Form Schedule M-3 (1120 Schedule M-3 (1120 Net Income (Loss) Reconciliation for S Corporations With

SCHEDULE M-3
(Form 1120S)

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

OMB No. 1545-0130

2012

▶ Attach to Form 1120S.
Department of the Treasury
Internal Revenue Service
▶ Information about Sch. M-3 (Form 1120S) and its separate instructions is at www.irs.gov/form1120s.
Employer identification number
Name of corporation

Part I

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

1 a Did the corporation prepare a certified audited non-tax-basis income statement for the period ending with or within this tax
year? (See instructions if multiple non-tax-basis income statements are prepared.)
Yes. Skip line 1b and complete lines 2 through 11 with respect to that income statement.
No. Go to line 1b.
b Did the corporation prepare a non-tax-basis income statement for that period?
Yes. Complete lines 2 through 11 with respect to that income statement.
No. Skip lines 2 through 3b and enter the corporation’s net income (loss) per its books and records on line 4a.
2

Enter the income statement period: Beginning

/

Ending

/

/

/

3 a Has the corporation’s income statement been restated for the income statement period on line 2?
Yes. (If “Yes,” attach an explanation and the amount of each item restated.)
No.
b Has the corporation’s income statement been restated for any of the five income statement periods preceding the period on
line 2?
Yes. (If “Yes,” attach an explanation and the amount of each item restated.)
No.
4 a 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)
(4)
Tax-basis
Other (specify)

.

4a

5 a Net income from nonincludible foreign entities (attach statement) . . . . . . . . . .
b Net loss from nonincludible foreign entities (attach statement and enter as a positive amount) .

.
.

.
.

5a (
5b

)

6 a Net income from nonincludible U.S. entities (attach statement) . . . . . . . . . .
b Net loss from nonincludible U.S. entities (attach statement and enter as a positive amount) .

.
.

.
.

6a (
6b

)

.
.

7 a Net income (loss) of other foreign disregarded entities (attach statement) . . . . . . . . . .
b Net income (loss) of other U.S. disregarded entities (except qualified subchapter S subsidiaries)
(attach statement) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
c Net income (loss) of other qualified subchapter S subsidiaries (QSubs) (attach statement)
8

9

.

.

.

.

7a
7b
7c

Adjustment to eliminations of transactions between includible entities and nonincludible entities
(attach statement) . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8

Adjustment to reconcile income statement period to tax year (attach statement)

.

.

.

.

.

.

.

9

.

.

.

.

.

.

.

10

.

.

.

11

10

Other adjustments to reconcile to amount on line 11 (attach statement)

11

Net income (loss) per income statement of the corporation. Combine lines 4 through 10
Note. Part I, line 11, must equal Part II, line 26, column (a).

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

.

.

.

Total Liabilities

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

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

Cat. No. 39666W

Schedule M-3 (Form 1120S) 2012

Schedule M-3 (Form 1120S) 2012

Page

Part II

Reconciliation of Net Income (Loss) per Income Statement of the Corporation With Total Income
(Loss) per Return (see instructions)
(a)
Income (Loss) per
Income Statement

Income (Loss) Items
1

Income (loss) from equity method
corporations (attach statement) . . . . .

2
3
4
5
6
7

Gross foreign dividends not previously taxed . . .
Subpart F, QEF, and similar income inclusions (attach statement)
Gross foreign distributions previously taxed (attach statement)
Income (loss) from equity method U.S. corporations (attach statement)
U.S. dividends not eliminated in tax consolidation .
Income (loss) from U.S. partnerships (attach
statement) . . . . . . . . . . . . . .
Income (loss) from foreign partnerships (attach
statement) . . . . . . . . . . . . . .
Income (loss) from other pass-through entities
(attach statement) . . . . . . . . . . . .
Items relating to reportable transactions (attach
statement) . . . . . . . . . . . . . .

8
9
10
11
12
13
14
15
16
17
18
19
20
21a

b

2

Employer identification number

Name of corporation

(b)
Temporary
Difference

(c)
Permanent
Difference

(d)
Income (Loss) per
Tax Return

foreign
. . .

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 .
Income statement gain/loss on sale, exchange,
abandonment, worthlessness, or other disposition of
assets other than inventory and pass-through entities
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 Abandonment losses . . . . . . . . . . .
f Worthless stock losses (attach statement) . . . .
g Other gain/loss on disposition of assets other than
inventory . . . . . . . . . . . . . . .
Other income (loss) items with differences (attach
22
statement) . . . . . . . . . . . . . .
Total income (loss) items. Combine lines 1 through
23
22 . . . . . . . . . . . . . . . . .
Total expense/deduction items (from Part III, line
24
32) . . . . . . . . . . . . . . . . .
25
26

Other items with no differences
. . . . . . .
Reconciliation totals. Combine lines 23 through 25
Note. Line 26, column (a), must equal the amount on Part I, line 11, and column (d) must equal Form 1120S, Schedule K, line 18.
Schedule M-3 (Form 1120S) 2012

Schedule M-3 (Form 1120S) 2012

Page

Part III

Reconciliation of Net Income (Loss) per Income Statement of the Corporation With Total Income
(Loss) per Return—Expense/Deduction Items (see instructions)
(a)
Expense per
Income Statement

Expense/Deduction Items
1
2
3
4
5

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
. .

6
7
8
9
10
11
12
13
14

Foreign deferred income tax expense . . . . .
Equity-based compensation
. . . . . . . .
Meals and entertainment . . . . . . . . . .
Fines and penalties . . . . . . . . . . .
Judgments, damages, awards, and similar costs . .
Pension and profit-sharing . . . . . . . . .
Other post-retirement benefits . . . . . . . .
Deferred compensation . . . . . . . . . .
Charitable contribution of cash and tangible
property . . . . . . . . . . . . . . .

15
16

Charitable contribution of intangible property . . .
Current year acquisition or reorganization investment
banking fees . . . . . . . . . . . . . .
Current year acquisition or reorganization legal and
accounting fees . . . . . . . . . . . . .

17

3

Employer identification number

Name of corporation

18
19
20

Current year acquisition/reorganization other costs .
Amortization/impairment of goodwill . . . . . .
Amortization of acquisition, reorganization, and
start-up costs . . . . . . . . . . . . .

21
22
23a
b
24
25
26
27
28

Other amortization or impairment write-offs
Section 198 environmental remediation costs
Depletion—Oil & Gas . . . . . . . .
Depletion—Other than Oil & Gas . . . .
Depreciation . . . . . . . . . . .
Bad debt expense . . . . . . . . .
Interest expense (attach Form 8916-A) . .
Corporate owned life insurance premiums .
Purchase versus lease (for purchasers
lessees) . . . . . . . . . . . .

29
30
31

Research and development costs . . . . . . .
Section 118 exclusion (attach statement) . . . .
Other expense/deduction items with differences
(attach statement) . . . . . . . . . . . .

32

Total expense/deduction items. Combine lines 1
through 31. Enter here and on Part II, line 24,
reporting positive amounts as negative and negative
amounts as positive . . . . . . . . . . .

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and/or
. . .

Schedule M-3 (Form 1120S) 2012