DOIND TAX RETURN AND 1120-F
2021 Schedules M-1 and M-2 (Form 1120-F) SCHEDULES M-1 and M-2 (Form 1120-F) Department of the Treasury Internal Revenue Service Reconciliation of Income (Loss) and Analysis of Unappropriated Retained Earnings per Books ▶ Go to www.irs.gov/Form1120F for the latest information. ▶ Attach to Form 1120-F. OMB No. 1545-0123 2021 Name of corporation Employer identification number Schedule M-1 Reconciliation of Income (Loss) per Books With Income per Return Note: The corporation may be required to file Schedule M-3 (see instructions). 1 Net income (loss) per books . . . . . 2 Federal income tax per books . . . . 3 Excess of capital losses over capital gains 4 Income subject to tax not recorded on books this year (itemize): 5 Expenses recorded on books this year not deducted on this return (itemize): a Depreciation . . . . $ b Charitable contributions $ c Travel and entertainment $ d Other (itemize): 6 Add lines 1 through 5 . . . . . . . 7 Income recorded on books this year not included on this return (itemize): a Tax-exempt interest $ b Other (itemize): 8 Deductions on this return not charged against book income this year (itemize): a Depreciation . . $ b Charitable contributions $ c Other (itemize): 9 Add lines 7 and 8 . . . . . . . 10 Income—line 6 less line 9 . . . . Schedule M-2 Analysis of Unappropriated Retained Earnings per Books 1 Balance at beginning of year . . . . 2 Net income (loss) per books . . . . . 3 Other increases (itemize): 4 Add lines 1, 2, and 3 . . . . . . . 5 Distributions: a Cash . . . . b Stock . . . . c Property . . . 6 Other decreases (itemize): 7 Add lines 5 and 6 . . . . . . . 8 Balance at end of year (line 4 less line 7) Who Must File Generally, any foreign corporation that is required to complete Form 1120-F, Section II must complete Schedules M-1 and M-2 (Form 1120-F). However, the following rules apply. Do not complete Schedules M-1, M-2, and M-3 if total assets at the end of the tax year (Schedule L, line 17, column (d)) are less than $25,000. Complete Schedule M-3 in lieu of Schedule M-1 if total assets at the end of the tax year that are reportable on Schedule L are $10 million or more. A corporation filing Form 1120-F that is not required to file Schedule M-3 may voluntarily file Schedule M-3 instead of Schedule M-1. See the Instructions for Schedule M-3 (Form 1120-F) for more information. Foreign corporations that (a) are required to file a Schedule M-3 (Form 1120-F) and have less than $50 million in total assets at the end of the tax year, or (b) are not required to file a Schedule M-3 (Form 1120-F) and voluntarily file a Schedule M-3 (Form 1120-F) must either (1) complete Schedule M-3 (Form 1120- F) entirely, or (2) complete Schedule M-3 (Form 1120-F) through Part I and complete Schedule M-1 instead of completing Parts II and III of Schedule M-3 (Form 1120-F). If the foreign corporation chooses (2), then Schedule M-1, line 1 must equal Schedule M-3 (Form 1120-F), Part I, line 11. See the Instructions for Schedule M-3 (Form 1120-F) for more information. Note: If Schedule M-3 is completed in lieu of Schedule M-1, the corporation is still required to complete Schedule M-2. Specific Instructions Schedule M-1 Line 1. Net income (loss) per books. The foreign corporation must report on line 1 of Schedule M-1 the net income (loss) per the set(s) of books taken into account on Schedule L. Line 5c. Travel and entertainment expenses. Include any of the following. • Entertainment expenses not deductible under section 274(a). • Meal expenses not deductible under section 274(n). • Expenses for the use of an entertainment facility. • The part of business gifts over $25. • Expenses of an individual over $2,000 that are allocable to conventions on cruise ships. • Employee achievement awards of non- tangible property or of tangible property if the value is over $400 ($1,600 if part of a qualified plan). • The part of luxury water travel expenses not deductible under section 274(m). • Expenses for travel as a form of education. • Other nondeductible travel and entertainment expenses. Line 7a. Tax-exempt interest. Report any tax-exempt interest received or accrued, including any exempt-interest dividends received as a shareholder in a mutual fund or other regulated investment company. Also report this same amount in item P at the top of page 2 of Form 1120-F. Schedule M-2 Line 1. Beginning balance of unappropriated retained earnings. Enter the beginning balance of unappropriated retained earnings per the set(s) of books taken into account on Schedule L. Note: For additional information for Schedule M-2 reporting, see the Instructions for Schedule M-3 (Form 1120-F). For Paperwork Reduction Act Notice, see the Instructions for Form 1120-F. Cat. No. 49678K Schedules