Schedule M-3 (Form Net Income (Loss) Reconciliation for Corporations with T

2009 Schedule M-3 (Form 1120) Net Income (Loss) Reconciliation for Corporations
With Total Assets of $10 Million or More
Purpose: This is the first circulated draft of the 2009 Schedule M-3 (Form 1120) for
your review and comments. There are no major changes.
TPCC Meeting: None, but one may be arranged if requested.
Prior Version: The 2008 Schedule M-3 (Form 1120) is available at:
http://www.irs.gov/pub/irs-pdf/f1120sm3.pdf.
Instructions: The 2009 Instructions for Schedule M-3 will be circulated at a later date.
The 2008 Instructions are available at:
http://www.irs.gov/pub/irs-pdf/i1120sm3.pdf
Other Products: Circulations of draft tax forms, instructions, notices, and publications
are posted at:
http://taxforms.web.irs.gov/Circulations/index.htm.
Comments: Please email, fax, call, or mail any comments to me and email the reviewer
at Joan.A.McAlpine@irs.gov by July 1, 2009.
Diane Regier
Tax Forms and Publications
SE:W:CAR:MP:T:B:C
Email: Diane.Regier@irs.gov
Phone: 202-622-3695
Fax: 202-622-3262

SCHEDULE M-3
(Form 1120)

Net Income (Loss) Reconciliation for Corporations
With Total Assets of $10 Million or More

2008

 Attach to Form 1120 or 1120-C.
 See separate instructions.

Department of the Treasury
Internal Revenue Service

9

Employer identification number

Name of corporation (common parent, if consolidated return)

Check applicable box(es):

OMB No. 1545-0123

(1)

Non-consolidated return

(2)

Consolidated return (Form 1120 only)

(3)

Mixed 1120/L/PC group

(4)

Dormant subsidiaries schedule attached

Financial Information and Net Income (Loss) Reconciliation (see instructions)

Part I

1a Did the corporation file SEC Form 10-K for its income statement period ending with or within this tax year?
Yes. Skip lines 1b and 1c and complete lines 2a through 11 with respect to that SEC Form 10-K.
Go to line 1b. See instructions if multiple non-tax-basis income statements are prepared.
No.
b Did the corporation prepare a certified audited non-tax-basis income statement for that period?
Yes. Skip line 1c and complete lines 2a through 11 with respect to that income statement.
Go to line 1c.
No.
c Did the corporation prepare a non-tax-basis income statement for that period?
Yes. Complete lines 2a through 11 with respect to that income statement.
Skip lines 2a through 3c and enter the corporation’s net income (loss) per its books and records on line 4a.
No.
MM/DD/YYYY
2a Enter the income statement period: Beginning
Ending
MM/DD/YYYY
b Has the corporation’s income statement been restated for the income statement period on line 2a?
Yes.

(If “Yes,” attach an explanation and the amount of each item restated.)

No.

c Has the corporation’s income statement been restated for any of the five income statement periods preceding the period on line 2a?
Yes. (If “Yes,” attach an explanation and the amount of each item restated.)
No.

3a Is any of the corporation’s voting common stock publicly traded?
Yes.

If “No,” go to line 4a.
No.
b Enter the symbol of the corporation’s primary U.S. publicly traded voting common
stock . . . . . . . . . . . . . . . . . . . . . . . . . . .
c Enter the nine-digit CUSIP number of the corporation’s primary publicly traded voting
common stock
. . . . . . . . . . . . . . . . . . . . . . .
4a Worldwide consolidated net income (loss) from income statement source identified in Part I, line 1 . .
b Indicate accounting standard used for line 4a (see instructions):
(1)
(2)
GAAP
IFRS (3)
Statutory (4)
Tax-basis
(5)
Other (specify)
5a Net income from nonincludible foreign entities (attach schedule) . . . . . . . . . . . . .
b Net loss from nonincludible foreign entities (attach schedule and enter as a positive amount) . . . .
6a Net income from nonincludible U.S. entities (attach schedule) . . . . . . . . . . . . . .
b Net loss from nonincludible U.S. entities (attach schedule and enter as a positive amount) . . . . .
7a Net income (loss) of other includible foreign disregarded entities (attach schedule) . . . . . . .
b Net income (loss) of other includible U.S. disregarded entities (attach schedule) . . . . . . . .
c Net income (loss) of other includible entities (attach schedule) . . . . . . . . . . . . . .
8 Adjustment to eliminations of transactions between includible entities and nonincludible entities (attach
schedule) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9
10a
b
c
11

