IRS · Official form

Schedule M-3 (Form 1120), Net Income (Loss) Reconciliation for Corporations With Total Assets of $10 Million or More

Schedule M-3 reconciles a large corporation’s financial statement income with the taxable income reported on Form 1120. Fill in the official IRS PDF below and download it.

Fill out Schedule M-3 (Form 1120) in the editor Download the blank PDF Quick fill on this page

This is the genuine IRS PDF, unmodified. Source: IRS official page.

What is Schedule M-3 (Form 1120)?

Schedule M-3 (Form 1120), Net Income (Loss) Reconciliation for Corporations With Total Assets of $10 Million or More, is a detailed replacement for the simpler Schedule M-1 book-to-tax reconciliation. Part I identifies the corporation’s financial statements and arrives at book net income, while Parts II and III break every income and expense difference into temporary and permanent components.

The schedule attaches to Form 1120, the U.S. Corporation Income Tax Return. It gives the IRS a line-by-line view of why the income a corporation reports to shareholders differs from the income it reports for tax, which is why the form runs to three pages and hundreds of fields.

Who files Schedule M-3 (Form 1120)?

Corporations filing Form 1120 that report total assets of $10 million or more at year end
Members of consolidated groups, which generally complete Schedule M-3 information for the group and its members
Corporations below the asset threshold that choose to file Schedule M-3 voluntarily instead of Schedule M-1
Corporations directed to file it for other reasons in the current Form 1120 instructions

How to fill out Schedule M-3 (Form 1120)

Answer the Part I questions about your financial statements: whether they are certified audited statements, and the worldwide and U.S. book income they show.
Work down Part II, reporting each income item per the books, the temporary and permanent differences, and the resulting tax amount.
Complete Part III the same way for expense and deduction items, then carry the totals back to Part II.
Check that the reconciled taxable income ties to the amount reported on Form 1120.
Download the finished PDF and file it with Form 1120. Most large corporations e-file the whole return, so the schedule usually goes in electronically with the rest of the package.

Quick fill Schedule M-3 (Form 1120) on this page

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These are the form's own fields, in the order they appear on the pages. Fill in what you know; anything left blank stays a fillable field in the PDF, so you can finish it in any PDF reader. Nothing you type here is sent to IRS.

Page 1 50 fields

Page 2 146 fields

Name of corporation (common parent, if consolidated return)

Employer identification number

Consolidated group

Parent corp

Consolidated eliminations

Subsidiary corp

Mixed 1120/L/PC group

1120 group

1120 eliminations

Name of subsidiary (if consolidated return)

Employer identification number

Income (loss) from equity method foreign corporations. Column: (a) Income (Loss) per Income Statement.

Row: 1. Income (loss) from equity method foreign corporations. Column: (b) Temporary Difference.

Row: 1. Income (loss) from equity method foreign corporations. Column: (c) Permanent Difference.

Row: 2. Gross foreign dividends not previously taxed. Column: (a) Income (Loss) per Income Statement.

Row: 2. Gross foreign dividends not previously taxed. Column: (b) Temporary Difference.

Row: 2. Gross foreign dividends not previously taxed. Column: (c) Permanent Difference.

Row: 2. Gross foreign dividends not previously taxed. Column: (d) Income (Loss) per Tax Return.

Row: 3. Subpart F, Q E F, and similar income inclusions. Column: (b) Temporary Difference.

Row: 3. Subpart F, Q E F, and similar income inclusions. Column: (c) Permanent Difference.

Row: 3. Subpart F, Q E F, and similar income inclusions. Column: (d) Income (Loss) per Tax Return.

Row: 4. Gross-up for foreign taxes deemed paid. Column: (b) Temporary Difference.

Row: 4. Gross-up for foreign taxes deemed paid. Column: (c) Permanent Difference.

Row: 4. Gross-up for foreign taxes deemed paid. Column: (d) Income (Loss) per Tax Return.

Row: 5. Gross foreign distributions previously taxed. Column: (a) Income (Loss) per Income Statement.

Row: 5. Gross foreign distributions previously taxed. Column: (b) Temporary Difference.

Row: 5. Gross foreign distributions previously taxed. Column: (c) Permanent Difference.

Row: 6. Income (loss) from equity method U.S. corporations. Column: (a) Income (Loss) per Income Statement.

