1120-US: Automatic calculations for Schedule M-3 and Form 8916-A (FAQ)

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Question

Does UltraTax CS perform any automatic calculations for Schedule M-3 and Form 8916-A?

Answer

Yes, UltraTax CS performs some automatic calculations of income statement and tax amounts, as well as temporary and permanent differences. However, due to the complexity of Schedule M-3, it is important for the return to be reviewed and changes made accordingly. In the M3 screens and Screen 8916A, an asterisk (*) denotes which fields have default calculations. To override the calculations, enter an amount, including zero, in the appropriate field.

UltraTax CS automatically transfers book and tax amounts and calculates the necessary temporary or permanent difference for the following items on Schedule M-3:

  • Income statement gain (loss) on sale of assets other than inventory and pass-through entities
  • Gross capital gains from Schedule D, excluding amounts from pass-through entities
  • Gross capital losses from Schedule D, excluding amounts from pass-through entities
  • Net gain (loss) reported on Form 4797, line 17
  • Utilization of capital loss carryover from prior years (Not applicable for S Corporations)
  • Disallowed capital loss in excess of capital gains (Not applicable for S Corporations)
  • U.S. current income tax expense (Not applicable for members of a consolidated C or S Corporation)
  • State and local income tax expense (Not applicable for members of a consolidated C or S Corporation, or foreign corporation)
  • Meal expenses from all activities, other than Form 1125-A
  • Charitable contributions (Not applicable for S Corporations)
  • Charitable contribution limitation or carryforward (Not applicable for S Corporations)
  • Extraterritorial income exclusion (Not applicable for S Corporations or foreign corporations)
  • Depreciation from all activities, other than Form 1125-A
  • Credit for employer-provided childcare facilities and services
  • Credit for employer Social Security and medicare taxes paid on certain employee tips
  • Credit for increasing research activities
  • Credit for small employer health insurance premiums
  • Credit for small employer pension plan startup costs
  • Credit to holders of tax credit bonds
  • Disabled access credit
  • Empowerment zone employment credit, not allocated to cost of labor on Form 1125-A
  • Energy efficient home credit
  • Income from alcohol fuel credit
  • Income from biodiesel fuel credit
  • Indian employment credit, not allocated to cost of labor on Form 1125-A
  • Low-sulfur diesel fuel credit
  • Orphan drug credit
  • Work opportunity credit, not allocated to cost of labor on Form 1125-A
  • Credit for employer differential wage payments, not allocated to cost of labor on Form 1125-A
  • Other items with no differences
  • Rounding adjustment, if applicable

UltraTax CS also automatically transfers book and tax amounts and calculates the necessary temporary or permanent difference for the following items on Form 8916-A.

  • Meal expenses from Form 1125-A
  • Depreciation, from Form 1125-A
  • Wage Reduction for employment credits allocated to cost of labor on Form 1125-A
  • Other items with no differences

If the taxable income calculated on the Reconciliation totals line in Part II, column (a) does not equal the taxable income of the corporation, UltraTax CS/1120 generates a critical diagnostic message for the return.


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1120-US: Schedule M-3 FAQs

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