Schedule M-1. The difference will carry forward and be your starting point for next year's reconciliation.

DavidD66Answer

Level 15

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jlettsAuthor

Level 2

I'm using Turbo Tax and it's telling me Schedule M-1 is out of balance by -917. Do I leave it as is or make the correction? If it's the latter, I have no idea how to do that. Suggestions?