Row: 6. Income (loss) from equity method U.S. corporations. Column: (b) Temporary Difference.

Row: 6. Income (loss) from equity method U.S. corporations. Column: (c) Permanent Difference.

Row: 7. U.S. dividends not eliminated in tax consolidation. Column: (a) Income (Loss) per Income Statement.

Row: 7. U.S. dividends not eliminated in tax consolidation. Column: (b) Temporary Difference.

Row: 7. U.S. dividends not eliminated in tax consolidation. Column: (c) Permanent Difference.

Row: 7. U.S. dividends not eliminated in tax consolidation. Column: (d) Income (Loss) per Tax Return.

Row: 8. Minority interest for includible corporations. Column: (a) Income (Loss) per Income Statement.

Row: 8. Minority interest for includible corporations. Column: (b) Temporary Difference.

Row: 8. Minority interest for includible corporations. Column: (c) Permanent Difference.

Row: 9. Income (loss) from U.S. partnerships. Column: (a) Income (Loss) per Income Statement.

Row: 9. Income (loss) from U.S. partnerships. Column: (b) Temporary Difference.

Row: 9. Income (loss) from U.S. partnerships. Column: (c) Permanent Difference.

Row: 9. Income (loss) from U.S. partnerships. Column: (d) Income (Loss) per Tax Return.

Row: 10. Income (loss) from foreign partnerships. Column: (a) Income (Loss) per Income Statement.

Row: 10. Income (loss) from foreign partnerships. Column: (b) Temporary Difference.

Row: 10. Income (loss) from foreign partnerships. Column: (c) Permanent Difference.

Row: 10. Income (loss) from foreign partnerships. Column: (d) Income (Loss) per Tax Return.

Row: 11. Income (loss) from other pass-through entities. Column: (a) Income (Loss) per Income Statement.

Row: 11. Income (loss) from other pass-through entities. Column: (b) Temporary Difference.

Row: 11. Income (loss) from other pass-through entities. Column: (c) Permanent Difference.

Row: 11. Income (loss) from other pass-through entities. Column: (d) Income (Loss) per Tax Return.

Row: 12. Items relating to reportable transactions. Column: (a) Income (Loss) per Income Statement.

Row: 12. Items relating to reportable transactions. Column: (b) Temporary Difference.

Row: 12. Items relating to reportable transactions. Column: (c) Permanent Difference.

Row: 12. Items relating to reportable transactions. Column: (d) Income (Loss) per Tax Return.

Row: 13. Interest income (see instructions). Column: (a) Income (Loss) per Income Statement.

Row: 13. Interest income (see instructions). Column: (b) Temporary Difference.

Row: 13. Interest income (see instructions). Column: (c) Permanent Difference.

Row: 13. Interest income (see instructions). Column: (d) Income (Loss) per Tax Return.

Row: 14. Total accrual to cash adjustment. Column: (a) Income (Loss) per Income Statement.

Row: 14. Total accrual to cash adjustment. Column: (b) Temporary Difference.

Row: 14. Total accrual to cash adjustment. Column: (c) Permanent Difference.

Row: 14. Total accrual to cash adjustment. Column: (d) Income (Loss) per Tax Return.

Row: 15. Hedging transactions. Column: (a) Income (Loss) per Income Statement.

Row: 15. Hedging transactions. Column: (b) Temporary Difference.

Row: 15. Hedging transactions. Column: (c) Permanent Difference.

Row: 15. Hedging transactions. Column: (d) Income (Loss) per Tax Return.

Row: 16. Mark-to-market income (loss). Column: (a) Income (Loss) per Income Statement.

Row: 16. Mark-to-market income (loss). Column: (b) Temporary Difference.

Row: 16. Mark-to-market income (loss). Column: (c) Permanent Difference.

Row: 16. Mark-to-market income (loss). Column: (d) Income (Loss) per Tax Return.

Row: 17. Cost of goods sold (see instructions). Column: Open parenthesis. (a) Income (Loss) per Income Statement. Close parenthesis.

Row: 17. Cost of goods sold (see instructions). Column: (b) Temporary Difference.

Row: 17. Cost of goods sold (see instructions). Column: (c) Permanent Difference.

Row: 17. Cost of goods sold (see instructions). Column: Open parenthesis. (d) Income (Loss) per Tax Return. Close parenthesis.

