Form Schedules M1 & M2 Schedules M1 & M2 Reconsiliation of Income (Loss) and Analysis of Unapprop

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redesign. Accordingly, no changes or additions are highlighted.

SCHEDULES M-1 and M-2
(Form 1120-F)
Department of the Treasury
Internal Revenue Service
Name of corporation

Schedule M-1

Date

Revised proofs
requested

Ref. checks = Rev. Rul. XX

Reconciliation of Income (Loss) and Analysis of
Unappropriated Retained Earnings per Books

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

Cumulative
Changes

Action

Attach to Form 1120-F.

OMB No. 1545-0126

2007

Employer identification number

Reconciliation of Income (Loss) per Books With Income per Return
Note: Schedule M-3 may be required instead of Schedule M-1—see instructions.

1
2
3

Net income (loss) per books
Federal income tax per books
Excess of capital losses over capital gains

4

Income subject to tax not recorded on
books this year (itemize):

5

Expenses recorded on books this year not
deducted on this return (itemize):
Depreciation
$
Charitable contributions $
Travel and entertainment $
Other (itemize):

7

Income recorded on books this year not
included on this return (itemize):
a Tax-exempt interest $
b Other (itemize):

Deductions on this return not charged
against book income this year (itemize):
$
a Depreciation
b Charitable contributions $
c Other (itemize):

8

a
b
c
d
6

Add lines 1 through 5

Schedule M-2
1
2
3

4

9
10

Add lines 7 and 8
Income—line 6 less line 9

Analysis of Unappropriated Retained Earnings per Books per Return

Balance at beginning of year
Net income (loss) per books
Other increases (itemize):

5

Add lines 1, 2, and 3

Specific Instructions
Line 1. Net income (loss) per
books. The foreign corporation must
report on line 1 of Schedule M-1 the
net income (loss) per the set or sets
of books taken into account on
Schedule L. The foreign corporation
must report on line 1 of Schedule
M-2 the balance of unappropriated
retained earnings per the set or sets
of books taken into account on
Schedule L.
Do not complete Schedules M-1
and M-2 if total assets at the end of
the tax year (line 17, column (d) of
Schedule L) are less than $25,000.
Complete Schedule M-3 in lieu of
Schedule M-1 if total assets at the end
of the tax year are $10 million or more.

that are reportable
on Schedule L

6

Distributions: a Cash
b Stock
c Property
Other decreases (itemize):

7
8

Add lines 5 and 6
Balance at end of year (line 4 less line 7)

Line 5c. Travel and entertainment
expenses. Include any of the
following:
● Meal and entertainment expenses
not deductible under section 274(n).
● Expenses for the use of an
entertainment facility.

● The part of luxury water travel
expenses not deductible under
section 274(m).
● Expenses for travel as a form of
education.

● The part of business gifts over $25.
● Expenses of an individual over
$2,000 that are allocable to
conventions on cruise ships.
● Employee achievement awards
over $400.
● The cost of entertainment tickets
over face value (also subject to the
50% limit under section 274(n)).

For more information, see Pub.
542.
Line 7a. Tax-exempt interest.
Report any tax-exempt interest
received or accrued, including any
exempt-interest dividends received
as a shareholder in a mutual fund or
other regulated investment
company. Also report this same
amount in item P at the top of page
2 of Form 1120-F.

● The cost of skyboxes over the
face value of nonluxury box seat
tickets.

● Other nondeductible travel and
entertainment expenses.

A corporation filing Form 1120-F that is not required to file
Schedule M-3 (Form 1120-F) may voluntarily file Schedule
M-3 instead of Schedule M-1. See the instructions for
Schedule M-3 (Form 1120-F) for more information.

For Privacy Act and Paperwork Reduction Act Notice,
see the Instructions for Form 1120-F.

Cat. No. 49678K

Schedules M-1 and M-2 (Form 1120-F) 2007