INSTRUCTIONS: NET INCOME (LOSS) RECONCILIATION FOR S CORPORATIONS WITH TOTAL ASSETS OF $10 MILLION OR MORE (Form 1120S) SCHEDULE M-3

S Corporations filing their federal income taxes using a form 1120S use a Schedule M-3 supplement if their total assets are $10 million or more to reconcile their net income or loss as documented on estimated tax payments with their reported returns. This document can be found on the website of the Internal Revenue Service.

Net Income (Loss) Reconciliation For S Corporations With Total Assets Of $10 Million Or More 1120S Schedule M-3 Step 1: At the top of the page, enter the name of the corporation and its employer identification number.

Net Income (Loss) Reconciliation For S Corporations With Total Assets Of $10 Million Or More 1120S Schedule M-3 Step 2: Part I requires you to give financial information. Answer questions 1a and 1b with check marks. If you answer question 1b "no," skip to question 4. Otherwise, complete questions 2 and 3.

Net Income (Loss) Reconciliation For S Corporations With Total Assets Of $10 Million Or More 1120S Schedule M-3 Step 3: On line 4a, enter your worldwide consolidated net income or loss. Indicate your accounting standard with a check mark on line 4b.

Net Income (Loss) Reconciliation For S Corporations With Total Assets Of $10 Million Or More 1120S Schedule M-3 Step 4: Enter your net income from nonincludable foreign bodies on line 5a and your net loss from the same sources on line 5b.

Net Income (Loss) Reconciliation For S Corporations With Total Assets Of $10 Million Or More 1120S Schedule M-3 Step 5: Complete lines 6a through 12 as directed.

Net Income (Loss) Reconciliation For S Corporations With Total Assets Of $10 Million Or More 1120S Schedule M-3 Step 6: Skip to Part III on the third page. This section concerns reconciliation of your net income or loss as documented on your income statement with the total income or loss documented per return. Complete the table as instructed.

Net Income (Loss) Reconciliation For S Corporations With Total Assets Of $10 Million Or More 1120S Schedule M-3 Step 7: Transfer the value from line 32 on this page to line 24 on the second page.

Net Income (Loss) Reconciliation For S Corporations With Total Assets Of $10 Million Or More 1120S Schedule M-3 Step 8: Complete Part II on the second page as instructed.