Row: 18. Sale versus lease (for sellers and/or lessors). Column: (a) Income (Loss) per Income Statement.

Row: 18. Sale versus lease (for sellers and/or lessors). Column: (b) Temporary Difference.

Row: 18. Sale versus lease (for sellers and/or lessors). Column: (c) Permanent Difference.

Row: 18. Sale versus lease (for sellers and/or lessors). Column: (d) Income (Loss) per Tax Return.

Row: 19. Section 481(a) adjustments. Column: (b) Temporary Difference.

Row: 19. Section 481(a) adjustments. Column: (c) Permanent Difference.

Row: 19. Section 481(a) adjustments. Column: (d) Income (Loss) per Tax Return.

Row: 20. Unearned/deferred revenue. Column: (a) Income (Loss) per Income Statement.

Row: 20. Unearned/deferred revenue. Column: (b) Temporary Difference.

Row: 20. Unearned/deferred revenue. Column: (c) Permanent Difference.

Row: 20. Unearned/deferred revenue. Column: (d) Income (Loss) per Tax Return.

Row: 21. Income recognition from long-term contracts. Column: (a) Income (Loss) per Income Statement.

Row: 21. Income recognition from long-term contracts. Column: (b) Temporary Difference.

Row: 21. Income recognition from long-term contracts. Column: (c) Permanent Difference.

Row: 21. Income recognition from long-term contracts. Column: (d) Income (Loss) per Tax Return.

Row: 22. Original issue discount and other imputed interest. Column: (a) Income (Loss) per Income Statement.

Row: 22. Original issue discount and other imputed interest. Column: (b) Temporary Difference.

Row: 22. Original issue discount and other imputed interest. Column: (c) Permanent Difference.

Row: 22. Original issue discount and other imputed interest. Column: (d) Income (Loss) per Tax Return.

Row: 23a. Income statement gain/loss on sale, exchange, abandonment, worthlessness, or other disposition of assets other than inventory and

Row: 23b. Gross capital gains from Schedule D, excluding amounts from pass-through entities. Column: (b) Temporary Difference.

Row: 23b. Gross capital gains from Schedule D, excluding amounts from pass-through entities. Column: (c) Permanent Difference.

Row: 23b. Gross capital gains from Schedule D, excluding amounts from pass-through entities. Column: (d) Income (Loss) per Tax Return.

Row: 23c. Gross capital losses from Schedule D, excluding amounts from pass-through entities, abandonment losses, and worthless stock

Row: 23d. Net gain/loss reported on Form 4797, line 17, excluding amounts from pass-through entities, abandonment losses, and worthless

Row: 23e. Abandonment losses. Column: (b) Temporary Difference.

Row: 23e. Abandonment losses. Column: (c) Permanent Difference.

Row: 23e. Abandonment losses. Column: (d) Income (Loss) per Tax Return.

Row: 23f. Worthless stock losses (attach statement). Column: (b) Temporary Difference.

Row: 23f. Worthless stock losses (attach statement). Column: (c) Permanent Difference.

Row: 23f. Worthless stock losses (attach statement). Column: (d) Income (Loss) per Tax Return.

Row: 23g. Other gain/loss on disposition of assets other than inventory. Column: (b) Temporary Difference.

Row: 23g. Other gain/loss on disposition of assets other than inventory. Column: (c) Permanent Difference.

Row: 23g. Other gain/loss on disposition of assets other than inventory. Column: (d) Income (Loss) per Tax Return.

Row: 24. Capital loss limitation and carryforward used. Column: (b) Temporary Difference.

Row: 24. Capital loss limitation and carryforward used. Column: (c) Permanent Difference.

Row: 24. Capital loss limitation and carryforward used. Column: (d) Income (Loss) per Tax Return.

Row: 25. Other income (loss) items with differences (attach statement). Column: (a) Income (Loss) per Income Statement.

Row: 25. Other income (loss) items with differences (attach statement). Column: (b) Temporary Difference.

Row: 25. Other income (loss) items with differences (attach statement). Column: (c) Permanent Difference.

Row: 25. Other income (loss) items with differences (attach statement). Column: (d) Income (Loss) per Tax Return.

Row: 26. Total income (loss) items. Combine lines 1 through 25. Column: (a) Income (Loss) per Income Statement.

Row: 26. Total income (loss) items. Combine lines 1 through 25. Column: (b) Temporary Difference.

