Form Schedule M-3 (Form Schedule M-3 (Form Net Income (Loss) Reconsiliation for Foreign Corporation

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I.R.S. SPECIFICATIONS

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INSTRUCTIONS TO PRINTERS
SCHEDULE M-3 (FORM 1120-F), PAGE 1 of 4
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FLAT SIZE: 216mm (81⁄ 2 ") 3 279mm (11")
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Cumulative
Changes

This is a new product that was developed in response to the Form 1120-F
redesign. Accordingly, no changes or additions are highlighted.

SCHEDULE M-3
(Form 1120-F)
Department of the Treasury
Internal Revenue Service

Action

Date

O.K. to print
Revised proofs
requested

Ref. checks =

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

2007

Attach to Form 1120-F.
See separate instructions.

Name of corporation

Rev. Rul. XX
OMB No. 1545-0126

©
©

Signature

Employer identification number

Has the corporation reported taxable income on Form 1120-F, page 3, using a treaty provision to attribute
business profits to a U.S. permanent establishment under rules other than section 864(c)?

Yes

No

Did the corporation prepare a non-consolidated, worldwide, certified audited income statement for the
period (see instructions)?

Yes

No

C Did the corporation prepare a non-consolidated, worldwide income statement for the period (see instructions)?

Yes

No

D Did the corporation prepare certified audited income statement(s) for the set(s) of books reported on Form
1120-F, Schedule L?

Yes

No

A

B

Part I
1

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

Is the corporation a foreign bank as defined in Temporary Regulations section 1.882-5T(c)(4)?
Yes. Complete the remainder of Part I as follows:
If D is “Yes,” use the income statement described in D to complete lines 2 through 5 and 7 through 11.
If D is “No,” use the income statement(s) for the set(s) of books reported on Form 1120-F, Schedule L
to complete lines 2 through 5 and 7 through 11.
No. Complete the remainder of Part I as follows:
If B is “Yes,” use the income statement described in B to complete lines 2 through 11.
If B is “No” and C is “Yes,” use the income statement described in C to complete lines 2 through 11.
If B and C are “No” and D is “Yes,” use the income statement described in D to complete lines 2 through 11.
If B, C, and D are “No,” use the income statement described in the instructions to complete lines 2 through 11.

/
/
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2a Enter the income statement period: Beginning
Ending
b Has the corporation’s income statement been restated for the income statement period entered on line 2a?
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 5 income statement periods preceding
the period on line 2a?
Yes. Attach an explanation and the amount of each item restated.
No.
3 Is any of the corporation’s stock publicly traded on any exchange, U.S. or foreign?
Yes. List exchange(s) and symbol ©
No.
4 Non-consolidated foreign corporation net income (loss) in U.S. dollars from the income statement
4
source identified in line 1
5a
5a Net income from includible disregarded foreign entities not included on line 4 (attach schedule)
5b (
b Net loss from includible disregarded foreign entities not included on line 4 (attach schedule)
5c
c Net income from includible disregarded U.S. entities not included on line 4 (attach schedule)
5d (
d Net loss from includible disregarded U.S. entities not included on line 4 (attach schedule)
6
6 Net income (loss) from foreign locations not included on line 4 (attach schedule)
7a (
7a Net income of non-includible entities (attach schedule)
7b
b Net loss of non-includible entities (attach schedule)
8
8 Adjustments to intercompany transactions (attach schedule)
9
9 Adjustments to reconcile income statement period to tax year (attach schedule)
10
10 Other adjustments to reconcile to amount on line 11 (attach schedule)
11

Adjusted financial net income (loss) of non-consolidated foreign corporation. Combine lines 4
through 10

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

Cat. No. 39667H

)
)
)

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Schedule M-3 (Form 1120-F) 2007

15
I.R.S. SPECIFICATIONS

TO BE REMOVED BEFORE PRINTING

INSTRUCTIONS TO PRINTERS
SCHEDULE M-3 (FORM 1120-F), PAGE 2 of 4
MARGINS: TOP 13mm (1⁄ 2 ") CENTER SIDES.
PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
1
FLAT SIZE: 216mm (8 ⁄ 2 ") 3 279mm (11")
PERFORATE: (NONE)

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Page

Schedule M-3 (Form 1120-F) 2007
Name of corporation

Part II

(a)
Income (Loss) per
Income Statement
(optional)

1

Gross receipts

2
3a

Cost of goods sold (attach schedule)
Dividends from foreign entities

c
4a

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Reconciliation of Net Income (Loss) per Income Statement of Non-Consolidated Foreign Corporations With
Taxable Income per Return (see instructions)

Income (Loss) Items

b

2

Employer identification number

Dividends from U.S. entities
Substitute dividend payments received
Interest income
equivalents

excluding

interest

b

Substitute interest payments received

c

Interest equivalents not included on line 4b

5

Gross rental income

6

Gross royalty income

7

Fee and commission income

8

Income (loss) from equity method
corporations

9

Net income (loss) from U.S. partnerships

10

Net income (loss) from certain foreign
partnerships (attach schedule)

11

Net income (loss) from other passthrough entities (attach schedule)

12

Items
relating
to
reportable
transactions (attach details)

13

Hedging transactions

(b)
Temporary
Differences

(c)
Permanent
Differences

(d)
Other Permanent
Differences
for Allocations to
Non-ECI and ECI

(e)
Income (Loss)
per Return
(optional)

14a Mark-to-market income (loss) under
section 475(a)
b Mark-to-market income (loss) subject
to section 475(d)(3)(B)
c Mark-to-market income (loss) under
section 475(e)
d Mark-to-market income (loss) under
section 475(f)
15

