A First Look at 2004 Schedule M-3Reporting by Large CorporationsBy Charles Boynton, Portia DeFilippes, and

Ellen Legel

Charles Boynton is a program manager and seniorprogram analyst with the IRS Large and MidsizeBusiness Division’s Office of Strategy, Research, andProgram Planning. From September 2000 throughMay 2006, he was a Surrey Senior Research Fellow inTreasury’s Office of Tax Analysis (OTA). He has beena member of the joint Treasury-IRS Schedule M-3team since its formation in June 2003.

Portia DeFilippes is a financial economist in theEconomic Modeling and Computer Application Di-vision of OTA. Since September 2000, she and Boyn-ton have explored comparisons of corporate financialstatement and tax return data, book-tax differences,and tax return consolidation anomalies as part oftheir research for OTA.

Ellen Legel is a senior staff economist and man-agement official with the Corporation Tax Branch ofthe IRS’s Statistics of Income (SOI) Division. She hasbeen a lead analyst for the corporation tax program,and is the senior analyst for Schedule M-1, ScheduleM-2, and Schedule M-3.

For most publicly traded and many privately heldcorporations with assets of $10 million or more, thenew Schedule M-3 book-tax reconciliation replacedthe four-decade old Schedule M-1 effective Decem-ber 2004. The authors examine Form 1120 corporatetax return data for December 2004 through June 2005from the 2004 SOI advance corporate file and iden-tify 35,386 tax returns potentially subject to ScheduleM-3. Data for 100 large returns were not yet avail-able. The authors find 30,430 returns (86 percent)with a Schedule M-3 that passes some reconciliationtests. Those 30,430 tax returns represent approxi-mately 89 percent of the aggregate tax after creditsfor the tax returns potentially subject to the 2004Schedule M-3. The unavailable 100 returns representapproximately 6 percent of the aggregate tax aftercredits. The 4,856 returns with either reconciliationproblems (2,438 or approximately 7 percent) or noSchedule M-3 data (2,418 or approximately 7 per-cent) represent in total approximately 5 percent ofthe aggregate tax after credits for the 35,386 taxreturns. Further, the authors discuss the need to

convert Schedule M-3 data to pretax differences bybacking out the effects of federal tax expense. Anadjustment to a common pretax base for both bookand tax is consistent with the literature since Talis-man (2000). For the 30,430 returns, total worldwideincome is $568,010 million; book income for the taxgroup is $515,421 million. Pretax book is $707,092million, and M-3 tax income is $575,375 million,resulting in a pretax total difference of ($131,718)million of which ($81,587) million is temporary (62percent) and ($50,131) million is permanent (38 per-cent).

The authors thank the SOI Division for makingdata from the 2004 SOI advance corporate file avail-able to us for this research. They thank the followingat the SOI Division for assistance: Thomas Petska,Douglas Shearer, Janet McCubbin, Martha Harris,and, particularly, Ken Szeflinski. They thank MikeMandeville, Kathleen Walker, and Melissa Schottlerfor assistance with the advance data file. The authorsalso thank Karen Gill, IRS Publishing Division, andBarbara Bradley, IRS Tax Forms and PublicationsDivision, for providing Exhibit I, ‘‘2004 Form 1120Schedule M-3.’’ They thank the participants in theMay 12, 2006, OTA Brownbag Seminar, and theparticipants in the June 14, 2006, IRS Research Con-ference. They thank the following for comments atdifferent stages of the development of this report:Robert Adams, Geraldine Gerardi, Don Kiefer, JohnMcClelland, Mike McDonald, Judith McNamara,John Miller, Lillian Mills, Susan Nelson, GeorgePlesko, David Stanley, William Trautman, Bill Wil-son, and Gregory Zielinski. Last but not least, theauthors thank Jonathan Mable for his PowerPointpresentation, and Mable and Erin Sullivan for pastand current project assistance. All errors are theauthors’.

The opinions expressed are those of the authorsand do not necessarily represent positions of Trea-sury or the IRS.

This report was prepared for the 2006 IRS Re-search Conference. It was presented by Legel on June14, 2006.

