@CannotPassAgain
Try Schedule M-3 🙂
What you said about “deferred tax assets” is somewhat true. The “M-1” adjustment is the change in your deferred tax asset or liability, but gross of tax, not net of tax.
For example, if your bad debt reserve increases from $100 to $200, your “M-1” adjustment is $100. At the end of the day, your deferred tax asset is the $200 X 35% tax rate (simplified, assuming constant tax rate and not considering state effective tax rate) = $70, assuming no valuation allowance. Your DTA gross of tax changed from $100 to $200, your DTA net of tax (the correct phrasing of deferred tax asset) changed from $35 to $75.
You might be freaking out now but don't worry you will understand very quickly, most of corporate tax isn't taught in college. Most of your common M-1s will be changes in TB accounts as the accounting methods were established by people before you. You will spend a lot of time figuring out why fixed assets don't roll forward. And I promise you, you will understand GAAP better than the guys in the audit department, if you are using a DTA approach to all of your M-1s.
REG 80 2/7/11
FAR 91 10/8/11
AUD 97 11/22/11
BEC 96 2/4/12
CPA 3/15/13