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Form 1120-SB: 1120 (Schedule B)
IRS Schedule B (Form 1120) is an attachment to Form 1120 for corporations that file Schedule M-3. It collects additional information on partnership allocations, intangible asset transfers, cost-sharing arrangements, and accounting changes. Corporations with less than $50 million in total assets at year-end are not required to file Schedule B.
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IRS Form 1120-SB - 1120 (Schedule B)
IRS Schedule B (Form 1120) is an attachment to Form 1120 for corporations that file Schedule M-3. It collects additional information on partnership allocations, intangible asset transfers, cost-sharing arrangements, and accounting changes. Corporations with less than $50 million in total assets at year-end are not required to file Schedule B.
Risk Radar
Scan points- 1Failing to file Schedule B when required for corporations with $50 million or more in total assets.
- 2Answering 'No' to Question 1 when the corporation received disproportionate partnership allocations.
- 3Failing to file Form 3115 for a change in accounting method (Question 6).
- 4Not reporting cost-sharing arrangements with related foreign parties on Form 5471 (Question 4).
- 5Omitting Schedule B from a consolidated return when the parent corporation files Schedule M-3.
Plain English
This form asks corporations that file Schedule M-3 a series of yes-or-no questions about special tax situations. It helps the IRS check if the corporation has unusual partnership allocations, transfers of intangible assets to related parties, cost-sharing with foreign affiliates, or changes in accounting methods. The form must be attached to the corporation's main tax return (Form 1120).
Submission Date
- Filing date: 2018-11-15 22:00:08
- Preparation window: collect IDs, supporting records, and signatures in advance.
- Final review: verify names, dates, and required fields before submission.
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What this form is for
- Use this form when you are filing Form 1120 and are required to file Schedule M-3 (Form 1120); Schedule B provides additional answers for Schedule M-3 filers.
- Do not use it when your total assets at the end of the tax year are less than $50 million, or when you voluntarily file Schedule M-3 without being required to do so.
- Check Form 3115 instead when the corporation needs to request a change in accounting method, as referenced in question 6 of Schedule B.
Form selector
Use this form or another form?
Corporation enters cost-sharing arrangement with related foreign party and does not file Form 5471
Schedule B question 4 asks about such arrangements; failing to file Form 5471 may trigger penalties
✓ Confirm that Form 5471 is filed for each related foreign party involved in the cost-sharing arrangement
Corporation changes its method of accounting during the tax year
Schedule B question 6 references Form 3115; an unauthorized change can result in adjustment to income
✓ File Form 3115 or a statement in lieu thereof before the due date of the return (including extensions)
Corporation receives a nonshareholder contribution after December 22, 2017
New rules under section 118 limit exclusion; mischaracterizing a contribution may lead to underreported income
✓ Verify that the contribution qualifies under the master development plan exception if made by a governmental entity
Form 1120 (Schedule B question 10)
Corporation has partnership allocations disproportionate to its capital contribution
Schedule B question 1 requires disclosure; failure to answer correctly may distort Schedule M-3 reporting
✓ Compare each partner's allocation ratio to its capital contribution and other item sharing ratios
Corporation sells or acquires an intangible asset from a related person under section 267(b)
Schedule B questions 2 and 3 require disclosure; related-party transactions must be at arm's length
✓ Maintain contemporaneous documentation supporting the transfer price and identify the related person
Form 1120 (transfer pricing documentation)
Deadline or filing window
Not stated in the official source.
Checklist
What you need before filling it out
Question 1 – Partnership allocations disproportionate to capital contribution
Partnership agreement showing allocation ratios and capital contributions · Partnership records or K-1
Question 2 – Sale/exchange/transfer of intangible to related person (sec. 267(b))
Contract or agreement documenting the transfer and identification of related person · Corporate records, related-party transaction logs
Question 3 – Acquisition of intangible from related person (sec. 267(b))
Same as question 2 for acquisitions · Same as question 2
Question 4a – Entered cost-sharing arrangement with related foreign party without filing Form 5471
Cost-sharing agreement and evidence of Form 5471 filing status · Corporate records, Form 5471 copies
Question 4b – Participant in cost-sharing arrangement with related foreign party without filing Form 5471
Same as 4a · Same as 4a
Question 5 – Change in accounting principle for financial accounting purposes
Financial statements and footnotes identifying the change · Audited financial statements or internal accounting records
Question 10 – Return filing position characterizing amount as capital contribution by nonshareholder
Documentation supporting the contribution and its exclusion under section 118 · Corporate resolutions, contribution agreements
Before you submit
- 1Confirm the form revision is December 2018.