Adjustment to reconcile income statement period to tax year (attach schedule)
Intercompany dividend adjustments to reconcile to line 11 (attach schedule) .
Other statutory accounting adjustments to reconcile to line 11 (attach schedule)
Other adjustments to reconcile to amount on line 11 (attach schedule) . . .

.
.
.
.

.
.
.
.

.
.
.
.

.
.
.
.

.
.
.
.

.
.
.
.

.
.
.
.

.
.
.
.

Net income (loss) per income statement of includible corporations. Combine lines 4 through 10 .

.

.

4a

5a (
5b
6a (
6b
7a
7b
7c

)
)

8
9
10a
10b
10c
11

Note. Part I, line 11, must equal the amount on Part II, line 30, column (a), and Schedule M-2, line 2.
12

Enter the total amount (not just the corporation’s share) of the assets and liabilities of all entities included or removed on the following lines.

Total Assets
a
b
c
d

Included on Part I, line 4
Removed on Part I, line 5
Removed on Part I, line 6
Included on Part I, line 7

.
.
.
.

.
.
.
.

.
.
.
.

.
.
.
.

.
.
.
.

.
.
.
.

Total Liabilities



.



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

Cat. No. 37961C

Schedule M-3 (Form 1120) 2008

9

Schedule M-3 (Form 1120) 2008

9

Page 2
Employer identification number

Name of corporation (common parent, if consolidated return)
Check applicable box(es): (1)
Check if a sub-consolidated: (6)

Consolidated group
1120 group

(2)

(7)

Parent corp

(3)

Consolidated eliminations

(4)

Mixed 1120/L/PC group

Reconciliation of Net Income (Loss) per Income Statement of Includible Corporations With
Taxable Income per Return (see instructions)
(a)
Income (Loss) per
Income Statement

Income (Loss) Items
(Attach schedules for lines 1 through 11)
1
2
3
4
5
6
7
8
9
10
11
12

(5)

Employer identification number

Name of subsidiary (if consolidated return)

Part II

Subsidiary corp

1120 eliminations

(b)
Temporary
Difference

(c)
Permanent
Difference

(d)
Income (Loss)
per Tax Return

Income (loss) from equity method foreign corporations

Gross foreign dividends not previously taxed .
Subpart F, QEF, and similar income inclusions
Section 78 gross-up . . . . . . . . .
Gross foreign distributions previously taxed .

.
.
.
.

Income (loss) from equity method U.S. corporations

.

U.S. dividends not eliminated in tax consolidation
Minority interest for includible corporations . .
Income (loss) from U.S. partnerships .

.

.

.

.

.

Income (loss) from foreign partnerships .

.

.

.

.

Income (loss) from other pass-through entities .
Items relating to reportable transactions (attach
details) . . . . . . . . . . . . . .
Interest income (attach Form 8916-A) . . . .
Total accrual to cash adjustment . . . . . .
Hedging transactions . . . . . . . . .
Mark-to-market income (loss) . . . . . . .
Cost of goods sold (attach Form 8916-A) . . .
Sale versus lease (for sellers and/or lessors) . .
Section 481(a) adjustments . . . . . . .
Unearned/deferred revenue . . . . . . .
Income recognition from long-term contracts
.
Original issue discount and other imputed interest

13
14
15
16
17
18
19
20
21
22
23a Income statement gain/loss on sale, exchange,

(

)

(

)

abandonment, worthlessness, or other disposition of
assets other than inventory and pass-through entities

b Gross capital gains from Schedule D, excluding
amounts from pass-through entities . . . . .
c Gross capital losses from Schedule D, excluding
amounts from pass-through entities, abandonment
losses, and worthless stock losses . . . . .
d Net gain/loss reported on Form 4797, line 17,
excluding amounts from pass-through entities,
abandonment losses, and worthless stock losses
e
f
g
24
25
26
27
28
29a

Abandonment losses
. . . . . .
Worthless stock losses (attach details) .

