SCHEDULES M-1 and M-2                   Reconciliation of Income (Loss) and Analysis of                                                            OMB No. 1545-0123
(Form 1120-F)                             Unappropriated Retained Earnings per Books
Department of the Treasury                                   Attach to Form 1120-F.                                                                2023
Internal Revenue Service                     Go to www.irs.gov/Form1120F for the latest information.
Name of corporation                                                                                             Employer identification number

Schedule M-1             Reconciliation of Income (Loss) per Books With Income per Return  
                         Note: The corporation may be required to file Schedule M-3 (see instructions).
1       Net income (loss) per books .      .  . .  .                          7    Income recorded on books this year 
2       Federal income tax per books  .       . .  .                               not included on this return (itemize):
3       Excess of capital losses over capital gains                           a    Tax-exempt interest      $
4       Income  subject  to  tax  not  recorded  on                           b    Other (itemize):
        books this year (itemize):

                                                                              8    Deductions on this return not charged 
5       Expenses recorded on books this year not                                   against book income this year (itemize):
        deducted on this return (itemize):                                    a    Depreciation  .   .      $
    a   Depreciation  .     . .  .    $                                       b    Charitable contributions $
    b   Charitable contributions      $                                       c    Other (itemize):
    c   Travel and entertainment  $
    d   Other (itemize):
                                                                              9    Add lines 7 and 8  .     . . .  . .                            .
6       Add lines 1 through 5  .    .   .  .  . .  .                          10   Income—line 6 less line 9  .    . .                            .
Schedule M-2             Analysis of Unappropriated Retained Earnings per Books
1       Balance at beginning of year       .  . .  .                          5    Distributions:  a   Cash  .     . .                            .
2       Net income (loss) per books .      .  . .  .                                               b   Stock  .    . .                            .
3       Other increases (itemize):                                                                 c   Property  .   .                            .
                                                                              6    Other decreases (itemize):

                                                                              7    Add lines 5 and 6  .     . . .  . .                            .
4       Add lines 1, 2, and 3  .    .   .  .  . .  .                          8    Balance at end of year (line 4 less line 7)
Who Must File                                      Schedule M-3 (Form 1120-F). If the foreign      • Employee achievement awards of non-
Generally, any foreign corporation that is         corporation chooses (2), then Schedule          tangible property or of tangible property if 
required to complete Form 1120-F, Section          M-1, line 1, must equal Schedule M-3            the value is over $400 ($1,600 if part of a 
II, must complete Schedules M-1 and M-2            (Form 1120-F), Part I, line 11. See the         qualified plan).
(Form 1120-F). However, the following              Instructions for Schedule M-3 (Form             • The part of luxury water travel expenses 
rules apply.                                       1120-F) for more information.                   not deductible under section 274(m).
                                                   Note: If Schedule M-3 is completed in lieu      • Expenses for travel as a form of 
Do not complete Schedules M-1, M-2,                of Schedule M-1, the corporation is still       education.
and M-3 if total assets at the end of the tax      required to complete Schedule M-2.
year (Schedule L, line 17, column (d)) are                                                         • Other nondeductible travel and 
                                                                                                   entertainment expenses.
less than $25,000.                                 Specific Instructions
Complete Schedule M-3 in lieu of                                                                   Line 7a. Tax-exempt interest.Report any 
Schedule M-1 if total assets at the end of         Schedule M-1                                    tax-exempt interest received or accrued, 
the tax year that are reportable on                Line 1. Net income (loss) per books.The         including any exempt-interest dividends 
Schedule L are $10 million or more.                foreign corporation must report on line 1 of    received as a shareholder in a mutual fund 
A corporation filing Form 1120-F that is           Schedule M-1 the net income (loss) per the      or other regulated investment company. 
not required to file Schedule M-3 may              set(s) of books taken into account on           Also report this same amount in item P at 
voluntarily file Schedule M-3 instead of           Schedule L.                                     the top of page 2 of Form 1120-F.
Schedule M-1. See the Instructions for             Line 5c. Travel and entertainment               Schedule M-2
Schedule M-3 (Form 1120-F) for more                expenses. Include any of the following.         Line 1. Beginning balance of 
information. 
                                                   • Entertainment expenses not deductible         unappropriated retained earnings. Enter 
Foreign corporations that (a) are required         under section 274(a).                           the beginning balance of unappropriated 
to file a Schedule M-3 (Form 1120-F) and           • Meal expenses not deductible under            retained earnings per the set(s) of books 
have less than $50 million in total assets at      section 274(n).                                 taken into account on Schedule L.
the end of the tax year, or (b) are not 
required to file a Schedule M-3 (Form              • Expenses for the use of an entertainment      Note: For additional information for 
1120-F) and voluntarily file a Schedule M-3        facility.                                       Schedule M-2 reporting, see the 
                                                                                                   Instructions for Schedule M-3 (Form   
(Form 1120-F) must either (1) complete             • The part of business gifts over $25.          1120-F).
Schedule M-3 (Form 1120-F) entirely, or (2)        • Expenses of an individual over $2,000 
complete Schedule M-3 (Form 1120-F)                that are allocable to conventions on cruise 
through Part I and complete Schedule M-1           ships.
instead of completing Parts II and III of 

For Paperwork Reduction Act Notice, see the Instructions for Form 1120-F.          Cat. No. 49678K    Schedules M-1 and M-2 (Form 1120-F) 2023