Must Part III, Lines 1-6, regarding current and deferred U.S., state, and foreign income taxes, be completed by each member of the U.S. consolidated tax group?
A. No. Part III, Lines 1-6, must be completed in accordance with how tax expense is expressed in the financial statements (or the books and records, if applicable) of the members of the U.S. consolidated tax group and reported on Part I, Line 11, and consequently, Part II, Line 30, Column (a). Because Part I, Line 11, is an amount of consolidated net income after tax per the financial statements (or the books and records, if applicable), and because each corporation included in the U.S. consolidated tax group must complete its own Schedule M-3, Part III, Lines 1 through 6 must report in each corporation’s Schedule M-3 what has been included in Part I, Line 11, and Part II, Line 30, Column (a). In circumstances, for example, where the current and deferred U.S., state, and foreign income tax expense for the U.S. consolidated tax group is not shared or allocated among all members of the U.S.
