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Corporations with $50 million or more of assets are required to file the more complex Schedule M-3 and completing the Schedule M-3 can be confusing when the corporation prepares consolidated financial statements since some entities eligible for consolidation on a financial basis are not eligible for consolidation on a tax basis.  Furthermore, multiple Schedule M-3’s must be filed for the consolidated group, leading to potential “information overload.” It is important to understand the myriad differences between consolidated financial income and consolidated taxable income to navigate through the maze of sometimes conflicting rules. 

Other issues to consider include how to compute the total assets and liabilities of a consolidated group reported on Schedule L, form 1120, Balance Sheet per Books, and how to reconcile Retained Earnings per books on Schedule M-2.  Since the purpose of Schedule M-3 is to provide detailed information on book-tax differences, it is important to determine the financial information disclosure requirements, including the determination of “book” income versus “taxable Income” for a consolidated group rather than for each member of the consolidated group.

This course covers the Schedule M-3 filing and reporting requirements for a consolidated group, including:

  • Which entities in the consolidated financial statements are included/excluded on the consolidated tax return.   
  • Schedule M-3, Part I reporting requirements for a consolidated group. 
  • Reconciliation of net income per books to reported on Schedule M-3 to Schedule M-2, Reconciliation of retained earnings on Form 1120.
  • Schedule M-3, Parts II and III disclosure requirements for the consolidated return, the parent and other members of the consolidated group.
  • Adjustments for inter-company transactions, temporary versus permanent deferrals on Parts II and III of Schedule M-3.
  • How to report the current and deferred US tax expense for a consolidated group on Schedule M-3. 

Note:  Tax compliance for the Schedule M-3 for a corporation that is not part of a consolidated group was covered in the three previous intermediate courses.

A comprehensive example of the Schedule M-3for a consolidated group is provided to reinforce your knowledge of the reporting and tax compliance process of a consolidated group.

Course Series

This course is included in the following series:

7 CoursesReporting and Compliance for Book-Tax Differences

  1. Corporate Tax Filing: Schedule M-1 Disclosure of Book-Tax Differences on the Corporate Tax Return
  2. Corporate Tax Filing: Schedule M-3: Part I: Compliance and Reporting Issues
  3. Corporate Tax Filing: Schedule M-3: Part II: Compliance and Reporting Issues
  4. Corporate Tax Filing: Schedule M-3: Part III: Compliance and Reporting Issues
  5. Corporate Tax Filing: Schedule M-3: Additional Reporting in Parts II and III
  6. Corporate Tax Filing: Schedule M-3: Reporting Requirements for a Consolidated Group
  7. Corporate Tax Filing: Uncertain Tax Positions: Financial Accounting and Tax Reporting Requirements

Learning Objectives

  • Identify which entities from the financial consolidated group are included/excluded on the consolidated tax return.
  • Discover the Schedule M-3, Part I reporting requirements for a consolidated group on the consolidated return.
  • Identify how to report the current/deferred US tax expense for a consolidated group on Lines 1 and 2 of Schedule M-3, part III.
  • Identify how to report intercompany transactions between members of the consolidated group.
Last updated/reviewed: February 11, 2018

1 Review (15 ratings)Reviews

4
Anonymous Author
Good summary and content

Prerequisites

Course Complexity: Advanced

No Advanced Preparation or Prerequisites are needed for this course. However, it is recommended to take the other courses in the series prior to completing this one.

Education Provider Information

Company:
Illumeo, Inc., 75 East Santa Clara St., Suite 1215, San Jose, CA 95113
Contact:
For more information regarding this course, including complaint and cancellation policies, please contact our offices at (408) 400- 3993 or send an e-mail to .
Course Syllabus
INTRODUCTION AND OVERVIEW
Reporting Requirements for a Consolidated Group
  14:18What is a Financial Consolidated Group?
  10:56Lines 5 - 8 and 11 - 12
  15:22Part II and Part III Adjustments
CONCLUSION
  17:26Course Summary
Continuous Play
  1:01:146 Corporate Tax Filing Schedule M-3: Reporting Requirements for a Consolidated Group
SUPPORTING MATERIALS
  PDFSlides: Schedule M-3 Reporting Requirements for a Consolidated Group
  PDFSchedule M-3 Reporting Requirements for a Consolidated Group Glossary/Index
REVIEW & TEST
  quizREVIEW QUESTIONS
 examFINAL EXAM