Canary Corporation, which sustained a $5,000 net short-term capital loss during the year, will enter $5,000 as an addition on Schedule M-1 of Form 1120.
Answer the following statement true (T) or false (F)
True
Rationale: A net short-term capital loss is entered as an addition on Schedule M-1. The loss is an expense for book purposes but not deductible for tax purposes. Therefore, the $5,000 capital loss must be added in reconciling from book income to taxable income.
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