1120 Schedule B Additional for Schedule M-3 Filers

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Additional Information for Schedule M-3 Filers

SCHEDULE B
(Form 1120)
(Rev. December 2018)
Department of the Treasury
Internal Revenue Service

OMB No. 1545-0123

▶ Attach

to Form 1120.
▶ Go to www.irs.gov/Form1120 for the latest information.
Employer identification number (EIN)

Name

1

Does any amount reported on Schedule M-3 (Form 1120), Part II, line 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)? . . . . . . . . . . . . . . . . . . . . . . . . . .

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?
. . . . . . . . . . . . . . . . . . . . . . . . . .

DRAFT AS OF
July 17, 2018
DO NOT FILE

Yes

No

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
nonshareholders? 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. 12-2018)

Schedule B (Form 1120) (Rev. 12-2018)

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

Future Developments

Page

2

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

DRAFT AS OF
July 17, 2018
DO NOT FILE

For the latest information about developments related to
Schedule B (Form 1120) and its instructions, such as
legislation enacted after they were published, go to
www.irs.gov/Form1120.

What’s New

After December 22, 2017, the following non‐shareholder
contributions to the capital of a corporation are not
eligible for exclusion under section 118.
• Any contribution by any civic group; or
• Any contribution by any governmental entity, except any
contribution that was made after December 22, 2017,
according to a master development plan that was
approved prior to December 22, 2017, by a governmental
entity.

Purpose of Form

Use Schedule B (Form 1120) to provide answers to
additional questions for filers of Schedule M-3 (Form
1120).

Who Must File
Generally, filers of Form 1120 that file Schedule M-3
(Form 1120), must complete and file Schedule B (Form
1120). However, filers that (a) are required to file Schedule
M-3 and have less than $50 million in total assets at the
end of the tax year or (b) are not required to file Schedule
M-3 and voluntarily file Schedule M-3, are not required to
file Schedule B (Form 1120). See the Instructions for
Schedule M-3 (Form 1120) for more information.
In the case of a consolidated group, a parent
corporation files one Schedule B for the entire group.

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.
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.
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.

Question 6. Change in Method of Accounting
Corporations are generally required to file Form 3115,
Application for Change in Accounting Method, or a
statement in lieu of Form 3115, to request a change in a
method of accounting. See the Instructions for Form
3115 for information on requesting a change in
accounting method.
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
Section 446(a) and Regulations section 1.446-1(a)(1)
generally provide that taxable income shall be figured
under the method of accounting on the basis of which the
corporation regularly figures its income in keeping its
books. An exception applies if book income does not
clearly reflect income.
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
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 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). Otherwise, answer “No.”