Row: 26. Total income (loss) items. Combine lines 1 through 25. Column: (c) Permanent Difference.

Row: 26. Total income (loss) items. Combine lines 1 through 25. Column: (d) Income (Loss) per Tax Return.

Row: 27. Total expense/deduction items (from Part I I I, line 39). Column: (a) Income (Loss) per Income Statement.

Row: 27. Total expense/deduction items (from Part I I I, line 39). Column: (b) Temporary Difference.

Row: 27. Total expense/deduction items (from Part I I I, line 39). Column: (c) Permanent Difference.

Row: 27. Total expense/deduction items (from Part I I I, line 39). Column: (d) Income (Loss) per Tax Return.

Row: 28. Other items with no differences. Column: (a) Income (Loss) per Income Statement.

Row: 28. Other items with no differences. Column: (d) Income (Loss) per Tax Return.

Row: 29a. Mixed groups, see instructions. All others, combine lines 26 through 28. Column: (a) Income (Loss) per Income Statement.

Row: 29a. Mixed groups, see instructions. All others, combine lines 26 through 28. Column: (b) Temporary Difference.

Row: 29a. Mixed groups, see instructions. All others, combine lines 26 through 28. Column: (c) Permanent Difference.

Row: 29a. Mixed groups, see instructions. All others, combine lines 26 through 28. Column: (d) Income (Loss) per Tax Return.

Row: 29b. P C insurance subgroup reconciliation totals. Column: (a) Income (Loss) per Income Statement.

Row: 29b. P C insurance subgroup reconciliation totals. Column: (b) Temporary Difference.

Row: 29b. P C insurance subgroup reconciliation totals. Column: (c) Permanent Difference.

Row: 29b. P C insurance subgroup reconciliation totals. Column: (d) Income (Loss) per Tax Return.

Row: 29c. Life insurance subgroup reconciliation totals. Column: (a) Income (Loss) per Income Statement.

Row: 29c. Life insurance subgroup reconciliation totals. Column: (b) Temporary Difference.

Row: 29c. Life insurance subgroup reconciliation totals. Column: (c) Permanent Difference.

Row: 29c. Life insurance subgroup reconciliation totals. Column: (d) Income (Loss) per Tax Return.

Row: 30. Reconciliation totals. Combine lines 29a through 29c. Column: (a) Income (Loss) per Income Statement. Note: Line 30, column (a),

Row: 30. Reconciliation totals. Combine lines 29a through 29c. Column: (b) Temporary Difference.

Row: 30. Reconciliation totals. Combine lines 29a through 29c. Column: (c) Permanent Difference.

Row: 30. Reconciliation totals. Combine lines 29a through 29c. Column: (d) Income (Loss) per Tax Return. Note: Line 30, column (d) must

Page 3 157 fields

Name of corporation (common parent, if consolidated return)

Employer identification number

Consolidated group

Parent corp

Consolidated eliminations

Subsidiary corp

Mixed 1120/L/PC group

1120 group

1120 eliminations

Name of subsidiary (if consolidated return)

Employer identification number

current income tax expense. Column: (a) Expense per Income Statement.

Row: 1. U.S. current income tax expense. Column: (b) Temporary Difference.

Row: 1. U.S. current income tax expense. Column: (c) Permanent Difference.

Row: 2. U.S. deferred income tax expense. Column: (a) Expense per Income Statement.

Row: 2. U.S. deferred income tax expense. Column: (b) Temporary Difference.

Row: 2. U.S. deferred income tax expense. Column: (c) Permanent Difference.

Row: 3. State and local current income tax expense. Column: (a) Expense per Income Statement.

Row: 3. State and local current income tax expense. Column: (b) Temporary Difference.

Row: 3. State and local current income tax expense. Column: (c) Permanent Difference.

Row: 3. State and local current income tax expense. Column: (d) Deduction per Tax Return.

Row: 4. State and local deferred income tax expense. Column: (a) Expense per Income Statement.

Row: 4. State and local deferred income tax expense. Column: (b) Temporary Difference.

Row: 4. State and local deferred income tax expense. Column: (c) Permanent Difference.

Row: 5. Foreign current income tax expense (other than foreign withholding taxes). Column: (a) Expense per Income Statement.

Row: 5. Foreign current income tax expense (other than foreign withholding taxes). Column: (b) Temporary Difference.

