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Screen NCM2 - North Carolina Analysis of AAA (1120)

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Analysis of Accumulated and Other Adjustments

Beginning balance
Enter the beginning of the year balances for the
AAA, NC Adjustment Account
,
Shareholder Undistributed Taxable Income
, and
REU Timing Differences
 fields. If these fields are blank, the application uses the corresponding federal Schedule M-2 balances as the default amounts. If the application proformas the client data, these fields reflect last year’s ending North Carolina Schedule M-2 balances.
note
You aren't required to use these fields because the amounts aren't transferred to any North Carolina form. If Schedule M-2 is reconciled on a book basis, it's not likely that this account for Schedule M-2 reconciles. However, if Schedule M-2 is reconciled on a tax basis, this account is helpful in tracking book / tax timing differences and C Corporation retained earnings.
Other additions: AAA
The application automatically transfers the following amounts from the federal 1120 return to the statement attached to this field:
  • Net real estate income (if positive)
  • Net other rental income (if positive)
  • Interest income
  • Dividend income
  • Royalty income (if positive)
  • Short-term Schedule D, line 6 (if positive)
  • Long-term Schedule D, line 13 (if positive)
  • Net Sec 1231 Gain on Schedule K, line 9 (if positive)
  • Gain on sale of section 179 assets
  • Other income (if positive)
  • Officer life cash surrender value
  • Federal Schedule M-1 items coded as AAA additions
  • Federal Schedule M-2 items entered as AAA additions
Other additions: NC Adjustment Account
The application automatically transfers the following amounts from the federal 1120 return to the statement attached to this field:
  • Tax-exempt interest
  • Federal Schedule M-1 items coded as OAA additions
  • Federal Schedule M-2 items entered as OAA additions
Other additions / reductions: REU Timing Differences
These fields are used to calculate the Schedule M-2 Reconciliation Worksheet to reconcile the year-end Schedule M-2 balances to the total retained earnings on the Schedule L balance sheet. The application automatically transfers the Schedule M-1 out of balance adjustment amount, if positive, to the
Other additions
 field on this input screen; if negative, the application transfers that amount to the
Other reductions
 field.
Other reductions: AAA
The application automatically transfers the following amounts from the federal 1120 return to the statement attached to this field:
  • Net real estate income (if negative)
  • Net other rental income (if negative) Royalty income (if negative)
  • Short-term Schedule D, line 6 (if negative)
  • Long-term Schedule D, line 13 (if negative)
  • Net Sec 1231 loss on Schedule K, line 9 (if negative)
  • Loss on sale of section 179 assets
  • Other income (if negative)
  • Charitable contributions
  • Section 179 deduction
  • Other deductions
  • Interest expense on investment debts
  • Total foreign taxes
  • Total Section 59(e) expenditures
  • Disallowed entertainment expense
  • Income from alcohol fuel credit
  • Income from biodiesel fuel credit
  • Qualified zone academy credit
  • Employment credit wages
  • Employer tip credit reduction
  • Research credit
  • Capitalized research credit
  • Disabled access credit
  • Orphan drug credit
  • Capitalized orphan drug credit
  • Employer pension plan credit
  • Employer child care credit
  • Low sulfur diesel fuel credit
  • Energy efficient home credit
  • Officer life insurance premiums
  • Conservation expense
  • Oil / Gas depletion
  • Shareholder health insurance
  • Fines and penalties
  • Federal Schedule M-1 items coded as AAA reductions
  • Federal Schedule M-2 items entered as AAA reductions
Other reductions: NC Adjustment Account
The application automatically transfers the following amounts from the federal 1120 return to the statement attached to this field:
  • Expenses attributable to tax-exempt interest
  • Federal Schedule M-1 items coded as OAA reductions
  • Federal Schedule M-2 items entered as OAA reductions

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