Prelude to Schedule M-3: Schedule M-1 Corporate Book-Tax Difference Data 1990-2003

Abstract

For most large corporations, the new Schedule M-3 book-tax reconciliation replaces the four-decade-old Schedule M-1 effective December 2004. This article presents Schedule M-1 data and other selected tax return data for the immediately preceding 14-year period, 1990-2003. In particular, the authors discuss tax policy data interpretation issues related to U.S. intercompany dividends (ICD) improperly included on corporate tax returns by some large taxpayers. In light of the ICD interpretation uncertainties, the authors recommend the Talisman (2000) approach to measuring the book-tax gap of the 1990s for purposes of assessing compliance risk.