Reconciliation of Income (Loss) per Books With Income (Loss) per Return
This section is used to reconcile the income that the S corporation is reporting on the tax return with the income in its accounting records.
Again, referring back to line 11 on Schedule B, if your S Corporations total receipts and total assets were less than $250K then the Yes box should be selected. Your S Corporation is not required to complete Schedule M-1.
Analysis of Accumulated Adjustments Account, Shareholders’ Undistributed Taxable Income Previously Taxed, Accumulated Earnings and Profits, and Other Adjustments Account
This section is used to reconcile what affects your, shareholder’s, basis in the S Corporation. Your basis is your S Corporation's earnings and deposit withdrawals.