Row: 5. Foreign current income tax expense (other than foreign withholding taxes). Column: (c) Permanent Difference.

Row: 5. Foreign current income tax expense (other than foreign withholding taxes). Column: (d) Deduction per Tax Return.

Row: 6. Foreign deferred income tax expense. Column: (a) Expense per Income Statement.

Row: 6. Foreign deferred income tax expense. Column: (b) Temporary Difference.

Row: 6. Foreign deferred income tax expense. Column: (c) Permanent Difference.

Row: 7. Foreign withholding taxes. Column: (a) Expense per Income Statement.

Row: 7. Foreign withholding taxes. Column: (b) Temporary Difference.

Row: 7. Foreign withholding taxes. Column: (c) Permanent Difference.

Row: 7. Foreign withholding taxes. Column: (d) Deduction per Tax Return.

Row: 8. Interest expense (see instructions). Column: (a) Expense per Income Statement.

Row: 8. Interest expense (see instructions). Column: (b) Temporary Difference.

Row: 8. Interest expense (see instructions). Column: (c) Permanent Difference.

Row: 8. Interest expense (see instructions). Column: (d) Deduction per Tax Return.

Row: 9. Stock option expense. Column: (a) Expense per Income Statement.

Row: 9. Stock option expense. Column: (b) Temporary Difference.

Row: 9. Stock option expense. Column: (c) Permanent Difference.

Row: 9. Stock option expense. Column: (d) Deduction per Tax Return.

Row: 10. Other equity-based compensation. Column: (a) Expense per Income Statement.

Row: 10. Other equity-based compensation. Column: (b) Temporary Difference.

Row: 10. Other equity-based compensation. Column: (c) Permanent Difference.

Row: 10. Other equity-based compensation. Column: (d) Deduction per Tax Return.

Row: 11. Meals and entertainment. Column: (a) Expense per Income Statement.

Row: 11. Meals and entertainment. Column: (b) Temporary Difference.

Row: 11. Meals and entertainment. Column: (c) Permanent Difference.

Row: 11. Meals and entertainment. Column: (d) Deduction per Tax Return.

Row: 12. Fines and penalties. Column: (a) Expense per Income Statement.

Row: 12. Fines and penalties. Column: (b) Temporary Difference.

Row: 12. Fines and penalties. Column: (c) Permanent Difference.

Row: 12. Fines and penalties. Column: (d) Deduction per Tax Return.

Row: 13. Judgments, damages, awards, and similar costs. Column: (a) Expense per Income Statement.

Row: 13. Judgments, damages, awards, and similar costs. Column: (b) Temporary Difference.

Row: 13. Judgments, damages, awards, and similar costs. Column: (c) Permanent Difference.

Row: 13. Judgments, damages, awards, and similar costs. Column: (d) Deduction per Tax Return.

Row: 14. Parachute payments. Column: (a) Expense per Income Statement.

Row: 14. Parachute payments. Column: (b) Temporary Difference.

Row: 14. Parachute payments. Column: (c) Permanent Difference.

Row: 14. Parachute payments. Column: (d) Deduction per Tax Return.

Row: 15. Compensation with section 162(m) limitation. Column: (a) Expense per Income Statement.

Row: 15. Compensation with section 162(m) limitation. Column: (b) Temporary Difference.

Row: 15. Compensation with section 162(m) limitation. Column: (c) Permanent Difference.

Row: 15. Compensation with section 162(m) limitation. Column: (d) Deduction per Tax Return.

Row: 16. Pension and profit-sharing. Column: (a) Expense per Income Statement.

Row: 16. Pension and profit-sharing. Column: (b) Temporary Difference.

Row: 16. Pension and profit-sharing. Column: (c) Permanent Difference.

Row: 16. Pension and profit-sharing. Column: (d) Deduction per Tax Return.

Row: 17. Other post-retirement benefits. Column: (a) Expense per Income Statement.

Row: 17. Other post-retirement benefits. Column: (b) Temporary Difference.

Row: 17. Other post-retirement benefits. Column: (c) Permanent Difference.

Row: 17. Other post-retirement benefits. Column: (d) Deduction per Tax Return.

Row: 18. Deferred compensation. Column: (a) Expense per Income Statement.

Row: 18. Deferred compensation. Column: (b) Temporary Difference.

