1120 Tax Return

[Taxman]

I have a question regarding preparing schedules L, M-1, and M-2. The instructions say the corporation is not required to complete Schedules L, M-1 and M-2 if the corporation's total receipts for the tax year and it's total assets at the end of the tax year are less than $250,000.

I have a client who has gross receipts of $1,050,000 but has assets of only $40,000. Would I need to prepare schedules L, M-1 & M-2?

[dsi]

I think you have to complete the schedules because you did have total receipts greater than $250K (you did not satisfy both requirements).

[thomtax]

Form 1120S

On Form 1120S, Schedule B, Line 9 it asks

Are the corporation's total receipts (see instructions) for the tax year AND its total assets at the end of the tax year less than $250,000? If "YES", the corporation is not required to complete Schedules L and M-1"

Lowell Thomas