Header boxes
Four boxes (non-consolidated return, consolidated return (Form 1120-PC only), mixed 1120/L/PC group, dormant subsidiaries schedule attached), then the name of the corporation (the common parent, if consolidated) and EIN.
1120-PC Sch. M-3
Net Income (Loss) Reconciliation for U.S. Property and Casualty Insurance Companies With Total Assets of $10 Million or More
- Agency
- IRS
- Revision
- Rev. December 2021
- Fillable fields
- 383
- Pages
- 3
- Official source
- IRS form page
- Checked
- October 21, 2026
Schedule M-3 (Form 1120-PC): Net Income Reconciliation for Property and Casualty Insurers
Schedule M-3 (Form 1120-PC) is the Net Income (Loss) Reconciliation for U.S. Property and Casualty Insurance Companies With Total Assets of $10 Million or More. The About Form 1120-PC page says it is used to reconcile financial statement net income (loss) with taxable income reported on Form 1120-PC. The instructions say Part I reconciles net income (loss) on line 4a to net income (loss) for U.S. taxable income purposes on line 11, and Parts II and III reconcile line 11 to the subtotal on Form 1120-PC, Schedule A, line 35 (or Schedule B, line 19, if applicable).
For property and casualty insurance companies that prepare an annual statement, the instructions say financial statement net income (loss) should be reported on the statutory basis on Part I, line 11. The schedule says to attach it to Form 1120-PC.
This page hosts the December 2021 revision; the instructions linked here were revised in December 2025. You can fill it out free in your browser on this page and download the result without an account.
What's on Schedule M-3 (Form 1120-PC)
Part I, lines 1 to 3
Which income statement is used (SEC Form 10-K, certified audited, other non-tax-basis, or books and records), the income statement period, any restatements, and the stock symbol and CUSIP number if voting common stock is publicly traded.
Part I, lines 4 to 11
Worldwide consolidated net income (loss) with the accounting standard (GAAP, IFRS, statutory or other), then adjustments. The form notes that line 11 equals Part II, line 30, column (a), and Schedule M-2, line 2.
Part I, line 12
Total assets and total liabilities (not just the corporation's share) of all entities included or removed on Part I, lines 4, 5, 6 and 7.
Part II: income (loss) items
Lines 1 to 30 in four columns: income statement, temporary difference, permanent difference and tax return. Insurance lines include premium income (attach statement), and line 13 interest income says to attach Form 8916-A.
Part III: expense and deduction items
Lines 1 to 40, including write-off of premium receivables, guarantee fund assessments, discounting of unpaid losses (section 846), reduction of loss deduction (section 832(b)(5)(B)) and interest expense (attach Form 8916-A).
How to fill out Schedule M-3 (Form 1120-PC)
- 1
Check the boxes on page 1
The instructions say Part I is completed for any tax year the company files Schedule M-3. Check box (1), (2) or (3), as applicable, and box (4) if a dormant subsidiaries schedule is attached.
- 2
Line 1: the income statement
If SEC Form 10-K was filed for the period, check Yes on line 1a and skip lines 1b and 1c. If line 1c is No, the form says to skip lines 2a through 3c and enter net income (loss) per books and records on line 4a.
- 3
Columns (a) to (d)
Column (a) is the amount included on Part I, line 11, and column (d) the amount in the subtotal on Form 1120-PC, Schedule A, line 35 (or Schedule B, line 19). The instructions say differences are split into temporary in column (b) and permanent in column (c), following SAP when statements use it.
- 4
Line 16: premium income
Column (a) is earned premiums included in Part I, line 11, and column (d) earned premiums on Schedule A, line 35. Attach a statement of amounts from changes in items such as advanced premiums, earned but unbilled premiums and retrospective premium accruals.
- 5
Line 29: discounting of unpaid losses
Column (a) is the change in liability for unpaid losses and loss adjustment expense net of reinsurance, and column (d) the change in the same liability valued for tax purposes. Paid losses are not included. A statement shows the section 846 discounting at the start and end of the year.
- 6
Line 30: proration
Report the proration adjustment required by section 832(b)(5)(B) as a negative amount in column (d), with amounts in columns (b) and (c) as appropriate. The instructions say not to enter an amount in column (a).
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Where it goes and how it ties to the return
Where it goes
The schedule says to attach it to Form 1120-PC. The instructions give the address for Form 1120-PC and all attachments: Department of the Treasury, Internal Revenue Service Center, Ogden, UT 84201-0012.
Form 1120-PC, Item A
A company filing Schedule M-3 checks Item A, box 3, on Form 1120-PC, page 1, whether the schedule is required or voluntary, and does not file Schedule M-1.
Ties to Schedules L and M-2
The instructions say total assets on Schedule L, line 15, column (d), equal the company's total assets on the last day of the tax year, and Schedule M-2, line 2, equals Schedule M-3, Part I, line 11.
Supporting statements
For U.S. consolidated tax returns, the instructions say to file supporting statements for each includible corporation. A statement or explanation may be attached to any line even if none is required.
Recent development
The About Form 1120-PC page lists a notice dated 20-FEB-2026: no penalty for not electronically filing Forms 1120-REIT, 1120-RIC, 1120-L, and 1120-PC for 2025.
Related forms
1120-PC
U.S. Property and Casualty Insurance Company Income Tax Return
565 fields, 9 pages
8916
Reconciliation of Schedule M-3 Taxable Income With Tax Return Taxable Income for Mixed Groups
25 fields, 2 pages
8916-A
Supplemental Attachment to Schedule M-3
140 fields, 4 pages
851
Affiliations Schedule
256 fields, 4 pages
1120 Sch. M-3
Net Income (Loss) Reconciliation for Corporations With Total Assets of $10 Million or More
380 fields, 3 pages
1120-L Sch. M-3
Net Income (Loss) Reconciliation for U.S. Life Insurance Companies With Total Assets of $10 Million or More
383 fields, 3 pages
Who needs to fill out Schedule M-3 (Form 1120-PC)?
The property and casualty insurance company, or the common parent on a consolidated return, completes it and attaches it to Form 1120-PC.
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Questions about Form 1120-PC Sch. M-3
Who files Schedule M-3 (Form 1120-PC)?
A domestic corporation or consolidated group filing Form 1120-PC that reports total assets of $10 million or more on Schedule L at the end of the tax year. Others filing Form 1120-PC may file it voluntarily.
Can it be filed together with Schedule M-1?
No. The instructions say a property and casualty insurance company filing Schedule M-3 does not file Schedule M-1.
What does it reconcile to?
To the subtotal on Form 1120-PC, Schedule A, line 35 (or Schedule B, line 19, if applicable). The form notes that Part II, line 30, column (d), equals Schedule A, line 35.
Which accounting basis goes on Part I, line 11?
For companies that prepare an annual statement, the instructions say financial statement net income (loss) should be reported on the statutory basis.
What if the group includes a life insurer or a Form 1120 member?
That member files the Schedule M-3 for its own form, and the group follows the mixed group rules and also files Form 8916 and, if applicable, Form 8916-A.
Where is it mailed?
With Form 1120-PC and all attachments, to the Internal Revenue Service Center, Ogden, UT 84201-0012, as the instructions list.