- 2Verify that you are required to file Schedule M-3 (Form 1120).
- 3Check total assets at year-end: if less than $50 million, you are not required to file Schedule B.
- 4For consolidated groups, ensure the parent corporation files one Schedule B for the entire group.
- 5Enter the corporation's name and EIN exactly as on Form 1120.
- 6Answer all questions that apply; if none, check 'No' for each.
- 7Review question 10 for the new rules on nonshareholder contributions after December 22, 2017.
- 8Attach Schedule B to Form 1120 before filing.
- 9Keep a copy of the completed Schedule B and supporting documents for your records.
- 10Sign and date Form 1120 (Schedule B does not require a separate signature).
How to file this form
- 1Determine if you are required to file Schedule M-3 (Form 1120) with your Form 1120.
- 2Check your total assets at the end of the tax year; if less than $50 million, you are not required to file Schedule B.
- 3If required, complete Schedule B by answering all questions (1–10) based on your tax year activities.
- 4Attach the completed Schedule B to Form 1120.
- 5Sign and date Form 1120 (the officer's signature covers all attachments).
- 6File Form 1120 with Schedule B attached with the IRS according to the instructions for Form 1120.
- 7Retain a copy of the filed return, including Schedule B, as proof of filing.
Known limitations
- 1Filers with less than $50 million in total assets at the end of the tax year are not required to file Schedule B, even if they file Schedule M-3.
- 2Filers who voluntarily file Schedule M-3 (not required to do so) are not required to file Schedule B.
- 3Consolidated groups file only one Schedule B for the entire group, filed by the parent corporation.
- 4After December 22, 2017, contributions to capital by civic groups or governmental entities (without an approved master plan before that date) are not eligible for exclusion under section 118.
- 5Schedule B is only for filers of Form 1120 that file Schedule M-3; it does not apply to other entity types or forms.
Field map
Compact field-by-field guide
Entity Info
2 items
Full legal name of the corporation and its Employer Identification Number.
Current mailing address and date of incorporation.
Income
3 items
Total revenue from business operations before deducting costs.
Direct costs attributable to producing goods sold by the corporation.
Gross receipts minus cost of goods sold and returns/allowances.
Deductions
1 items
Sum of all business expenses including compensation, rent, interest, taxes, and depreciation.
Tax
2 items
Total income minus total deductions.
Tax calculated on taxable income using the applicable corporate tax rate, minus any credits.
Signatures
1 items
An authorized corporate officer must sign and date the return.
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Fillable formOpen in Editor->The current edition is Schedule B (Form 1120) Rev. December 2018. The source directs filers to www.irs.gov/Form1120 for the latest information and notes that after December 22, 2017, certain nonshareholder contributions (by civic groups or governmental entities without an approved master plan) are no longer eligible for exclusion under section 118.
What changed or needs a fresh check
- Edition date — confirm the revision reads 'Rev. December 2018' on the form.
- OMB No. — confirm OMB No. 1545-0123 is present on page 1.
- Fee — Not stated in the official source — verify on the agency site.
- Mailing address — Not stated in the official source — verify on the agency site.
- Paperwork Reduction Act Notice — see the Instructions for Form 1120 as referenced on the form.
- Signature — Schedule B is attached to Form 1120; sign and date Form 1120, not Schedule B separately.
Quick Facts
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After you file
- 1Retain a copy of the filed Form 1120 and Schedule B for your records.
- 2Keep supporting documentation for each answer (partnership agreements, contracts, financial statements) for at least three years.
- 3Monitor IRS correspondence for any notices or questions regarding Schedule B answers.
- 4If an error is discovered, file an amended return using Form 1120X to correct Form 1120 and Schedule B.
- 5Check www.irs.gov/Form1120 for future developments or updates to Schedule B.
- 6If you answered 'Yes' to question 6 (change in accounting method), ensure Form 3115 was filed separately if not already done.
Sources
- SRCForm p.1 — Schedule B is attached to Form 1120.
- SRCForm p.1 — OMB No. 1545-0123.
- SRCForm p.2 — Purpose: provide answers to additional questions for filers of Schedule M-3.
- SRCForm p.2 — Who Must File: generally filers of Form 1120 that file Schedule M-3 must file Schedule B, but exceptions for under $50M assets or voluntary filers.
- SRCForm p.2 — Consolidated group parent files one Schedule B.
