SCHEDULE M-3 Net Income (Loss) Reconciliation for Foreign OMB No. 1545-0126

(Form 1120-F) Corporations With Reportable Assets of $10 Million or More

Department of the Treasury © Attach to Form 1120-F.

Internal Revenue Service

Name of corporation Employer identification number

For Privacy Act and Paperwork Reduction Act Notice, see the Instructions for Schedule M-3 (Form 1120-F) 2007

Form 1120-F.

Cat. No. 39667H

2007

Yes No

© See separate instructions.

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)?

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)

2a Enter the income statement period: Beginning / / Ending / /

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

Yes. Complete the remainder of Part I as follows:

No. Complete the remainder of Part I as follows:

b

3

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

No.

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

4

5a

6

7a

8

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

source identified in line 1

Net income from includible disregarded foreign entities not included on line 4 (attach schedule)

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

Net income of non-includible entities (attach schedule)

Adjustments to intercompany transactions (attach schedule)

4

5a

5c

7a

8

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

b

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

5b

5d

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.

Yes. List exchange(s) and symbol ©

No.

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

( )

( )

( )

c

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

c

d

Net income (loss) from foreign locations not included on line 4 (attach schedule)

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

6

10

11

Other adjustments to reconcile to amount on line 11 (attach schedule)

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

through 10

10

11

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.

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.
Schedule M-3 (Form 1120-F) 2007 Page 2

Income (Loss) Items

(c)

Permanent

Differences

(b)

Temporary

Differences

(a)

Income (Loss) per

Income Statement

(optional)

1 Gross receipts

2 Cost of goods sold (attach schedule)

3a

Interest income excluding interest

equivalents

4a

5 Gross rental income

6 Gross royalty income

7 Fee and commission income

Income (loss) from equity method

corporations

8

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

Net income (loss) from certain foreign

partnerships (attach schedule)

10

Net income (loss) from other passthrough entities (attach schedule) 

Items relating to reportable

transactions (attach details)

11

12

13 Hedging transactions

c

Mark-to-market income (loss) under

section 475(a)

16a

b

18

19

Gains (losses) and other fixed and

determinable, annual, or periodic

income from global securities dealing

not included on lines 16a and 16b

Sales versus lease (for sellers and/or

lessors)

20

21a

Unearned/deferred revenue

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

Taxable Income per Return (see instructions)

14a

Part II

Name of corporation Employer identification number

b Gross capital gains from Schedule D,

excluding amounts from passthrough entities

Original issue discount, imputed

interest, and phantom income

Section 481(a) adjustments

(e)

Income (Loss)

per Return

(optional)

Income statement gain/loss on sale,

exchange, abandonment, worthlessness,

or other disposition of assets other than

inventory and pass-through entities

Dividends from foreign entities

b Dividends from U.S. entities

c

b Substitute interest payments received

d

Mark-to-market income (loss) under

section 475(e)

15

Mark-to-market income (loss) under

section 475(f)

c

Interest income from global securities

dealing

Dividends from global securities dealing 

17

(d)

Other Permanent

Differences

for Allocations to

Non-ECI and ECI

Gain (loss) from certain section 988

transactions

Substitute dividend payments received 

c Interest equivalents not included on line 4b

b Mark-to-market income (loss) subject

to section 475(d)(3)(B)
Schedule M-3 (Form 1120-F) 2007 Page 3

Income (Loss) Items

(d)

Other Permanent

Differences 

for Allocations to

Non-ECI and ECI

(c)

Permanent

Differences

(b)

Temporary

Differences

(a)

Income (Loss) per

Income Statement

(optional)

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

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

Part II

Name of corporation Employer identification number

26

28

Other items with no differences

Total income (loss) items. Combine

lines 1 through 24 

Total expense/deduction items

(from Part III, line 33) 

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.

27

g Other gain/loss on disposition of

assets other than inventory

22

24

25

Other income (loss) items with

differences (attach schedule)

Capital loss limitation and

carryforward used

Expense/Deduction Items

(c)

Permanent

Differences

(b)

Temporary

Differences

(a)

Expense per

Income Statement

(optional)

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

Corporations With Taxable Income per Return (see instructions)

1

2

3

4

5

6

7

8

9

10

11

12

U.S. current income tax expense

U.S. deferred income tax expense

Non-U.S. current income tax expense 

(other than foreign withholding taxes)

Non-U.S. deferred income tax

expense

Non-U.S. withholding taxes

Compensation with section 162(m)

limitation

Salaries and other base compensation

Stock option expense

Other equity-based compensation

Meals and entertainment

Fines and penalties

Judgments, damages, awards, and

similar costs

Part III

Schedule M-3 (Form 1120-F) 2007

(e)

Income (Loss)

per Return

(optional)

(e)

Deduction per

Tax Return

(optional)

e

f Worthless stock losses (attach details)

Abandonment losses

d Net gain/loss reported on Form 4797,

line 17, excluding amounts from

pass-through entities, abandonment

losses, and worthless stock losses

23 Gross effectively connected income

of foreign banks from books that do

not give rise to U.S. booked

liabilities

(d)

Other Permanent

Differences 

for Allocations to

Non-ECI and ECI

Gross capital losses from Schedule D, 

excluding amounts from pass-through 

entities, abandonment losses, and

worthless stock losses

21c
Schedule M-3 (Form 1120-F) 2007 Page 4

Expense/Deduction Items (c)

Permanent

Differences

(b)

Temporary

Differences

(a)

Expense per

Income Statement

(optional)

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

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

Schedule M-3 (Form 1120-F) 2007

16

17

18

19

20

21

22

23

24

25

26a

c

28

30

31

32

33

Current year acquisition/reorganization

other costs

Amortization/impairment of goodwill

Amortization of acquisition,

reorganization, and start-up costs

Other amortization and impairment

write-offs

Bad debt expense

Depreciation

Purchase versus lease (for purchasers 

and/or lessees)

Fee and commission expense

Rental expense

Royalty expense

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 21)

b

Part III

Charitable contributions

Domestic production activities

deduction

Name of corporation Employer identification number

Total expense/deduction items.

Combine lines 1 through 32. Enter here 

and on Part II, line 26

Current year acquisition or

reorganization investment banking

fees, legal and accounting fees

Other expense/deduction items with

differences (attach schedule)

(e)

Deduction per

Tax Return

(optional)

Interest expense under Regulations

section 1.882-5 (from Schedule I

(Form 1120-F), line 23)

e

Interest expense per books

(d)

Other Permanent

Differences 

for Allocations to

Non-ECI and ECI

29

Regulations section 1.882-5 allocation 

amount subject to deferral or

disallowance (from Schedule I (Form

1120-F), line 24d)

Interest equivalents (e.g., guarantee

fees) not included on line 26d

d U.S. source substitute interest

payments

27 U.S. source substitute dividend

payments

( )

13

14

15

Pension and profit-sharing

Other post-retirement benefits

Deferred compensation