Row: 18. Deferred compensation. Column: (c) Permanent Difference.

Row: 18. Deferred compensation. Column: (d) Deduction per Tax Return.

Row: 19. Charitable contribution of cash and tangible property. Column: (a) Expense per Income Statement.

Row: 19. Charitable contribution of cash and tangible property. Column: (b) Temporary Difference.

Row: 19. Charitable contribution of cash and tangible property. Column: (c) Permanent Difference.

Row: 19. Charitable contribution of cash and tangible property. Column: (d) Deduction per Tax Return.

Row: 20. Charitable contribution of intangible property. Column: (a) Expense per Income Statement.

Row: 20. Charitable contribution of intangible property. Column: (b) Temporary Difference.

Row: 20. Charitable contribution of intangible property. Column: (c) Permanent Difference.

Row: 20. Charitable contribution of intangible property. Column: (d) Deduction per Tax Return.

Row: 21. Charitable contribution limitation/carryforward. Column: (b) Temporary Difference.

Row: 21. Charitable contribution limitation/carryforward. Column: (c) Permanent Difference.

Row: 21. Charitable contribution limitation/carryforward. Column: (d) Deduction per Tax Return.

Row: 22. Domestic production activities deduction (see instructions). Column: (b) Temporary Difference.

Row: 22. Domestic production activities deduction (see instructions). Column: (c) Permanent Difference.

Row: 22. Domestic production activities deduction (see instructions). Column: (d) Deduction per Tax Return.

Row: 23. Current year acquisition or reorganization investment banking fees. Column: (a) Expense per Income Statement.

Row: 23. Current year acquisition or reorganization investment banking fees. Column: (b) Temporary Difference.

Row: 23. Current year acquisition or reorganization investment banking fees. Column: (c) Permanent Difference.

Row: 23. Current year acquisition or reorganization investment banking fees. Column: (d) Deduction per Tax Return.

Row: 24. Current year acquisition or reorganization legal and accounting fees. Column: (a) Expense per Income Statement.

Row: 24. Current year acquisition or reorganization legal and accounting fees. Column: (b) Temporary Difference.

Row: 24. Current year acquisition or reorganization legal and accounting fees. Column: (c) Permanent Difference.

Row: 24. Current year acquisition or reorganization legal and accounting fees. Column: (d) Deduction per Tax Return.

Row: 25. Current year acquisition/reorganization other costs. Column: (a) Expense per Income Statement.

Row: 25. Current year acquisition/reorganization other costs. Column: (b) Temporary Difference.

Row: 25. Current year acquisition/reorganization other costs. Column: (c) Permanent Difference.

Row: 25. Current year acquisition/reorganization other costs. Column: (d) Deduction per Tax Return.

Row: 26. Amortization/impairment of goodwill. Column: (a) Expense per Income Statement.

Row: 26. Amortization/impairment of goodwill. Column: (b) Temporary Difference.

Row: 26. Amortization/impairment of goodwill. Column: (c) Permanent Difference.

Row: 26. Amortization/impairment of goodwill. Column: (d) Deduction per Tax Return.

Row: 27. Amortization of acquisition, reorganization, and start-up costs. Column: (a) Expense per Income Statement.

Row: 27. Amortization of acquisition, reorganization, and start-up costs. Column: (b) Temporary Difference.

Row: 27. Amortization of acquisition, reorganization, and start-up costs. Column: (c) Permanent Difference.

Row: 27. Amortization of acquisition, reorganization, and start-up costs. Column: (d) Deduction per Tax Return.

Row: 28. Other amortization or impairment write-offs. Column: (a) Expense per Income Statement.

Row: 28. Other amortization or impairment write-offs. Column: (b) Temporary Difference.

Row: 28. Other amortization or impairment write-offs. Column: (c) Permanent Difference.

Row: 28. Other amortization or impairment write-offs. Column: (d) Deduction per Tax Return.

Row: 30. Depletion. Column: (a) Expense per Income Statement.

Row: 30. Depletion. Column: (b) Temporary Difference.

Row: 30. Depletion. Column: (c) Permanent Difference.

Row: 30. Depletion. Column: (d) Deduction per Tax Return.

Row: 31. Depreciation. Column: (a) Expense per Income Statement.

Row: 31. Depreciation. Column: (b) Temporary Difference.

