Who Must File

Generally, the following apply.

• Any domestic corporation or group of corporations required to file Form 1120-L, U.S. Life Insurance Company Income Tax Return, that reports on Schedule L, Part II, line 2, column (b), of Form 1120-L total assets at the end of the corporation’s tax year that equal or exceed $10 million must complete and file Schedule M-3.

• A corporation filing a non-consolidated Form 1120-L that reports on Schedule L, Part II, line 2, column (b), of Form 1120-L total assets that equal or exceed $10 million must complete and file Schedule M-3 and must check box (1) Non-consolidated return, at the top of page 1 of Schedule M-3.

• Any U.S. consolidated tax group consisting of a U.S. parent corporation and additional includible corporations listed on Form 851, Affiliations Schedule, required to file Form 1120-L that reports on Schedule L, Part II, line 2, column (b), of Form 1120-L total consolidated assets at the end of the tax year that equal or exceed $10 million must complete and file Schedule M-3 and must check box (2) Consolidated return (Form 1120-L only) or (3) Mixed 1120/L/PC group, as applicable, at the top of page 1 of Schedule M-3.

A U.S. life insurance company filing Form 1120-L that is not required to file Schedule M-3 may voluntarily file Schedule M-3. A life insurance company filing Schedule M-3 must check Item A, box 3, on Form 1120-L, page 1, indicating that Schedule M-3 is attached, whether required or voluntary.

Example 1.

Instructions for Schedule M-3 (Form 1120-L) (Rev. 12-2025) Catalog Number 39945W Dec 15, 2025 Department of the Treasury Internal Revenue Service www.irs.gov

1. U.S. life insurance company A owns U.S. subsidiary B and foreign subsidiary F. For its current tax year, A prepares consolidated financial statements with B and F that report total assets of $12 million. A files a consolidated U.S. income tax return with B and reports total consolidated assets on Schedule L, Part II, line 2, column (b), of $8 million. A’s U.S. consolidated tax group is not required to file Schedule M-3 for the current tax year.

2. U.S. life insurance company C owns U.S. life insurance company D. For its current tax year, C prepares consolidated financial statements with D but C and D file separate U.S. income tax returns. The consolidated accrual basis financial statements for C and D report total assets at the end of the tax year of $12 million after intercompany eliminations. C reports separate company total year-end assets on its Schedule L, Part II, line 2, column (b), of $7 million. D reports separate company total year-end assets on its Schedule L, Part II, line 2, column (b), of $6 million. Neither C nor D is required to file Schedule M-3 for the current tax year.

3. Foreign corporation F owns 100% of both U.S. life insurance company B and U.S. life insurance company C. C owns 100% of U.S. life insurance company D. For its current tax year, F prepares a consolidated worldwide financial statement for the FBCD consolidated group. The FBCD consolidated financial statement reports total year-end assets of $25 million. F is not required to file a U.S. income tax return. B files a separate U.S. income tax return and reports separate company total year-end assets on its Schedule L, Part II, line 2, column (b), of $12 million. C files a consolidated U.S. income tax return with D and, after eliminating intercompany transactions between C and D, reports consolidated total year-end assets on Schedule L, Part II, line 2, column (b), of $8 million. B is required to file Schedule M-3 because its total year-end assets reported on Schedule L, Part II, line 2, column (b), equal at least $10 million. The CD U.S. consolidated tax group is not required to file Schedule M-3 because its total year-end assets reported on Schedule L, Part II, line 2, column (b), do not equal at least $10 million.

Special Filing Requirements for Mixed Groups If the parent corporation of a U.S. consolidated tax group files Form 1120-L and files Schedule M-3, each member of the group must file Schedule M-3. However, if the parent corporation of a U.S. consolidated tax group files Form 1120-L and any member of the group files Form 1120-PC, U.S. Property and Casualty Insurance Company Income Tax Return, or Form 1120, that member must file a Form 1120-PC Schedule M-3 or a Form 1120 Schedule M-3, respectively, and the group must comply with the mixed group consolidated Schedule M-3 reporting described in the section Schedule M-3 Consolidation for Mixed Groups (1120/L/PC), later, in these instructions. A mixed group must also file Form 8916, Reconciliation of Schedule M-3 Taxable Income With Tax Return Taxable Income for Mixed Groups, and, if applicable, Form 8916-A, Supplemental Attachment to Schedule M-3.

If the parent corporation of a U.S. consolidated tax group files Form 1120-L and any member of the group

files Form 1120-PC or Form 1120, and the consolidated Schedule L, Part II, line 2, column (b), reported in the return includes the assets of all of the corporations (the insurance companies as well as the non-insurance companies), in order to determine if the group meets the $10 million threshold test for the requirement to file Schedule M-3, use the amount of total assets reported on Schedule L, Part II, line 2, column (b), of the consolidated return. If the parent company of a U.S. consolidated tax group files Form 1120-L and any member of the group files Form 1120-PC or Form 1120 and the consolidated Schedule L, Part II, line 2, column (b), reported in the return does not include the assets of one or more of the corporations in the U.S. consolidated tax group, in order to determine if the group meets the $10 million threshold test for the requirement to file Schedule M-3, use the sum of the amount of total assets reported on the consolidated Schedule L, Part II, line 2, column (b), plus the amounts of all assets reported on Forms 1120-PC and 1120 that are included in the consolidated return but not included on the consolidated Schedule L, Part II, line 2, column (b).

For insurance companies included in the consolidated U.S. income tax return, see the instructions for Part I, lines 10a, 10b, 10c, and 11, and Part II, line 7, for guidance on Schedule M-3 reporting of intercompany dividends and statutory accounting adjustments.