Instructions For Schedule Nir - Net Income Reconciliation

2012 Schedule NIR Instructions

General Information

identified in the required schedules reconciling the entries on U.S.

Schedule M-3, Part 1, lines 5a and 5b.

What Is the Net Income Reconciliation?

Schedule Net Income Reconciliation (NIR) reconciles income reported

Line 5a. Enter the entity’s Federal Identification number. If the entity

to shareholders with the income reported on the taxpayer’s consoli-

does not have one, enter zeros.

dated U.S. tax return and is similar to U.S. Schedule M-3, Part 1.

Line 5b. Enter the code corresponding to the type of entity for U.S. tax

Taxpayers must file Schedule NIR if required to file a U.S. Schedule M-3

purposes using the entity type chart.

with their U.S. tax return, including corporations that are part of a consoli-

Line 5c. If the entity files an income tax return of any kind in Massachu-

dated return that includes U.S. Schedule M-3. Corporations included in a

setts, enter “Y”. If no return is filed in Massachusetts, enter “N.”

Massachusetts combined group submit Schedule NIR with Form 355U.

Multiple Schedules NIR are required only where a Massachusetts com-

Line 5d. Enter “1” if this is a non-includible foreign entity with net in-

bined group includes corporations that separately submit U.S. Sched-

come greater than zero. Enter “2” if this is a non-includible foreign entity

ules M-3 with separate U.S. tax returns.

with net income of zero or less than zero.

Line Instructions

Line 5e. Enter, as a negative amount, the amount of income excluded

from the U.S. return due to the exclusion of this entity. Losses excluded

Registration Section. Enter the name and Federal Identification number

from the U.S. return are entered as positive amounts. The total of all

of the entity submitting Schedule NIR on the top line. On the 2nd line,

entries on Schedule NIR line 5e should equal the total of the U.S.

enter the name and Federal Identification number as it appears on U.S.

Schedule M-3, part 1, lines 5a and 5b.

Schedule M-3 as filed. This may be a corporation that does not have a

requirement to file a return in Massachusetts. If applicable, enter the

Line 6. Enter individually the name of each separate domestic entity

same information which was entered in line 1. Do not leave line 2 blank.

whose income is included in the worldwide income shown on line 4 but

not included on the federal tax return. These will be the same entities

Lines 1 through 3. Complete lines 1 through 3 using information from

identified in the required schedules reconciling the entries on U.S.

U.S. Schedule M-3, Part 1.

Schedule M-3, part 1, lines 6a and 6b.

Line 4. Enter in line 4 the consolidated worldwide income exactly as

Line 6a. Enter the entity’s Federal Identification number. If the entity

shown on U.S. Schedule M-3, Part 1, line 4.

does not have one, enter zeros.

Lines 5 through 7. List individually the different entities, included or ex-

Line 6b. Enter the code corresponding to the type of entity for federal

cluded in converting the consolidated worldwide income on line 4 to the

tax purposes. Use the same entity type codes provided for line 5b.

net income per income statement figure reported on U.S. Schedule M-

3, Part 1, line 11. Each entity must be identified by name, Federal Iden-

Line 6c. If the entity files a return in Massachusetts, enter “Y.” If not,

tification number (if applicable), and entity type using the following

enter “N.”

table:

Line 6d. Enter “3” if this is a non-includible domestic entity with net in-

Entity Type Codes for Column b

come greater than zero. Enter “4” if this is a non-includible domestic en-

tity with net income of zero or less than zero.

01: Corporations exempt from taxation under section 501 and not in-

cluded in a U.S. consolidated income tax return.

Line 6e. Enter, as a negative amount, the amount of income excluded

from the U.S. return due to the exclusion of this entity. Losses excluded

02: Insurance companies subject to tax under section 801 and not in-

from the U.S. return are entered as positive amounts. The total of all

cluded in a U.S. consolidated income tax return.

entries on Schedule NIR line 6e should equal the total of the U.S.

03: Foreign corporations not included in a U.S. consolidated income tax

Schedule M-3, Part 1, lines 6a and 6b.

return.

Line 7. Enter individually the names of each separate entity whose in-

04: Corporations with respect to which and election under section 936

come or loss is not included in the worldwide income shown on line 4

(relating to possession tax credit) is in effect for the taxable year.

but which is included on the federal tax return. These will be the same

entities identified in the required schedules reconciling the entries on

05: Regulated Investment Company subject to tax under subchapter M

U.S. Schedule M-3. Part 1, lines 7a and 7b.

06: Real Estate Investment Trust subject to tax under subchapter M

Line 7a. Enter the entity’s Federal Identification number. If the entity

07: A DISC as defined in section 992(a)(1)).

does not have one, enter zeros.

21: A U.S. domestic corporation, whether included or excluded in the

Line 7b. Enter the code corresponding to the type of entity for U.S. tax

U.S. return, where code numbers 01 through 07 do not apply.

purposes. Use the same entity type codes provided above.

22: A U.S. domestic limited liability company, whether included or ex-

Line 7c. No entries should be entered in this column.

cluded in the U.S. return, where code numbers 01 through 07 do not

Line 7d. Enter “5” if this is an “other includible entity” with net income

apply.

greater than zero. Enter “6” if this is an “other includible entity” with net

23: A U.S. domestic entity which is not a corporation or a limited liability

income of zero or less than zero.

company, whether included or excluded in the U.S. return, where code

Line 7e. Enter, as a positive amount, the amount of income attributable

numbers 01 through 07 do not apply.

to the entity being added to worldwide consolidated income for the tax

31: A foreign entity, whether included or excluded in the U.S. return,

return. Enter all losses as negative numbers. This differs from the fed-

where code numbers 01 through 07 do not apply.

eral instructions.

Line 8. Enter the total amount of the adjustment to eliminations of trans-

actions between includible entities and non-includible entities. This is

Line 5. Enter individually the name of each separate foreign entity

the amount shown on U.S. Schedule M-3, Part 1, line 8.

whose income is included in the worldwide income shown on line 4 but

not included on the U.S. tax return. These will be the same entities

Instructions For Schedule Nir - Net Income Reconciliation - 2012

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