Tax books. Records kept by a firm's management that follow IRS rules. The books follow Financial Accounting Standards Board rules.

Book-to-tax reconciliation is the act of reconciling the net income on the books to the income reported on the tax return by adding and subtracting the non-tax items. Schedules M-1 and M-2 can be used to reconcile a company's accounting income to the taxable income.

M-1 adjustments: reconciliation of book and taxable income (income and deductions.) Differences exist because of the difference in GAAP and tax law.

Most income is taxable unless it's specifically exempted by law. Income can be money, property, goods or services. Even if you don't receive a form reporting income, you should report it on your tax return. Income is taxable when you receive it, even if you don't cash it or use it right away.