Schedule B (Form 1120) - Additional Information For Schedule M-3 Filers Page 2
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Schedule B (Form 1120) (Rev. 12-2009)
Page
General Instructions
If the corporation has audited financial
statements, any changes in accounting
TIP
Section references are to the Internal Revenue Code
principle should be identified in footnotes to
unless otherwise noted.
those statements.
Purpose of Form
Question 6. Change in Method of Accounting
Use Schedule B (Form 1120) to provide answers to
Corporations are generally required to file Form 3115,
additional questions for filers of Schedule M-3 (Form
Application for Change in Accounting Method, or a
1120), Net Income (Loss) Reconciliation for
statement in lieu thereof, to request a change in a
Corporations With Total Assets of $10 Million or More.
method of accounting. See the Instructions for Form
3115 for information on requesting a change in
Who Must File
accounting method.
Schedule B (Form 1120) must be filed by all
Question 7. Voluntary Employees’ Beneficiary
corporations that file a Form 1120, U.S. Corporation
Association Trusts
Tax Return, and that are required to file Schedule M-3
Employers that establish and fund welfare benefit plans
(Form 1120).
on behalf of their employees do so through a
tax-exempt trust that is referred to as a voluntary
Attach Schedule B (Form 1120) to Form 1120.
employees’ beneficiary association (VEBA). See section
Specific Instructions
501(c)(9) and Regulations sections 1.501(c)(9)-1
through 1.501(c)(9)-8 for details.
Question 1. Partnership Allocations
Answer “Yes” if the corporation owned any VEBA
Answer “Yes” if this corporation is a partner in a
trusts that were used to hold funds designated for
partnership and has received special allocations of
employee benefits.
income, gain, loss, deduction, or credit from such
partnership.
Question 8. Indirect Costs
Example. P, a corporation, joins with B, an
Section 446(a) and Regulation section 1.446-1(a)(1)
individual, in forming the PB Partnership. P and B each
generally provide that taxable income shall be
contribute $50,000 in cash to PB Partnership. Profits
computed under the method of accounting on the
and losses are allocated equally, with the exception of
basis of which the corporation regularly computes its
depreciation, which is allocated 99% to P and 1% to
income in keeping its books. An exception applies if
B.
book income does not clearly reflect income.
P answers “Yes” to question 1 because its 99%
Answer “Yes” if the corporation, during the tax year,
allocation of depreciation deductions from PB
used an allocation method for indirect costs capitalized
Partnership is disproportionate to its ratio of sharing
to self-constructed assets that varied from its financial
other items of income, gain, loss, deduction, or credit
statement method of accounting. Otherwise, answer
from PB partnership.
“No.” Also answer “No” if the corporation used the
same method of allocating indirect costs to
Question 5. Changes in Accounting Principle
self-constructed assets, but capitalized a different
The term “change in accounting principle,” means a
amount due to differences in the amount of costs
change from one generally accepted accounting
which are includible in the computation of income for
principle to another generally accepted accounting
the tax year.
principle as described in Statement of Financial
Question 9. Mixed Service Costs
Accounting Standards (SFAS) No. 154—Accounting
Answer “Yes” if the corporation, during the tax year,
Changes and Error Corrections.
treated purchasing, handling, and storage, as
Answer “Yes” if a change in accounting principle
discussed in Regulations sections 1.263A-3(c)(1)
occurred during the tax year that affected (or is
through (5), and as defined in Regulations section
expected to affect) the amount of income reported for
1.263A-1(e)(3)(ii)(F), (G), and (H), as mixed-service costs
financial statement purposes.
as defined in Regulations section 1.263A-1(e)(4)(ii)(C).
Otherwise, answer “No.”
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