SCHEDULE M-3 

(Form 1120-F)

Department of the Treasury 

Internal Revenue Service 

Net Income (Loss) Reconciliation for Foreign 

Corporations With Reportable Assets of $10 Million or More

▶ Attach to Form 1120-F.

▶ Information about Schedule M-3 (Form 1120-F) and its instructions is available at www.irs.gov/form1120f.

OMB No. 1545-0126

2012

Name of corporation Employer identification number

A Has the corporation reported taxable income on Form 1120-F, page 3, using a treaty provision to attribute 

business profits to a U.S. permanent establishment under rules other than section 864(c)? . . . . . . Yes No

B Did the corporation prepare a non-consolidated, worldwide, certified audited income statement for the

period (see instructions)? . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No

C Did the corporation prepare a non-consolidated, worldwide income statement for the period (see instructions)? Yes No

D Did the corporation prepare certified audited income statement(s) for the set(s) of books reported on 

Form 1120-F, Schedule L? . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No

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

1 Is the corporation a foreign bank as defined in Regulations section 1.882-5(c)(4)?

Yes. Complete the remainder of Part I as follows:

If D is “Yes,” use the income statement described in D to complete lines 2 through 5 and 7 through 11.

If D is “No,” use the income statement(s) for the set(s) of books reported on Form 1120-F, Schedule L

to complete lines 2 through 5 and 7 through 11.

No. Complete the remainder of Part I as follows:

If B is “Yes,” use the income statement described in B to complete lines 2 through 11.

If B is “No” and C is “Yes,” use the income statement described in C to complete lines 2 through 11.

If B and C are “No” and D is “Yes,” use the income statement described in D to complete lines 2 through 11.

If B, C, and D are “No,” use the income statement described in the instructions to complete lines 2 through 11.

2a Enter the income statement period: Beginning Ending

b Has the corporation’s income statement been restated for the income statement period entered on line 2a?

Yes. Attach an explanation and the amount of each item restated.

No.

c Has the corporation’s income statement been restated for any of the 5 income statement periods preceding 

the period on line 2a?

Yes. Attach an explanation and the amount of each item restated.

No.

3 Is any of the corporation’s stock publicly traded on any exchange, U.S. or foreign?

Yes. List exchange(s) and symbol ▶

No.

4 Non-consolidated foreign corporation net income (loss) in U.S. dollars from the income statement 

source identified in line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . 4 

5a Net income from includible disregarded foreign entities not included on line 4 (attach statement) . . 5a 

b Net loss from includible disregarded foreign entities not included on line 4 (attach statement) . . . 5b ( ) 

c Net income from includible disregarded U.S. entities not included on line 4 (attach statement) . . . 5c 

d Net loss from includible disregarded U.S. entities not included on line 4 (attach statement) . . . . 5d ( ) 

6 Net income (loss) from foreign locations not included on line 4 (attach statement) . . . . . . . 6 

7a Net income of non-includible entities (attach statement) . . . . . . . . . . . . . . . 7a ( ) 

b Net loss of non-includible entities (attach statement) . . . . . . . . . . . . . . . . 7b

8 Adjustments to intercompany transactions (attach statement) . . . . . . . . . . . . . 8 

9 Adjustments to reconcile income statement period to tax year (attach statement) . . . . . . . 9 

10 Other adjustments to reconcile to amount on line 11 (attach statement) . . . . . . . . . . 10 

11 Adjusted financial net income (loss) of non-consolidated foreign corporation. Combine lines 4 

through 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 

For Paperwork Reduction Act Notice, see the Instructions 

for Form 1120-F.

Cat. No. 39667H Schedule M-3 (Form 1120-F) 2012
Schedule M-3 (Form 1120-F) 2012 Page 2 

Name of corporation Employer identification number

Part II Reconciliation of Net Income (Loss) per Income Statement of Non-Consolidated Foreign Corporations With 

Taxable Income per Return (see instructions)

Income (Loss) Items

(a) 

Income (Loss) per

Income Statement

(b) 

Temporary

Differences

(c) 

Permanent

Differences

(d) 

Other Permanent

Differences

for Allocations to

Non-ECI and ECI

(e) 

Income (Loss) 

per Tax Return 

1 Gross receipts . . . . . . . .

2 Cost of goods sold (attach statement) .

3a Dividends from foreign entities . . .

b Dividends from U.S. entities . . . .

c Dividend equivalents received . . .

4a Interest income excluding interest 

equivalents . . . . . . . . .

b Substitute interest payments received

c Interest equivalents not included on line 4b

5 Gross rental income . . . . . .

6 Gross royalty income . . . . . .

7 Fee and commission income . . .

8 Income (loss) from equity method 

corporations . . . . . . . .

9 Net income (loss) from U.S. partnerships

10 Net income (loss) from certain foreign 

partnerships (see instructions) . . .

11 Net income (loss) from other passthrough entities (attach statement) . .

12 Items relating to reportable transactions 

(attach statement) . . . . . . .

13 Hedging transactions . . . . . .

14a Mark-to-market income (loss) under 

section 475(a) . . . . . . . .

b Mark-to-market income (loss) subject to 

section 475(d)(3)(B) . . . . . .

c Mark-to-market income (loss) under 

section 475(e) . . . . . . . .

d Mark-to-market income (loss) under 

section 475(f) . . . . . . . .

15 Gain (loss) from certain section 988 

transactions . . . . . . . .

