Question

In the current year, Pelican, Inc., a calendar year C corporation, incurs $10,000 of meals and entertainment expenses that it deducts in computing net income per the corporation's financial statements. Assume all of the meals and entertainment expenditures are subject to the 100% disallowance rule applicable to such expenditures.
1. How is the information reported on Schedule M-3?

Answer 1

Answer: Below is how the information is reported on schedule M-3.

Pelican, Inc., reports the meals and entertainment expenditures on line 11, part III. The corporation reports book expense of $10,000 in column (a), permanent difference of $10,000 in column (c), and tax return deduction of $0 in column (d).