1218 Form 1120 (Schedule B) (PDF)

Official source: IRS Forms, Instructions & Publications (https://www.irs.gov/pub/irs-pdf/f1120sb.pdf), retrieved 2026-10-03. U.S. Government work (17 U.S.C. § 105).

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For Paperwork Reduction Act Notice, see the Instructions for Form 1120. Cat. No. 49737Q Schedule B (Form 1120) (Rev. 12-2018)

Schedule B (Form 1120) (Rev. 12-2018) Page 2

Section references are to the Internal Revenue Code unless otherwise noted.

Future Developments

For the latest information about developments related to Schedule B (Form 1120) and its instructions, such as legislation enacted after they were published, go to www.irs.gov/Form1120.

What’s New

After December 22, 2017, the following nonshareholder contributions to the capital of a corporation are not eligible for exclusion under section 118.

• Any contribution by any civic group; or

• Any contribution by any governmental entity, except any contribution that was made after December 22, 2017, according to a master development plan that was approved prior to December 22, 2017, by a governmental entity.

Purpose of Form

Use Schedule B (Form 1120) to provide answers to additional questions for filers of Schedule M-3 (Form 1120).

Who Must File

Generally, filers of Form 1120 that file Schedule M-3 (Form 1120), must complete and file Schedule B (Form 1120). However, filers that (a) are required to file Schedule M-3 and have less than $50 million in total assets at the end of the tax year or (b) are not required to file Schedule M-3 and voluntarily file Schedule M-3, are not required to file Schedule B (Form 1120). See the Instructions for Schedule M-3 (Form 1120) for more information.

In the case of a consolidated group, a parent corporation files one Schedule B for the entire group.

Question 1. Partnership Allocations Answer “Yes” if this corporation is a partner in a partnership and has received special allocations of income, gain, loss, deduction, or credit from such partnership.

Example. P, a corporation, joins with B, an individual, in forming the PB Partnership. P and B each contribute $50,000 in cash to PB Partnership. Profits and losses are allocated equally, with the exception of depreciation, which is allocated 99% to P and 1% to B.

P answers “Yes” to question 1 because its 99% allocation of depreciation deductions from PB Partnership is disproportionate to its ratio of sharing other items of income, gain, loss, deduction, or credit from PB Partnership.

Question 6. Change in Method of Accounting Corporations are generally required to file Form 3115, Application for Change in Accounting Method, or a statement in lieu of Form 3115, to request a change in a method of accounting. See the Instructions for Form 3115 for information on requesting a change in accounting method.

Question 7. Voluntary Employees’ Beneficiary Association Trusts Employers that establish and fund welfare benefit plans on behalf of their employees do so through a tax-exempt trust that is referred to as a voluntary employees’ beneficiary association (VEBA). See section 501(c)(9) and Regulations sections 1.501(c)(9)-1 through 1.501(c)(9)-8 for details.

Answer “Yes” if the corporation owned any VEBA trusts that were used to hold funds designated for employee benefits.

Question 8. Indirect Costs Section 446(a) and Regulations section 1.446-1(a)(1) generally provide that taxable income shall be figured under the method of accounting on the basis of which the corporation regularly figures its income in keeping its books. An exception applies if book income does not clearly reflect income.

Answer “Yes” if the corporation, during the tax year, used an allocation method for indirect costs capitalized to self-constructed assets that varied from its financial statement method of accounting. Otherwise, answer “No.” Also answer “No” if the corporation used the same method of allocating indirect costs to self-constructed assets, but capitalized a different amount due to differences in the amount of costs which are includible in the computation of income for the tax year.

Question 9. Mixed–Service Costs Answer “Yes” if the corporation, during the tax year, treated purchasing, handling, and storage, as discussed in Regulations sections 1.263A-3(c)(1) through (5), and as defined in Regulations sections 1.263A-1(e)(3)(ii)(F), (G), and (H), as mixed-service costs as defined in Regulations section 1.263A-1(e)(4)(ii)(C). Otherwise, answer “No.”

Question 5. Changes in Accounting Principle The term “change in accounting principle,” means a change from one generally accepted accounting principle to another generally accepted accounting principle as described in Statement of Financial Accounting Standards (SFAS) No. 154—Accounting Changes and Error Corrections.

Answer “Yes” if a change in accounting principle occurred during the tax year that affected (or is expected to affect) the amount of income reported for financial statement purposes.

If the corporation has audited financial statements, any changes in accounting principle should be identified in footnotes to those statements.