Gain (loss) from certain section 988
transactions

16a Interest income from global securities
dealing
b Dividends from global securities dealing
c Gains (losses) and other fixed and
determinable, annual, or periodic
income from global securities dealing
not included on lines 16a and 16b
17

Sales versus lease (for sellers and/or
lessors)

18

Section 481(a) adjustments

19

Unearned/deferred revenue

20

Original issue discount, imputed
interest, and phantom income

21a 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
passthrough entities
Schedule M-3 (Form 1120-F) 2007

15
I.R.S. SPECIFICATIONS

TO BE REMOVED BEFORE PRINTING

INSTRUCTIONS TO PRINTERS
SCHEDULE M-3 (FORM 1120-F), PAGE 3 of 4
PRINTS: HEAD TO HEAD
MARGINS: TOP 13mm (1⁄ 2 ") CENTER SIDES.
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 216mm (81⁄ 2 ") 3 279mm (11")
PERFORATE: (NONE)

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

Page

Schedule M-3 (Form 1120-F) 2007
Name of corporation

Part II

Reconciliation of Net Income (Loss) per Income Statement of Non-Consolidated Foreign
Corporations With Taxable Income per Return (see instructions) (continued from page 2)
(a)
Income (Loss) per
Income Statement
(optional)

Income (Loss) Items
21c 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 Abandonment losses
f Worthless stock losses (attach details)
g Other gain/loss on disposition of
assets other than inventory

22

Capital
loss
carryforward used

23

Gross effectively connected income
of foreign banks from books that do
not give rise to U.S. booked
liabilities

24

Other income (loss) items
differences (attach schedule)

25

Total income (loss) items. Combine
lines 1 through 24

26

Total expense/deduction
(from Part III, line 33)

27
28

limitation

and

with

5
6
7
8
9
10
11
12

(c)
Permanent
Differences

(d)
Other Permanent
Differences
for Allocations to
Non-ECI and ECI

(e)
Income (Loss)
per Return
(optional)

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items

Other items with no differences

Reconciliation of Net Income (Loss) per Income Statement of Non-Consolidated Foreign
Corporations With Taxable Income per Return (see instructions)
(a)
Expense per
Income Statement
(optional)

Expense/Deduction Items

4

(b)
Temporary
Differences

Reconciliation totals. Combine lines
25 through 27
Note. Line 28, column (a), must equal the amount on Part I, line 11, and column (e) must equal Form 1120-F, page 3, line 29.

Part III

1
2
3

3

Employer identification number

(b)
Temporary
Differences

(c)
Permanent
Differences

(d)
Other Permanent
Differences
for Allocations to
Non-ECI and ECI

(e)
Deduction per
Tax Return
(optional)

U.S. current income tax expense
U.S. deferred income tax expense
Non-U.S. current income tax expense
(other than foreign withholding taxes)
Non-U.S.
expense

deferred

income

tax

Non-U.S. withholding taxes
Compensation with section 162(m)
limitation
Salaries and other base compensation
Stock option expense
Other equity-based compensation
Meals and entertainment
Fines and penalties
Judgments, damages, awards, and
similar costs
Schedule M-3 (Form 1120-F) 2007

15
I.R.S. SPECIFICATIONS

TO BE REMOVED BEFORE PRINTING

INSTRUCTIONS TO PRINTERS
SCHEDULE M-3 (FORM 1120-F), PAGE 4 of 4
PRINTS: HEAD TO HEAD
MARGINS: TOP 13mm (1⁄ 2 ") CENTER SIDES.
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
1
FLAT SIZE: 216mm (8 ⁄ 2 ") 3 279mm (11")
PERFORATE: (NONE)

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

Page

Schedule M-3 (Form 1120-F) 2007
Name of corporation

Part III

Reconciliation of Net Income (Loss) per Income Statement of Non-Consolidated Foreign
Corporations With Taxable Income per Return (see instructions) (continued from page 3)

Expense/Deduction Items
13
14
15
16
17

Pension and profit-sharing

18

Current
year
acquisition
or
reorganization investment banking
fees, legal and accounting fees

19

Current year acquisition/reorganization
other costs

20
21

Amortization/impairment of goodwill

22

Other amortization and impairment
write-offs

23
24
25

4

Employer identification number

Other post-retirement benefits
Deferred compensation
Charitable contributions
Domestic
deduction

production

activities

Amortization
of
acquisition,
reorganization, and start-up costs

Depreciation
Bad debt expense
Purchase versus lease (for purchasers
and/or lessees)

26a Interest expense per books
b Interest expense under Regulations

(a)
Expense per
Income Statement
(optional)

(b)
Temporary
Differences

(d)
Other Permanent
Differences
for Allocations to
Non-ECI and ECI

(c)
Permanent
Differences

(e)
Deduction per
Tax Return
(optional)

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section 1.882-5 (from Schedule I
(Form 1120-F), line 23)

c Regulations section 1.882-5 allocation
amount subject to deferral or
disallowance (from Schedule I (Form
1120-F), line 24d)

d U.S.

source
payments

substitute

(

)

interest

e Interest equivalents (e.g., guarantee
fees) not included on line 26d

27

U.S. source
payments

28
29
30

Fee and commission expense

31

Expenses allocable to effectively
connected income under Regulations
section 1.861-8 from home office or
other books that do not give rise to
U.S. booked liabilities (from Schedule
H (Form 1120-F), line 21)

32

Other expense/deduction items with
differences (attach schedule)

33

Total expense/deduction items.
Combine lines 1 through 32. Enter here
and on Part II, line 26

substitute

dividend

Rental expense
Royalty expense

Schedule M-3 (Form 1120-F) 2007

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