There are a bunch or questions for you to answer on form 1120.
Question 13 on page 4 of Form 1120 says
"Are the corporation's total receipts (page 1, line 1a, plus lines 4 through 10) for the tax year and its total assets are the end of the tax year less the $250,000?
If yes the corporation isn't required to complete Schedules L, M-1 and M-2. Instead, enter the total amount of cash distributions and the book value of property distributions (other than cash) made during the tax yea."
So, you're fine not preparing M2 if you meet the above criteria.