M-1 and M-2 (Form 1120-F) 2021 Version A, Cycle 2 INTERNAL USE ONLY DRAFT AS OF July 9, 2021 2021 Schedules M-1 and M-2 (Form 1120-F) SE:W:CAR:MP Reconciliation of Income (Loss) and Analysis of Unappropriated Retained Earnings per Books SCHEDULES M-1 and M-2 (Form 1120-F) Department of the Treasury Internal Revenue Service Reconciliation of Income (Loss) and Analysis of Unappropriated Retained Earnings per Books ▶ Go to www.irs.gov/Form1120F for the latest information. ▶ Attach to Form 1120-F. OMB No. 1545-0123 O M B No. 1545-0123. For Paperwork Reduction Act Notice, see the Instructions for Form 1120-F. 2021 2021. Cat. No. 49678K. Schedule M-1 Reconciliation of Income (Loss) per Books With Income per Return Note: The corporation may be required to file Schedule M-3 (see instructions). 1 Net income (loss) per books 2 Federal income tax per books 3 Excess of capital losses over capital gains 4
Income subject to tax not recorded on books this year (itemize): 5
Expenses recorded on books this year not deducted on this return (itemize): a Depreciation . b Charitable contributions c Travel and entertainment d Other (itemize): 6 Add lines 1 through 5 7
Income recorded on books this year not included on this return (itemize): a Tax-exempt interest b Other (itemize): 8
Deductions on this return not charged against book income this year (itemize): a Depreciation b Charitable contributions c Other (itemize): 9 Add lines 7 and 8 10 Income—line 6 less line 9 Schedule M-2 Analysis of Unappropriated Retained Earnings per Books 1 Balance at beginning of year 2 Net income (loss) per books 3 4 Add lines 1, 2, and 3 5 Distributions: a Cash b Stock c Property 6 7 Add lines 5 and 6 8 Balance at end of year (line 4 less line 7) Who Must File Generally, any foreign corporation that is required to complete Form 1120-F, Section II must complete Schedules M-1 and M-2 (Form 1120-F). However, the following rules apply. Do not complete Schedules M-1, M-2, and M-3 if total assets at the end of the tax year (Schedule L, line 17, column (d)) are less than $25,000. Complete Schedule M-3 in lieu of Schedule M-1 if total assets at the end of the tax year that are reportable on Schedule L are $10 million or more. A corporation filing Form 1120-F that is not required to file Schedule M-3 may voluntarily file Schedule M-3 instead of Schedule M-1. See the Instructions for Schedule M-3 (Form 1120-F) for more information. Foreign corporations that (a) are required to file a Schedule M-3 (Form 1120-F) and have less than $50 million in total assets at the end of the tax year, or (b) are not required to file a Schedule M-3 (Form 1120-F) and voluntarily file a Schedule M-3 (Form 1120-F) must either (1) complete Schedule M-3 (Form 1120-F) entirely, or (2) complete Schedule M-3 (Form 1120-F) through Part I and complete Schedule M-1 instead of completing Parts II and III of Schedule M-3 (Form 1120-F). If the foreign corporation chooses (2), then Schedule M-1, line 1 must equal Schedule M-3 (Form 1120-F), Part I, line 11. See the Instructions for Schedule M-3 (Form 1120-F) for more information. Note: If Schedule M-3 is completed in lieu of Schedule M-1, the corporation is still required to complete Schedule M-2. Specific Instructions Schedule M-1 Line 1. Net income (loss) per books. The foreign corporation must report on line 1 of Schedule M-1 the net income (loss) per the set(s) of books taken into account on Schedule L. Line 5c. Travel and entertainment expenses. Include any of the following. • Entertainment expenses not deductible under section 274(a). • Meal expenses not deductible under section 274(n). • Expenses for the use of an entertainment facility. • The part of business gifts over $25. • Expenses of an individual over $2,000 that are allocable to conventions on cruise ships. • Employee achievement awards of non-tangible property or of tangible property if the value is over $400 ($1,600 if part of a qualified plan). • The part of luxury water travel expenses not deductible under section 274(m). • Expenses for travel as a form of education. • Other nondeductible travel and entertainment expenses. Line 7a. Tax-exempt interest. Report any tax-exempt interest received or accrued, including any exempt-interest dividends received as a shareholder in a mutual fund or other regulated investment company. Also report this same amount in item P at the top of page 2 of Form 1120-F. Schedule M-2 Line 1. Beginning balance of unappropriated retained earnings. Enter the beginning balance of unappropriated retained earnings per the set(s) of books taken into account on Schedule L. Note: For additional information for Schedule M-2 reporting, see the Instructions for Schedule M-3 (Form 1120-F). For Paperwork Reduction Act Notice, see the Instructions