(Rev. December 2019)

Net Income (Loss) Reconciliation for S Corporations With Total Assets of $10 Million or More

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 of $7 million. D reports separate company total year-end assets on its Schedule L of $6 million. Neither C nor D is required to file Schedule M-3 for the current tax year. C or D may voluntarily file Schedule M-3 for the current tax year. If C or D doesn't file Schedule M-3, it must file Schedule M-1. If C or D files Schedule M-3, it must either: (i) complete Schedule M-3 entirely; or (ii) complete Schedule M-3 through Part I and complete Schedule M-1 instead of completing Parts II and III of Schedule M-3.