John H. Fisher wrote:

- quote -

darn it! I wonder how many of my clients that will affect.

I'll worry about that tomorrow.

Cheer$,
Harlan Lunsford, EA n LA

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IR-2004-14, Jan. 28, 2004

TREASURY AND IRS PROPOSE NEW TAX FORM FOR CORPORATE TAX RETURNS

WASHINGTON - In an effort to increase the transparency of corporate tax
return filings, today the Treasury Department and Internal Revenue Service
released a new proposed draft form, Schedule M-3, Net Income (Loss)
Reconciliation for Corporations with Total Assets of $10 Million or More,
for use by certain corporate taxpayers filing Form 1120, U.S. Corporation
Income Tax Return. The new Schedule M-3 would expand the current Schedule
M-1, which has not been updated in several decades.

Schedule M-1 reconciles a corporation's financial accounting income or
loss with the taxable income or loss reported on the Form 1120. Large and
Midsize Business (LMSB) taxpayers (those with total assets of $10 million
or more) will complete the new Schedule M-3 in lieu of completing Schedule
M-1. Small Business and Self-Employed (SB/SE) taxpayers will not be
required to complete the new Schedule M-3 and will continue to complete
Schedule M-1. Other federal tax returns that also require the completion
of Schedule M-1 (e.g., Form 1065, U.S. Partnership Return of Income, and
Form 1120S, U.S. Income Tax Return for an S Corporation) may incorporate
Schedule M-3 in the future.

"The proposed Schedule M-3 will make differences between financial
accounting net income and taxable income more transparent. This will help
agents determine from the return whether the return should be audited and
identify the differences that matter most in the audit of the return. We
see benefits to taxpayers and the IRS from the new Schedule: a reduction
in unnecessary audits and a swifter focus on those differences that are
more likely to arise when taxpayers take aggressive positions or engage in
aggressive transactions. In addition, the increased transparency will have
a deterrent effect," stated Treasury Assistant Secretary for Tax Policy
Pam Olson.

"The new Schedule will let the IRS sharpen and improve monitoring of
corporate compliance," said IRS Commissioner Mark W. Everson. "Our
objective is to identify and resolve potential audit issues promptly. This
information will help us do so."

"These changes will enable us to focus our compliance resources on returns
and issues that need to be examined and avoid those that do not," said
Deborah M. Nolan, IRS Large and Mid-Size Business Division Commissioner.
"Increasing the transparency of corporate tax returns is critical to our
objectives to provide certainty to taxpayers sooner and to improve overall
compliance."

The Treasury and IRS expect that the proposed Schedule M-3 will be
finalized for use with federal income tax returns for tax years ending on
or after December 31, 2004.

The draft Schedule M-3, along with a general description of Schedule M-3,
is attached and may be accessed on www.irs.gov. Instructions for Schedule
M-3 will be released in the future and will be available on www.irs.gov.
Comments are requested regarding proposed Schedule M-3, including comments
on ways to minimize taxpayer burden. In addition, comments are requested
on significant difficulties that taxpayers may encounter if the use of
Schedule M-3 is required for a tax year that begins before Schedule M-3 is
finalized.

Comments should be submitted by April 30, 2004 to:

Susan Blake
Internal Revenue Service
Office of Pre-Filing and Technical Guidance
1111 Constitution Ave. NW
Mint Bldg M3-353 LM:PFT
Washington, DC 20224
Telephone number 202-283-8414
email address: PFTG2[at]irs.gov

"Jack" - John H. Fisher - TaxService[at]aol.com
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=

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