IRS News Release  
December 02, 2004

Treasury & IRS Issue Final Instructions for
New Corporate Tax Return Form

The Treasury Department and Internal Revenue Service today released the final instructions for the Schedule M-3, Net Income (Loss) Reconciliation for Corporations with Total Assets of $10 Million or More. Schedule M-3 is to be used by certain corporate taxpayers filing Form 1120, U.S. Corporation Income Tax Return. The original draft version of the Schedule M-3 instructions was released for public comment on March 10, 2004. The final draft version of the Schedule M-3 was issued on October 25, 2004.

Schedule M-3 is effective for any taxable year ending on or after December 31, 2004. In general, Schedule M-3 must be filed by a corporation required to file Form 1120, U.S. Corporation Income Tax Return, that reports on Form 1120 at the end of the corporation's taxable year total assets that equal or exceed $10 million. However, a corporation is only required to complete certain sections of Schedule M-3 in the first taxable year the corporation is required to file the schedule.

The final instructions to Schedule M-3 provide additional guidance to those corporations required to file the schedule, including detailed instructions for almost every line and many illustrative examples. The Treasury and IRS believe that the additional guidance and examples will significantly assist in completion of the schedule.

The final Schedule M-3 instructions and final draft Schedule M-3 are attached and may be accessed on The final Schedule M-3 also will be available on when it is released.

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