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Form 1120LS3: 1120-L (Schedule M-3)
IRS Form 1120-L Schedule M-3 is a net income reconciliation schedule for U.S. life insurance companies with total assets of $10 million or more, attached to Form 1120-L. It reconciles book income per financial statements to taxable income per return, with specific parts for income and expense items.
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IRS Form 1120LS3 - 1120-L (Schedule M-3)
IRS Form 1120-L Schedule M-3 is a net income reconciliation schedule for U.S. life insurance companies with total assets of $10 million or more, attached to Form 1120-L. It reconciles book income per financial statements to taxable income per return, with specific parts for income and expense items.
Risk Radar
Scan points- 1Part I line 11 must equal Part II line 30 column (a) — mismatch triggers IRS review.
- 2Failing to check the correct box in Part I for SEC filing status.
- 3Not attaching an explanation for restated income statements (Part I line 2b or 2c).
- 4Entering net income from nonincludible foreign entities without a statement (Part I line 5a).
- 5Omitting intercompany dividend adjustments on Part I line 10a.
Plain English
This schedule helps large life insurance companies match the income they report on their financial statements with the income they report on their tax return. It breaks down differences into temporary and permanent categories. You attach it to your main tax form, Form 1120-L.
Submission Date
- Filing date: 2021-11-29 22:10:29
- Preparation window: collect IDs, supporting records, and signatures in advance.
- Final review: verify names, dates, and required fields before submission.
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Glossary Terms
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What this form is for
- Use this form when the corporation is a U.S. life insurance company with total assets of $10 million or more and is filing Form 1120-L.
- Do not use it when the corporation's total assets are less than $10 million or when the corporation is not a U.S. life insurance company filing Form 1120-L.
- Check Form 1120-PC Schedule M-3 instead when the corporation is a property and casualty insurance company.
Form selector
Use this form or another form?
Reporting capital gains and losses from Schedule D
Schedule M-3 requires gross capital gains and losses from Schedule D, excluding pass-through amounts.
✓ Confirm Schedule D is attached to Form 1120-L.
Reporting gain/loss from Form 4797
Line 23d of Schedule M-3 requires net gain/loss from Form 4797, line 17.
✓ Ensure Form 4797 is completed and attached.
Attaching interest expense adjustments
Part III line 36 requires attachment of Form 8916-A for interest expense.
✓ Verify Form 8916-A is prepared and attached.
Filing as a mixed 1120/L/PC group
Mixed groups have special instructions; check applicable boxes on Schedule M-3.
✓ Review instructions for mixed group reporting.
Using SEC financial statements
If filed, use SEC Form 10-K income statement for reconciliation; skip lines 1b-1c.
✓ Confirm SEC Form 10-K covers the same period.
Deadline or filing window
The schedule is filed as an attachment to Form 1120-L. The due date for Form 1120-L is not provided in this schedule's instructions. Refer to the Form 1120-L instructions for the filing deadline and extension information.
Checklist
What you need before filling it out
Part I line 1a – Did corporation file SEC Form 10-K?
SEC Form 10-K filing status · Corporation's records
Part I line 5b – Net loss from nonincludible foreign entities
Statement detailing net loss from nonincludible foreign entities · Attached statement
Part II line 23b – Gross capital gains from Schedule D
Schedule D (Form 1120-L) · Attached to return
Part III line 36 – Interest expense
Form 8916-A · Attached to return
Part I line 12 – Total assets and liabilities
Balance sheet of includible entities · Financial statements
Part II line 30 – Reconciliation totals
Part I line 11 and Form 1120-L page 1 line 20 · Form 1120-L
Check applicable boxes – Part I boxes (1)-(4)
Filing status · Return type
Before you submit
- 1Confirm the revision date on the form is December 2021.
- 2Verify the corporation name and EIN are entered at the top of each page.
- 3Check the applicable box(es) in Part I for return type (non-consolidated, consolidated, mixed, dormant subsidiaries).
- 4If SEC Form 10-K was filed, check 'Yes' on line 1a and skip lines 1b-1c.
- 5Attach required statements for lines 5a, 5b, 6a, 6b, 7a, 7b, 7c, 8, 9, 10a, 10b, 10c as applicable.
- 6Ensure Part I line 11 equals Part II line 30 column (a).
- 7Attach Form 8916-A for interest expense on Part III line 36.
- 8Complete Part II and Part III with all income and expense items.
- 9Ensure column (d) of Part II line 30 equals Form 1120-L page 1 line 20.
- 10Sign and date the return; keep a copy of the completed Schedule M-3 and all attachments.
How to file this form
- 1Download the current version of Schedule M-3 (Form 1120-L) from www.irs.gov/Form1120L.
- 2Enter the corporation's name and EIN at the top of each page and check the applicable box(es) in Part I.
- 3Complete Part I using financial statements: if SEC Form 10-K was filed, use it; otherwise follow lines 1b-1c.
- 4Attach required statements for nonincludible entities, adjustments, and eliminations as indicated on lines 5-10.
- 5Complete Part II by reconciling income (loss) items per income statement to tax return, using columns for temporary and permanent differences.
- 6Complete Part III for expense/deduction items, attaching Form 8916-A for interest expense.
- 7Verify that Part I line 11 equals Part II line 30 column (a) and that Part II line 30 column (d) equals Form 1120-L page 1 line 20.
- 8Attach the completed Schedule M-3 to Form 1120-L and file the return.
Known limitations
- 1Not for life insurance companies with total assets under $10 million.
- 2Not for property and casualty insurance companies (use the PC version of Schedule M-3).
- 3Not for standalone filing; must be attached to Form 1120-L.
