Form Schedule B (Form 1 Schedule B (Form 1 Additional Information for Schedule M-3 Filers

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I.R.S. SPECIFICATIONS

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INSTRUCTIONS TO PRINTERS
SCHEDULE B (FORM 1120), PAGE 1 of 2
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FLAT SIZE: 216mm (81⁄ 2 ") 3 279mm (11")
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SCHEDULE B
(Form 1120)
(December 2008)
Department of the Treasury
Internal Revenue Service
Name

Action

Date

Signature

O.K. to print
Revised proofs
requested

Additional Information for Schedule M-3 Filers
OMB No. 1545-0123

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©

See instructions on page 2.
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Attach to Form 1120.

Employer identification number (EIN)

1

Do the amounts reported on Schedule M-3 (Form 1120), Part II, lines 9 or 10, column (d), reflect allocations
to this corporation from a partnership of income, gain, loss, deduction, or credit that are disproportionate to
this corporation’s capital contribution to the partnership or its ratio for sharing other items of the partnership?

2

At any time during the tax year, did the corporation sell, exchange, or transfer any interest in an intangible
asset to a related person as defined in section 267(b)?

3

At any time during the tax year, did the corporation acquire any interest in an intangible asset from a related
person as defined in section 267(b)?

Yes

No

4a During the tax year, did the corporation enter into a cost-sharing arrangement with any related foreign party
on whose behalf the corporation did not file Form 5471, Information Return of U.S. Persons With Respect To
Certain Foreign Corporations?
b At any time during the tax year, was the corporation a participant in a cost-sharing arrangement with any
related foreign party on whose behalf the corporation did not file Form 5471?
5

At any time during the tax year, did the corporation make any change in accounting principle for financial
accounting purposes? See instructions for the definition of change in accounting principle

6

At any time during the tax year, did the corporation make any change in a method of accounting for U.S.
income tax purposes?

7

At any time during the tax year, did the corporation own any voluntary employees’ beneficiary association
(VEBA) trusts that were used to hold funds designated for employee benefits?

8

At any time during the tax year, did the corporation use an allocation method for mixed-service costs that
varied from the Federal Energy Regulatory Commission method of accounting?

For Paperwork Reduction Act Notice, see Instructions for Form 1120.

Cat. No. 49737Q

Schedule B (Form 1120) (12-2008)

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I.R.S. SPECIFICATIONS

TO BE REMOVED BEFORE PRINTING

INSTRUCTIONS TO PRINTERS
SCHEDULE B (FORM 1120), PAGE 2 of 2
MARGINS: TOP 13mm (1⁄ 2 ") CENTER SIDES.
PAPER: WHITE WRITING, SUB. 20.
FLAT SIZE: 216mm (81⁄ 2 ") 3 279mm (11")
PERFORATE: (NONE)

PRINTS: HEAD TO HEAD
INK: BLACK

DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Schedule B (Form 1120) (12-2008)

General Instructions

Page

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Section references are to the Internal Revenue Code
unless otherwise noted.

Purpose of Form

Use Schedule B (Form 1120) to provide answers to
additional questions for filers of Schedule M-3 (Form
1120), Net Income (Loss) Reconciliation for
Corporations With Total Assets of $10 Million or More.

Who Must File

Schedule B (Form 1120) must be filed by all
corporations that file a Form 1120, U.S. Corporation
Tax Return, and that are required to file Schedule M-3
(Form 1120).
Attach Schedule B (Form 1120) to Form 1120.

Specific Instructions
Line 1. Partnership Allocations

2

Answer “Yes,” if a change in accounting principle
occurred during the tax year that affected or will affect
the amount of income reported for financial statement
purposes.

TIP

If the corporation has audited financial
statements, any changes in accounting
principle should be identified in footnotes to
those statements.

Line 6. Change in Method of Accounting

Corporations are generally required to file Form 3115,
Application for Change in Accounting Method, or a
statement in lieu thereof, to request a change in a
method of accounting. See the Instructions for Form
3115 for information on requesting a change in
accounting method.
Line 7. Voluntary Employees’ Beneficiary Association
Trusts

Answer “Yes,” if this corporation is a partner in a
partnership and has received special allocations of
income, gain, loss, deduction, or credit from such
partnership.

Example. P, a corporation, joins with B, an
individual, in forming the PB Partnership. P and B each
contribute $50,000 in cash to PB Partnership. Profits
and losses are allocated equally, with the exception of
depreciation, which is allocated 99% to P and 1% to
B.
P answers “Yes,” to question 1 because its 99%
allocation of depreciation deductions from PB
Partnership is disproportionate to its ratio of sharing
other items of income, gain, loss, deduction, or credit.
Line 5. Changes in Accounting Principle
The term “change in accounting principle,” means a
change from one generally accepted accounting
principle to another generally accepted accounting
principle as described in Statement of Financial
Accounting Standards (SFAS) No. 154—Accounting
Changes and Error Corrections.

Employers that establish and fund welfare benefit plans
on behalf of their employees do so through a
tax-exempt trust that is referred to as a voluntary
employees’ beneficiary association (VEBA). See section
501(c)(9) and Regulations sections 1.501(c)(9)-1
through 1.501(c)(9)-8 for details.
Answer “Yes,” if the corporation owned any VEBA
trusts that were used to hold funds designated for
employee benefits.
Line 8. Mixed-Service Costs
Section 446(a) and Regulation section 1.446(a)(1)
generally provide that taxable income shall be
computed under the method of accounting on the
basis of which the taxpayer regularly computes his
income in keeping his books. An exception applies if
book income does not clearly reflect income.
Certain utilities are subject to a regulatory method of
accounting imposed by the Federal Energy Regulatory
Commission (FERC) to determine which expenditures
are capitalized or expenses. Answer “Yes,” if the
corporation is subject to FERC accounting during the
tax year and used an allocation method for
mixed-service costs that varied from the FERC method
of accounting. Otherwise, answer “No.”

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