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Requirements for Filing Schedule M-3:

  • A U.S. partnership filing Form 1065 or Form 1065-B that is not required to file Schedule M-3 may voluntarily file Schedule M-3 in place of Schedule M-1.
  • Any entity that files Form 1065 U.S. Return of Partnership Income or Form 1065-B U.S. Return of Income for Electing Large Partnerships must complete and file Schedule M-3 instead of Schedule M-1 Reconciliation of Income (Loss) per Books With Income (Loss) per Return, if any of the following is true:
    1. The amount of total assets at the end of the tax year reported on Schedule L, line 14, column (d), is equal to $10 million or more.
    2. The amount of adjusted total assets for the year is equal to $10 million or more.
    3. The amount of total receipts is equal to $35 million or more. Total receipts is defined in the instructions for Codes for Principal Business Activity and Principal Product or Service in the Instructions for Form 1065, page 42 or Form 1065-B, page 34.
    4. An entity that is a reportable entity partner with respect to the partnership owns or is deemed to own, directly or indirectly, an interest of 50% or more in the partnership’s capital, profit, or loss, on any day during the tax year of partnership.

Note: A common trust fund or foreign partnership must file Schedule M-3 if it meets any of the tests discussed above.

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