- 4Special rules apply for mixed groups including 1120-L and PC entities.
- 5Requires attachment of statements for nonincludible entities and adjustments.
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 Revision December 2021. The form directs filers to www.irs.gov/Form1120L for instructions and the latest information.
What changed or needs a fresh check
- Edition date — confirm the revision reads December 2021.
- OMB No. — confirm 1545-0123 is present on the form.
- Form title — confirm it says Schedule M-3 (Form 1120-L).
- Attach to Form 1120-L — ensure it is attached to the correct return.
- Go to www.irs.gov/Form1120L — check for latest information before filing.
Quick Facts
Downloads
After you file
- 1Retain a copy of the filed Schedule M-3 and all attachments with your tax records.
- 2Keep the copy for at least 3 years from the date of filing.
- 3If an error is discovered after filing, file an amended Form 1120-L with a corrected Schedule M-3.
- 4Monitor IRS correspondence for any notices regarding the reconciliation.
- 5If the return was mailed, use certified mail for proof of delivery.
- 6Check the IRS Where's My Amended Return tool for amended returns.
- 7Ensure any required statements are maintained for audit purposes.
Sources
- SRCForm p.1Title: Schedule M-3 (Form 1120-L) Rev. December 2021.
- SRCForm p.1Applicability: U.S. Life Insurance Companies with total assets $10 million or more.
- SRCForm p.1Line 1a: Did corporation file SEC Form 10-K?
- SRCForm p.1Lines 5a-5b: Net income/loss from nonincludible foreign entities.
- SRCForm p.2Part II line 23b: Gross capital gains from Schedule D.
- SRCForm p.2Part II line 30: Note that line 30 col (a) must equal Part I line 11 and col (d) must equal Form 1120-L page 1 line 20.
- SRCForm p.3Part III line 36: Interest expense attach Form 8916-A.
- SRCForm p.1OMB No. 1545-0123.
- SRCForm p.1Check applicable boxes (1)-(4).
- SRCForm p.1Go to www.irs.gov/Form1120L for instructions.
Common confusion points
Should I check 'Yes' on line 1a if I filed SEC Form 10-K?
The form asks if the corporation filed SEC Form 10-K for the income statement period ending with or within this tax year.
→ Check 'Yes' only if an SEC Form 10-K was actually filed; otherwise check 'No' and complete lines 1b-1c.
What is the difference between temporary and permanent differences in Part II?
Temporary differences reverse over time; permanent differences do not.
→ Refer to the instructions for examples; ensure amounts are entered in correct column.
Do I need to attach statements for lines 5a, 5b, etc.?
The form explicitly says 'attach statement' for those lines.
→ Prepare a separate statement for each line that requires attachment and include it with the return.
How do I report net loss from nonincludible foreign entities?
Line 5b says enter as a positive amount.
→ Enter the absolute value of the loss; do not use a negative sign.
What if my corporation is part of a mixed 1120/L/PC group?
The form has check boxes for mixed groups and special instructions.
→ Check box (3) in Part I and follow instructions for mixed groups; also complete Part II lines 29a-29c.
How do I ensure Part I line 11 equals Part II line 30 column (a)?
This is a required cross-check.
→ After completing both parts, verify the amounts match; if not, review entries for errors.
What is the purpose of line 12 in Part I?
It asks for total assets and liabilities of entities included or removed.
→ Enter the total amounts, not just the corporation's share.
Can I use the same statements for multiple lines?
Each line requiring a statement should have its own statement unless instructions allow combining.
→ Attach separate statements for each line unless the instructions explicitly permit consolidation.
Workflow map
Related forms and next steps
Current
Often used with
⚠ If something goes wrong
- Form 1120-X – Amended U.S. Corporation Income Tax Return to correct errors.
Questions about IRS Form 1120LS3
What is IRS Form 1120LS3 used for?
This schedule helps large life insurance companies match the income they report on their financial statements with the income they report on their tax return. It breaks down differences into temporary and permanent categories. You attach it to your main tax form, Form 1120-L.
Who must file IRS Form 1120LS3?
U.S. life insurance companies with total assets of $10 million or more that file Form 1120-L must complete and attach Schedule M-3.
What information does IRS Form 1120LS3 require?
The schedule collects financial information in Part I, including the type of income statement used and worldwide net income. Part II reconciles net income per income statement to taxable income per return, listing income and expense items with temporary and permanent differences. Part III details expense/deduction items.
Where do I file IRS Form 1120LS3?
Attach Schedule M-3 to Form 1120-L and file with the IRS according to the instructions for Form 1120-L. No separate mailing address is provided for this schedule.
How do I complete IRS Form 1120LS3?
Start with Part I by indicating whether the corporation files SEC Form 10-K or has a certified audited statement. Enter the income statement period and accounting standard. Complete Part II and Part III by listing income and expense items with differences, attaching statements as required. Ensure Part I line 11 equals Part II line 30 column (a). Attach the schedule to Form 1120-L before signing.
Should I check 'Yes' on line 1a if I filed SEC Form 10-K?
The form asks if the corporation filed SEC Form 10-K for the income statement period ending with or within this tax year. Check 'Yes' only if an SEC Form 10-K was actually filed; otherwise check 'No' and complete lines 1b-1c.
What is the difference between temporary and permanent differences in Part II?
Temporary differences reverse over time; permanent differences do not. Refer to the instructions for examples; ensure amounts are entered in correct column.
Do I need to attach statements for lines 5a, 5b, etc.?
The form explicitly says 'attach statement' for those lines. Prepare a separate statement for each line that requires attachment and include it with the return.
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