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Requirement a$.$ Prepare a reconciliation of Sigma's taxable income before special deductions with its book income. $($If an input field is not used in the table, leave the field empty; do not select a label or enter a zero.$)$ The following steps outline the approach to provide for income taxes in the financial

statements. This process addresses only federal income taxes.

Identify temporary differences by comparing the book and tax bases of assets

and liabilities, and identify tax carryovers.

Prepare "roll forward" schedules of temporary differences that tabulate cumulative

differences and current$-$year changes.

In the roll forward schedules, apply the appropriate statutory tax rates to determine the

ending balances of deferred tax assets and liabilities.

Adjust deferred tax assets by a valuation allowance if necessary.

Adjust the income tax expense for uncertain tax positions if necessary.

Determine current federal income taxes payable, which, in many cases, also is the

current federal income tax expense for book purposes.

Determining the total federal income tax expense $($benefit$).$

Prepare and record tax related journal entries.

Prepare a tax provision reconciliation.

Prepare the tax rate reconciliation.

Prepare financial statements. Current Year Results Requirements

a$.$ Prepare a reconciliation of Sigma's taxable income before special deductions

with its book income.

b$.$ Prepare a tax provision reconciliation as in Step $9$ of the Tax Provision Process.

Assume a $21\%$ tax rate.

Schedule M$-1$ Reconciliation of Income $($Loss$)$ per Books With Income per Return

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