Entity Considerations for Schedule M-3

For purposes of Schedule M-3, references to the classification of an entity (for example, as a corporation, a partnership, or a trust) are references to the treatment of the entity for U.S. income tax purposes. An entity that is generally disregarded as separate from its owner for U.S. income tax purposes (disregarded entity) must not be separately reported on Schedule M-3 except, if required, on Part I, line 7a or 7b. On Schedule M-3, Parts II and III, any item of income, gain, loss, deduction, or credit of a disregarded entity must be reported as an item of its owner. In particular, the income or loss of a disregarded entity must not be reported on Part II, line 9, 10, or 11, as from a separate partnership or other pass-through entity. The financial statement income or loss of a disregarded entity is included on Part I, line 7a or 7b, only if its financial statement income or loss is included on Part I, line 11, but not on Part I, line 4a.

Reportable Entity Partner Reporting Responsibilities A reportable entity partner with respect to a partnership filing Form 1065 is an entity that:

• Owns or is deemed to own, directly or indirectly, under these instructions a 50% or greater interest in the income, loss, or capital of the partnership on any day of the tax year; and

• Was required to file Schedule M-3 with its most recently filed U.S. income tax return or return of income filed prior to that day.

For the purposes of these instructions, the following rules apply.

1. The parent corporation of a consolidated tax group is deemed to own all corporate and partnership interests owned or deemed to be owned under these instructions by any member of the tax consolidated group.

2. The owner of a disregarded entity is deemed to own all corporate and partnership interests owned or deemed to be owned under these instructions by the disregarded entity.

3. The owner of 50% or more of a corporation by vote on any day of the corporation’s tax year is deemed to own all corporate and partnership interests owned or deemed to be owned under these instructions by the corporation during the corporation’s tax year.

4. The owner of 50% or more of partnership income, loss, or capital on any day of the partnership tax year is deemed to own all corporate and partnership interests owned or deemed to be owned under these instructions by the partnership during the partnership tax year.

5. The beneficial owner of 50% or more of the beneficial interest of a trust or nominee arrangement on any day of the trust or nominee arrangement tax year is deemed to own all corporate and partnership interests owned or deemed to be

owned under these instructions by the trust or nominee arrangement.

A reportable entity partner with respect to a partnership (as defined above) must report the following to the partnership within 30 days of first becoming a reportable entity partner and, after first reporting to the partnership under these instructions, thereafter within 30 days of the date of any change in the interest it owns or is deemed to own, directly or indirectly, under these instructions, in the partnership.

1. Name.

2. Mailing address.

3. Taxpayer identification number (TIN) or EIN, if applicable.

4. Entity or organization type.

5. State or country in which it is organized.

6. Date on which it first became a reportable entity partner.

7. Date with respect to which it is reporting a change in its ownership interest in the partnership, if applicable.

8. The interest in the partnership it owns or is deemed to own in the partnership, directly or indirectly (as defined under these instructions), as of the date with respect to which it is reporting.

9. Any change in that interest as of the date with respect to which it is reporting.

The reportable entity partner must retain copies of required reports it makes to partnerships under these instructions. Each partnership must retain copies of the required reports it receives under these instructions from reportable entity partners.

Example 3.

1. A, limited liability company (LLC) filing a Form 1065 for 2025, is owned 50% by U.S. corporation Z. A owns 50% of B, C, D, and E, which are also LLCs filing a Form 1065 for calendar year 2025. Z was first required to file Schedule M-3 (Form 1120) for its corporate tax year ending December 31, 2024, and filed its Form 1120 with Schedule M-3 for 2024 on October 15, 2025. As of October 16, 2025, Z was a reportable entity partner with respect to A and, through A, with respect to B, C, D, and E. On November 5, 2025, Z reports to A, B, C, D, and E, as it is required to do within 30 days of October 16, that Z is a reportable entity partner directly owning (with respect to A) or deemed to own indirectly (with respect to B, C, D, and E) a 50% interest. Therefore, because Z was a reportable entity partner for 2025, each of A, B, C, D, and E is required to file Schedule M-3 (Form 1065) for 2025, regardless of whether they would otherwise be required to file Schedule M-3 for that year.

2. P, a U.S. corporation, is the parent of a financial consolidation group with 50 domestic subsidiaries, DS1 through DS50, and 50 foreign subsidiaries, FS1 through FS50, all 100% owned on October 16, 2025. On October 15, 2025, P filed a consolidated tax return on Form 1120 and was required to file Schedule M-3 for the tax year ending December 31, 2024. On October 16, 2025, DS1, DS2, DS3, FS1, and FS2 each acquire a 10% partnership interest in partnership K, which files Form 1065 for the tax year ending December 31, 2025. P is deemed to own, directly or indirectly (under these instructions), all corporate and partnership interests of DS1, DS2, and DS3 as the parent of

4 Instructions for Schedule M-3 (Form 1120) (Rev. 6-2025)

the tax consolidation group and is therefore deemed to own 30% of K on October 16, 2025. P is deemed to own, directly or indirectly (under these instructions), all corporate and partnership interests of FS1 and FS2 as the owner of 50% or more of each corporation by vote and is therefore deemed to own 20% of K on September 16, 2025. P is therefore deemed to own 50% of K on October 16, 2025. Since P owns or is deemed to own, directly or indirectly (under these instructions), 50% or more of K on October 16, 2025, and was required to file Schedule M-3 on its most recently filed U.S. income tax return filed prior to that date, P is a reportable entity partner of K as of October 16, 2025. On November 5, 2025, P reports to K, as it is required to do, that P is a reportable entity partner as of October 16, 2025, deemed to own (under these instructions), a 50% interest in K. K is therefore required to file Schedule M-3 when it files its Form 1065 for its tax year ending December 31, 2025.