Row: 31. Depreciation. Column: (c) Permanent Difference.

Row: 31. Depreciation. Column: (d) Deduction per Tax Return.

Row: 32. Bad debt expense. Column: (a) Expense per Income Statement.

Row: 32. Bad debt expense. Column: (b) Temporary Difference.

Row: 32. Bad debt expense. Column: (c) Permanent Difference.

Row: 32. Bad debt expense. Column: (d) Deduction per Tax Return.

Row: 33. Corporate owned life insurance premiums. Column: (a) Expense per Income Statement.

Row: 33. Corporate owned life insurance premiums. Column: (b) Temporary Difference.

Row: 33. Corporate owned life insurance premiums. Column: (c) Permanent Difference.

Row: 33. Corporate owned life insurance premiums. Column: (d) Deduction per Tax Return.

Row: 34. Purchase versus lease (for purchasers and/or lessees). Column: (a) Expense per Income Statement.

Row: 34. Purchase versus lease (for purchasers and/or lessees). Column: (b) Temporary Difference.

Row: 34. Purchase versus lease (for purchasers and/or lessees). Column: (c) Permanent Difference.

Row: 34. Purchase versus lease (for purchasers and/or lessees). Column: (d) Deduction per Tax Return.

Row: 35. Research and development costs. Column: (a) Expense per Income Statement.

Row: 35. Research and development costs. Column: (b) Temporary Difference.

Row: 35. Research and development costs. Column: (c) Permanent Difference.

Row: 35. Research and development costs. Column: (d) Deduction per Tax Return.

Row: 36. Section 118 exclusion (attach statement). Column: (a) Expense per Income Statement.

Row: 36. Section 118 exclusion (attach statement). Column: (b) Temporary Difference.

Row: 36. Section 118 exclusion (attach statement). Column: (c) Permanent Difference.

Row: 36. Section 118 exclusion (attach statement). Column: (d) Deduction per Tax Return.

Row: 37. Section 162(r)—F D I C premiums paid by certain large financial institutions (see instructions). Column: (a) Expense per Income

Row: 37. Section 162(r)—F D I C premiums paid by certain large financial institutions (see instructions). Column: (b) Temporary Difference.

Row: 37. Section 162(r)—F D I C premiums paid by certain large financial institutions (see instructions). Column: (c) Permanent Difference.

Row: 37. Section 162(r)—F D I C premiums paid by certain large financial institutions (see instructions). Column: (d) Deduction per Tax

Row: 38. Other expense/deduction items with differences (attach statement). Column: (a) Expense per Income Statement.

Row: 38. Other expense/deduction items with differences (attach statement). Column: (b) Temporary Difference.

Row: 38. Other expense/deduction items with differences (attach statement). Column: (c) Permanent Difference.

Row: 38. Other expense/deduction items with differences (attach statement). Column: (d) Deduction per Tax Return.

Row: 39. Total expense/deduction items. Combine lines 1 through 38. Enter here and on Part I I, line 27, reporting positive amounts as

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Frequently asked questions

What is the difference between Schedule M-1 and Schedule M-3?

Both reconcile book income to taxable income. Schedule M-1 is a short summary, while Schedule M-3 requires each difference to be itemized and split into temporary and permanent pieces. Corporations with total assets of $10 million or more generally must use Schedule M-3.

Do I still file Schedule M-1 if I file Schedule M-3?

No. Schedule M-3 replaces Schedule M-1 for the corporations required to file it. Check the current Form 1120 instructions for the reduced reporting options available to some filers.

What are temporary and permanent differences?

Temporary differences reverse over time, such as depreciation methods that differ between book and tax. Permanent differences never reverse, such as expenses that are booked but never deductible. Schedule M-3 asks you to classify every difference one way or the other.

Schedule M-3 (Form 1120), Net Income (Loss) Reconciliation for Corporations With Total Assets of $10 Million or More

What is Schedule M-3 (Form 1120)?

Who files Schedule M-3 (Form 1120)?

How to fill out Schedule M-3 (Form 1120)

Quick fill Schedule M-3 (Form 1120) on this page

Frequently asked questions

Related forms

Form 1120, U.S. Corporation Income Tax Return

Form 8916, Reconciliation of Schedule M-3 Taxable Income with Tax Return Taxable Income for Mixed Groups

Form 8916-A, Supplemental Attachment to Schedule M-3