Expanded schedule M-3 filing requirements for 2006 returns.

• Author: Dolan, Michael P.

Schedule M-3 must be filed by corporations and partnerships with $10 million or more in assets, and by cetain other partnerships. Filers of Forms 1120-PC, U.S. Property and Casualty Insurance Company Income Tax Return; 1120-L, U.S. Life Insurance Company Income Tax Return; 1120S; and 1065, U.S. Return of Partnership Income, are required to include Schedule M-3 with their 2006 returns. Cooperative associations filing new Form 1120-C, U.S. Income Tax Return for Cooperative Associations, must file a Form 1120, Schedule M-3, if they report total assets of $10 million or more.

Schedule M-3 currently contains a line for entities to report any book-tax difference arising from the cost-of-goods-sold (COGS) deduction. However, in pursuit of more detail on how entities compute the deduction, the IRS created Form 8916-A, Reconciliation of Cost of Goods Sold Reported on Schedule M-3, which requires a breakdown of the...