- SRCForm p.2 — What's New: after Dec 22, 2017, certain nonshareholder contributions not eligible for exclusion.
- SRCForm p.2 — Question 5: change in accounting principle per SFAS No. 154.
- SRCForm p.2 — Question 6: file Form 3115 for change in accounting method.
- SRCForm p.1 — Questions 2-4 reference related persons under section 267(b) and Form 5471.
- SRCForm p.2 — Question 10: contributions to capital by nonshareholders under section 118 or 362(c).
Common confusion points
Do I need to file Schedule B if I voluntarily file Schedule M-3?
The instructions say filers that voluntarily file Schedule M-3 are not required to file Schedule B
→ Check if you are required to file Schedule M-3; if voluntary, you may skip Schedule B
What if my corporation has less than $50 million in total assets at year-end?
The instructions exempt filers with less than $50 million in total assets from filing Schedule B even if they file Schedule M-3
→ Confirm total assets on the balance sheet; if under $50M, you are not required to file Schedule B
What counts as a disproportionate partnership allocation?
The form gives an example where depreciation is allocated 99% to one partner while other items are shared equally
→ Compare each partner's allocation of income, gain, loss, deduction, or credit to their capital contribution or sharing ratio for other items
What is a change in accounting principle for Schedule B?
The instructions define it as a change from one GAAP to another as described in SFAS No. 154
→ Look for changes disclosed in footnotes to audited financial statements; if none, consider whether a change occurred
What if I have a cost-sharing arrangement but I do file Form 5471?
The question asks only about arrangements where Form 5471 was not filed; if filed, answer 'No'
→ Verify that Form 5471 was filed for each related foreign party in the arrangement
Can I exclude any nonshareholder contribution after December 22, 2017?
Only contributions made according to a master development plan approved before that date by a governmental entity may still be excluded
→ Review the contribution date and whether a master development plan existed before December 22, 2017
What is a related person under section 267(b)?
The form does not define it; you must refer to section 267(b) of the Internal Revenue Code
→ Consult the Code or a tax professional to identify relationships covered (e.g., family members, controlled entities)
Workflow map
Related forms and next steps
Before
Current
After
Often used with
⚠ If something goes wrong
- Form 1120X — Use to amend Form 1120 and Schedule B if errors are found.
Questions about IRS Form 1120-SB
What is IRS Form 1120-SB used for?
This form asks corporations that file Schedule M-3 a series of yes-or-no questions about special tax situations. It helps the IRS check if the corporation has unusual partnership allocations, transfers of intangible assets to related parties, cost-sharing with foreign affiliates, or changes in accounting methods. The form must be attached to the corporation's main tax return (Form 1120).
Who must file IRS Form 1120-SB?
Corporations that file Form 1120 and are required to file Schedule M-3 must also file Schedule B (Form 1120), unless they have less than $50 million in total assets at the end of the tax year. For consolidated groups, the parent corporation files one Schedule B for the entire group.
What information does IRS Form 1120-SB require?
The form consists of 8 yes-or-no questions covering partnership allocations (Question 1), intangible asset transfers to or from related persons (Questions 2-3), cost-sharing arrangements with related foreign parties (Question 4), changes in accounting principle (Question 5) and method (Question 6), ownership of VEBA trusts (Question 7), and indirect cost allocation methods (Question 8).
How do I complete IRS Form 1120-SB?
Complete the corporation's name and EIN at the top. Answer each of the 8 questions by checking 'Yes' or 'No' based on the corporation's activities during the tax year. Review the instructions for each question, especially Question 1 for partnership allocations and Question 6 for accounting method changes. Attach the completed Schedule B to Form 1120 before filing.
Do I need to file Schedule B if I voluntarily file Schedule M-3?
The instructions say filers that voluntarily file Schedule M-3 are not required to file Schedule B Check if you are required to file Schedule M-3; if voluntary, you may skip Schedule B
What if my corporation has less than $50 million in total assets at year-end?
The instructions exempt filers with less than $50 million in total assets from filing Schedule B even if they file Schedule M-3 Confirm total assets on the balance sheet; if under $50M, you are not required to file Schedule B
What counts as a disproportionate partnership allocation?
The form gives an example where depreciation is allocated 99% to one partner while other items are shared equally Compare each partner's allocation of income, gain, loss, deduction, or credit to their capital contribution or sharing ratio for other items
What is a change in accounting principle for Schedule B?
The instructions define it as a change from one GAAP to another as described in SFAS No. 154 Look for changes disclosed in footnotes to audited financial statements; if none, consider whether a change occurred
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