Draft instructions for Schedule M-3 (Form 1120) for 2014  

August 6: The IRS has posted a draft version (as of August 5, 2014) of the instructions for Schedule M-3 (Form 1120), Net Income (Loss) Reconciliation for Corporations With Total Assets of $!0 Million or More.

The draft instructions [PDF 930 KB] are released for comments and OMB approval.

The draft instructions note that for tax years ending on or after December 31, 2014:

  • Form 1120 and Form 1120-C filers that (1) are required to file Schedule M-3 (Form 1120) and have less than $50 million total assets at the end of the tax year, or (2) are not required to file Schedule M-3 (Form 1120) and voluntarily file Schedule M-3 (Form 1120), must either:
    • Complete Schedule M-3 (Form 1120) entirely or
    • Complete Schedule M-3 (Form 1120) through Part I, and complete Schedule M-1 of Form 1120 (or Form 1120-C, if applicable) instead of completing Parts II and III of Schedule M-3 (Form 1120)

These filers are not required to file Schedule B (Form 1120) or Form 8916-A.

If these filers choose to complete Schedule M-1—instead of completing Parts II and III of Schedule M-3—line 1 of the applicable M-1 must equal line 11 of Part I of Schedule M-3.

  • In the case of an “1120 mixed group,” Parts II and III of Schedule M-3 (Form 1120) must be completed for all members of the mixed group whether Schedule M-3 (Form 1120) is required or voluntarily filed.

  • Any filer that completes Parts II and III of Schedule M-3 (Form 1120), must complete all columns, without exception

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