16a Interest income from global securities 

dealing . . . . . . . . . .

b Dividends from global securities dealing 

c Gains (losses) and other fixed and 

determinable, annual, or periodic 

income from global securities dealing 

not included on lines 16a and 16b . .

17 Sales versus lease (for sellers and/or 

lessors) . . . . . . . . . .

18 Section 481(a) adjustments . . . .

 19 Unearned/deferred revenue . . . .

20 Original issue discount, imputed 

interest, and phantom income . . .

21a Income statement gain/loss on sale, 

exchange, abandonment, worthlessness, or

other disposition of assets other than

inventory and pass-through entities . .

b Gross capital gains from Schedule D,

excluding amounts from pass-through 

entities . . . . . . . . . .

Schedule M-3 (Form 1120-F) 2012
Schedule M-3 (Form 1120-F) 2012 Page 3 

Name of corporation Employer identification number

Part II Reconciliation of Net Income (Loss) per Income Statement of Non-Consolidated Foreign Corporations 

With Taxable Income per Return (see instructions) (continued from page 2)

Income (Loss) Items

(a) 

Income (Loss) per

Income Statement

(b) 

Temporary

Differences

(c) 

Permanent

Differences

(d) 

Other Permanent

Differences 

for Allocations to

Non-ECI and ECI

(e) 

Income (Loss)

per Tax Return

21c 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 . . . . . .

22 Capital loss limitation and carryforward 

used . . . . . . . . . .

23 Gross effectively connected income of 

foreign banks from books that do not 

give rise to U.S. booked 

liabilities . . . . . . . . .

24 Other income (loss) items with 

differences (attach statement) . . .

25 Total income (loss) items. Combine

lines 1 through 24 . . . . . . .

26 Total expense/deduction items (from 

Part III, line 33) . . . . . . .

27 Other items with no differences . . .

28 Reconciliation totals. Combine lines 25

through 27 . . . . . . . . .

Note. Line 28, column (a), must equal the amount on Part I, line 11, and column (e) must equal Form 1120-F, page 3, line 29.

Part III Reconciliation of Net Income (Loss) per Income Statement of Non-Consolidated Foreign Corporations 

With Taxable Income per Return (see instructions)

Expense/Deduction Items

(a) 

Expense per

Income Statement

(b) 

Temporary

Differences

(c) 

Permanent

Differences

(d) 

Other Permanent

Differences 

for Allocations to

Non-ECI and ECI

(e) 

Deduction per

Tax Return

1 U.S. current income tax expense . .

 2 U.S. deferred income tax expense . .

3 Non-U.S. current income tax expense 

(other than foreign withholding taxes) .

4 Non-U.S. deferred income tax 

expense . . . . . . . . .

5 Non-U.S. withholding taxes . . . .

6 Compensation with section 162(m) 

limitation . . . . . . . . .

7 Salaries and other base compensation

 8 Stock option expense . . . . .

 9 Other equity-based compensation . .

 10 Meals and entertainment . . . . .

 11 Fines and penalties . . . . . .

 12 Judgments, damages, awards, and 

similar costs . . . . . . . .

Schedule M-3 (Form 1120-F) 2012
Schedule M-3 (Form 1120-F) 2012 Page 4 

Name of corporation Employer identification number

Part III Reconciliation of Net Income (Loss) per Income Statement of Non-Consolidated Foreign 

Corporations With Taxable Income per Return (see instructions) (continued from page 3)

( )

Expense/Deduction Items

(a) 

Expense per

Income Statement

(b) 

Temporary

Differences

(c) 

Permanent

Differences

(d) 

Other Permanent

Differences 

for Allocations to

Non-ECI and ECI

(e) 

Deduction per

Tax Return

13 Pension and profit-sharing . . . .

 14 Other post-retirement benefits . . .

 15 Deferred compensation . . . . .

16 Charitable contributions . . . . .

17 Domestic production activities deduction 

18 Current year acquisition or 

reorganization investment banking 

fees, legal and accounting fees . . .

19 Current year acquisition/reorganization 

other costs . . . . . . . . .

20 Amortization/impairment of goodwill .

21 Amortization of acquisition, 

reorganization, and start-up costs . .

22 Other amortization or impairment 

write-offs . . . . . . . . .

23 Depreciation . . . . . . . .

 24 Bad debt expense . . . . . .

25 Purchase versus lease (for purchasers 

and/or lessees) . . . . . . .

26a Interest expense per books . . . .

b Interest expense under Regulations 

section 1.882-5 (from Schedule I (Form 

1120-F), line 23) . . . . . . .

c Regulations section 1.882-5 allocation 

amount subject to deferral or 

disallowance (from Schedule I (Form 

1120-F), line 24d) . . . . . . .

d U.S. source substitute interest payments 

e Interest equivalents (e.g., guarantee 

fees) not included on line 26d . . .

27 Dividend equivalents . . . . . .

28 Fee and commission expense . . .

29 Rental expense . . . . . . .

30 Royalty expense . . . . . . .

31 Expenses allocable to effectively 

connected income under Regulations 

section 1.861-8 from home office or 

other books that do not give rise to U.S. 

booked liabilities (from Schedule H 

(Form 1120-F), line 20) . . . . .

32 Other expense/deduction items with 

differences (attach statement) . . .

33 Total expense/deduction items. 

Combine lines 1 through 32. Enter here

and on Part II, line 26 . . . . . .

Schedule M-3 (Form 1120-F) 2012