Menu

Search

Knowledge Base


10115: 1065/1120/1120S - Schedule M-3


Fed Returns Generally

Why am I getting an M-3 instead of an M-1 on my 1065 (or 1120, 1120-S) return?

 

Form 1065

Any entity that files Form 1065 must file Schedule M-3 (Form 1065) if any of the following are true:

  1. amount of total assets at the end of the tax year reported on Schedule L, line 14, column (d), is equal to $10 million or more.
  2. amount of adjusted total assets for the tax year is equal to $10 million or more.
  3. amount of total receipts for the tax year is equal to $35 million or more. 
  4. An entity that is a reportable entity partner with respect to the partnership (as defined under these instructions) owns or is deemed to own, directly or indirectly, an interest of 50% or more in the partnership's capital, profit, or loss on any day during the tax year of the partnership.

Form 1120

If the total assets at the end of the corporation's tax year equal or exceed $10 million, the corporation must file Schedule M-3. 

Form 1120-S

If the total assets at the end of the corporation's tax year equal or exceed $10 million, the corporation must file Schedule M-3. 

Notes:

  • Certain income and deduction amounts and adjustments flow to Schedule M-3, but all other M-3 data must be entered manually. If Schedule M-3 is present in a return, no Schedule M-1 is generated.
  • If the return does not meet the criteria to file an M-3, check for entries made on any of the Schedule M-3 screens which should not be there. 
    • Wks M1C explains the adjustments flowing to Schedules M-1 and M-3 for the 1120.
    • Wks M1S explains the adjustments flowing to Schedules M-1 and M-3 for the 1120S.
  • When an M-3 is required but total assets at tax-year-end are less than $50 million, then
    • The taxpayer must either:
      • Complete Schedule M-3 entirely.
      • Or complete Schedule M-3 through Part I and complete Schedule M-1 instead of completing Parts II and III of Schedule M-3 (in which case, line 1 of Schedule M-1 must equal line 11 of Schedule M-3).
    • The taxpayer is not required to file Schedule C (Form 1065), Schedule B (Form 1120) or Form 8916-A.
  • In Drake Tax, to voluntarily file Schedule M-3, make the appropriate selection from the Force Print Schedule M-3 (1065), Force Print M3 (1120-S), or Voluntarily File M-3 (1120) drop list at the top of the M3 screen.

See the following IRS resources for details: 


Also In This Category


Details
Article has been viewed 12K times.
Last Modified: 5 Months Ago
Options