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0208016006

PA SCHEDULE M

Reconciling of Federal Income to

PA Income by PA Income Class

(09-02)

2002

PA-20S/PA-65 Schedule M

OFFICIAL USE ONLY

Name as shown on PA-20S/PA-65 Information Return

Federal Identification Number:

—

Part B. Determining PA Reportable Income or Loss by Classification

The entity may need to prepare a PA Schedule M, Part B for each PA income class if it must make adjustments to properly determine its reportable classified

income for its PA-20S/PA-65 Information return. This specific list of adjustments primarily applies to ordinary income from a business or farm.

Part 1. Federal Classified Income (Loss). Income class from Line 20, Part A, Column:

(_____)

Part 2. Itemize income adjustments that increase PA reportable income (reduce the loss)

a. Deferred income relating to advance payments for goods and services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

b. Difference in gain (loss) for each sale of property where PA basis is lower than federal basis . . . . . . . . . . . . . . . . . . . . . . . .

c. Gain from like-kind exchanges, other than transactions qualifying as PA allowable like-kind exchanges – IRC Section 1031 . . .

d. Gain (loss) on involuntary conversions – IRC section 1033 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

e. Income from cancellation of debt that PA treats differently from federal rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

f. Increases in income in the year of change resulting from spread in the year of change associated with IRC

Section 481(a) adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

g. Income from obligations of other states and organizations that is not exempt for PA purposes. . . . . . . . . . . . . . . . . . . . . . . .

h. Other taxable income for PA purposes that the entity does not report for federal purposes – submit statement . . . . . . . . . . .

2. Total Lines (a) through (h)

Part 3. Itemize income adjustments that decrease the PA reportable income (increase the loss)

a. Decrease in gain for each sale of property where PA basis is higher than federal basis. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

b. Income from obligations of the U.S. Government and other organizations that is not taxable for PA purposes . . . . . . . . . . . .

c. Decreases for previously reported income in prior year resulting from spread associated with IRC section 481(a) . . . . . . . . .

d. Other PA nontaxable income that the entity reported for federal purposes – submit statement. . . . . . . . . . . . . . . . . . . . . . . .

3. Total Lines (a) through (d)

Part 4. Adjusted PA Reportable Income. Total Lines 1 plus 2 minus 3.

Part 5. Itemize those expenses that PA law does not allow that the entity deducted on its federal form.

These adjustments increase PA reportable income (reduce the loss)

a. Taxes paid on income from the worksheet in the PA PIT Guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

b. Differences in accelerated depreciation taken for PA and federal purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

c. Key man life insurance premiums (owners as beneficiaries) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

d. Differences in PA treatment of guaranteed payments for capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

e. Differences in depreciation for bonus depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

f. Wage expenses associated with PA credits claimed in Part VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

g. Other expenses that the entity took on its federal return that PA does not allow – submit statement. . . . . . . . . . . . . . . . . . . .

5. Total Lines (a) through (g)

Part 6. Itemize those expenses that PA law allows that the entity could not deduct on its federal form.

These adjustments decrease PA reportable income (increase the loss)

a. 50% of business meals and entertainment that the entity could not deduct and club dues . . . . . . . . . . . . . . . . . . . . . . . . . . .

b. Sales tax on depreciable assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

c. Qualified charitable contributions that the entity made. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

d. Differences in depreciation for bonus depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

e. Employee expenses for shareholder-employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

f. Life insurance premiums (PA S corporation or partnership as beneficiary) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

g. Wage expenses associated with federal credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

h. Other expenses that PA allows that the entity did not deduct on its federal return – submit statement . . . . . . . . . . . . . . . . . .

6. Total Lines (a) through (h)

Part 7. PA Classified Taxable Income (Loss). Total Lines 4 plus 5 minus 6. If a (loss), fill in the oval.

0208016006