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

SCHEDULE B
(Form 1120)
(Rev. December 2009)
Department of the Treasury
Internal Revenue Service

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

©

©

Attach to Form 1120.
See instructions on page 2.

Name

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 indirect costs capitalized to
self-constructed assets that varied from its financial method of accounting?

9

At any time during the tax year, did the corporation treat for tax purposes indirect costs, as defined in Regulations
sections 1.263A-1(e)(3)(ii)(F), (G), and (H), as mixed-service costs, as defined in Regulations section
1.263A-1(e)(4)(ii)(C)?

10

Did the corporation, under section 118 or 362(c) and the related regulations, take a return filing position
characterizing any amount as a contribution to the capital of the corporation during the tax year by any
non-shareholders? Amounts so characterized may include, without limitation, incentives, inducements, money,
and property

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

Cat. No. 49737Q

Schedule B (Form 1120) (Rev. 12-2009)

Page 2

Schedule B (Form 1120) (Rev. 12-2009)

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

TIP

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

Purpose of Form

Question 6. Change in Method of Accounting

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.

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.

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
Question 1. Partnership Allocations
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.

Question 7. Voluntary Employees’ Beneficiary
Association Trusts
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.
Question 8. Indirect Costs

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.

Section 446(a) and Regulation section 1.446-1(a)(1)
generally provide that taxable income shall be
computed under the method of accounting on the
basis of which the corporation regularly computes its
income in keeping its books. An exception applies if
book income does not clearly reflect income.

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
from PB partnership.

Answer “Yes” if the corporation, during the tax year,
used an allocation method for indirect costs capitalized
to self-constructed assets that varied from its financial
statement method of accounting. Otherwise, answer
“No.” Also answer “No” if the corporation used the
same method of allocating indirect costs to
self-constructed assets, but capitalized a different
amount due to differences in the amount of costs
which are includible in the computation of income for
the tax year.
Question 9. Mixed Service Costs

Question 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.
Answer “Yes” if a change in accounting principle
occurred during the tax year that affected (or is
expected to affect) the amount of income reported for
financial statement purposes.

Answer “Yes” if the corporation, during the tax year,
treated purchasing, handling, and storage, as
discussed in Regulations sections 1.263A-3(c)(1)
through (5), and as defined in Regulations section
1.263A-1(e)(3)(ii)(F), (G), and (H), as mixed-service costs
as defined in Regulations section 1.263A-1(e)(4)(ii)(C).
Otherwise, answer “No.”