.
.

.
.

.
.

Other gain/loss on disposition of assets other than inventory

Capital loss limitation and carryforward used .

.

Other income (loss) items with differences (attach schedule)
Total income (loss) items. Combine lines 1 through 25
Total expense/deduction items (from Part III, line 36)

Other items with no differences . . . . . .
Mixed groups, see instructions. All others, combine
lines 26 through 28 . . . . . . . . . .

b PC insurance subgroup reconciliation totals . .
c Life insurance subgroup reconciliation totals . .
30 Reconciliation totals. Combine lines 29a through 29c
Note. Line 30, column (a), must equal the amount on Part I, line 11, and column (d) must equal Form 1120, page 1, line 28.
Schedule M-3 (Form 1120) 2008

9

Schedule M-3 (Form 1120) 2008

9

Page 3
Employer identification number

Name of corporation (common parent, if consolidated return)
Check applicable box(es): (1)
Check if a sub-consolidated: (6)

Consolidated group
1120 group

(2)

(7)

Parent corp

(3)

Consolidated eliminations

(4)

6
7
8
9
10
11
12
13
14
15
16
17
18
19

Mixed 1120/L/PC group

Reconciliation of Net Income (Loss) per Income Statement of Includible Corporations With
Taxable Income per Return—Expense/Deduction Items (see instructions)
(a)
Expense per
Income Statement

Expense/Deduction Items
1
2
3
4
5

(5)

Employer identification number

Name of subsidiary (if consolidated return)

Part III

Subsidiary corp

1120 eliminations

U.S. current income tax expense . . . . .
U.S. deferred income tax expense . . . .
State and local current income tax expense .
State and local deferred income tax expense
Foreign current income tax expense (other
foreign withholding taxes) . . . . . . .

(b)
Temporary
Difference

(c)
Permanent
Difference

(d)
Deduction per
Tax Return

.
.
.
.
than
.

Foreign deferred income tax expense . . . .
Foreign withholding taxes . . . . . . . .
Interest expense (attach Form 8916-A) . . . .
Stock option expense . . . . . . . . .
Other equity-based compensation . . . . .
Meals and entertainment . . . . . . . .
Fines and penalties . . . . . . . . . .
Judgments, damages, awards, and similar costs
Parachute payments . . . . . . . . . .
Compensation with section 162(m) limitation . .
Pension and profit-sharing . . . . . . . .
Other post-retirement benefits . . . . . .
Deferred compensation . . . . . . . . .
Charitable contribution of cash and tangible
property . . . . . . . . . . . . . .

20
21
22
23

Charitable contribution of intangible property
.
Charitable contribution limitation/carryforward .
Domestic production activities deduction . . .
Current year acquisition or reorganization
investment banking fees . . . . . . . .
24 Current year acquisition or reorganization legal and
accounting fees . . . . . . . . . . .
25 Current year acquisition/reorganization other costs
26 Amortization/impairment of goodwill . . . .
27 Amortization of acquisition, reorganization, and
start-up costs . . . . . . . . . . . .
28
29
30
31
32
33
34

Other amortization or impairment write-offs . .
Section 198 environmental remediation costs .
Depletion . . . . . . . . . . . . .
Depreciation . . . . . . . . . . . .
Bad debt expense . . . . . . . . . .
Corporate owned life insurance premiums
. .
Purchase versus lease (for purchasers and/or
lessees) . . . . . . . . . . . . . .
35 Other expense/deduction items with differences
(attach schedule) . . . . . . . . . . .
36 Total expense/deduction items. Combine lines 1
through 35. Enter here and on Part II, line 27,
reporting positive amounts as negative and
negative amounts as positive . . . . . . .
Schedule M-3 (Form 1120) 2008

9