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Table of Contents

1. Introduction . . . . . . . . . . . . . . . . . . . . . . . 9442. Dissatisfaction With Schedule M-1 . . . . . . 9443. Schedule M-3 . . . . . . . . . . . . . . . . . . . . . . 9444. Source of 2004 Tax Return Data . . . . . . . . . 9455. Intercompany Dividends (ICD) . . . . . . . . . 9466. Overview of Tables 1-11 . . . . . . . . . . . . . . 9467. Pretax Benchmark and Sign Conventions . 9468. Data Presented in Tables 1-6 . . . . . . . . . . . 9479. Data Availability for the 2004 Schedule

M-3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94710. Reporting of Columns A and D in 2004 . . . 94811. Financial Statement Type . . . . . . . . . . . . . 94812. Financial Statement Restatements . . . . . . . 94813. Book-Tax Difference by Industry . . . . . . . 94914. Aggregate 2004 Schedule M-3: All . . . . . . 94915. Aggregate 2004 Schedule M-3: SEC 10-K . . 95016. Aggregate 2004 Schedule M-3: Audited . . 95117. Aggregate 2004 Schedule M-3: A & D

Reconcile . . . . . . . . . . . . . . . . . . . . . . . . . 95118. Aggregate 2004 Schedule M-3: A & D

Blank . . . . . . . . . . . . . . . . . . . . . . . . . . . 95119. Review of Supporting Documentation . . . 95120. Summary and Conclusion . . . . . . . . . . . . . 952References . . . . . . . . . . . . . . . . . . . . . . . . . . . . 953

1. Introduction

For most publicly traded and many privately heldcorporations with assets of $10 million or more, the newSchedule M-3 book-tax reconciliation replaced the four-decade old Schedule M-1 effective December 2004. Firstwe review events leading to the replacement of ScheduleM-1 with Schedule M-3. We then present 2004 ScheduleM-3 data and other tax data for corporations filing the2004 Form 1120, ‘‘U.S. Corporate Income Tax Return,’’ forthe period of December 2004 through June 2005 andreporting total assets of $10 million or more on the Form1120 Schedule L balance sheet.1

2. Dissatisfaction With Schedule M-1A 1999 Treasury report and testimony given in 2000 by

then-Treasury Assistant Secretary for Tax Policy JonathanTalisman noted the growing book-tax gap from 1991 to1997 between pretax book income on Schedule M-1 andtaxable income before net operating loss deduction andspecial deductions (tax net income) on page 1 of Form1120. Both the report and the testimony viewed the 1990sbook-tax gap as a possible indicator of corporate taxshelter activity, but it also noted the difficulty in inter-preting Schedule M-1 book-tax difference data.2 Mills-Plesko (2003) proposed a redesign of Schedule M-1 toincrease the transparency of the corporate tax returnbook-tax reconciliation and to improve data interpretabil-ity.3 The Mills-Plesko (2003) Schedule M-1 recommenda-tions are largely reflected in Schedule M-3, particularly inPart I.4

3. Schedule M-3Exhibit I presents the 2004 Form 1120. Part I reconciles

worldwide consolidated financial statement income withincome per income statement of includable corporations(members of the tax return consolidation group listed onForm 851). Parts II and III, reconcile income per incomestatement of includable corporations (book) with tax netincome on Form 1120, page 1, line 28. Differences be-tween book and tax are characterized as temporary orpermanent.

The goal of the Schedule M-3 is greater transparencyand uniform organization in book-tax data at the time ofreturn filing so that the data may be used to determinewhat returns will and will not be audited and to deter-mine what issues will and will not be examined on thereturns selected for audit.

1This report repeats some material from Boynton, DeFil-ippes, and Legel (2005 and 2006) and from Boynton and Wilson(2006), used with permission. Our tax return table values maynot add up and may differ from official 2004 SOI Publication 16values (when published in 2007) because of rounding andbecause we used data from the 2004 SOI advance corporate filemade available to us seven months before the issuance of the2004 SOI final corporate file. See the discussion of the advancefile and final file in Section 4: Source of 2004 Tax Return Data.The SOI corporate data file for year t includes all tax yearsending between July of calendar year t and June of calendaryear t+1. Effective for all tax years ending on or after Dec. 31,2004, Schedule M-3 replaced Schedule M-1 for corporationsfiling Form 1120 and reporting total assets of $10 million ormore on Form 1120 Schedule L. Effective December 2006, forcorporations with total assets of $10 million or more, ScheduleM-3 will apply to Form 1120-S for S corporations, to Form1120-C for cooperative associations, and to Form 1120-L and

Form-PC for life and property and casualty insurance compa-nies. Effective December 2006, Schedule M-3 will also apply toForm 1065 for partnerships with total assets of $10 million ormore and certain other partnerships. Schedule M-1 continues toapply to Form 1120-F for foreign corporations with effectivelyconnected U.S. income, to Form 1120-RIC for regulated invest-ment companies, to Form 1120-REIT for real estate investmenttrusts, and to all corporations with total assets of less than $10million.

2See Department of the Treasury (1999) and Talisman (2000).See also Mills (1998) cited by Treasury (1999), p. 32, n. 118: ‘‘Millsfinds evidence that the IRS is more likely to assert deficiencieson firms with large book-tax disparities, indicating that suchdisparities are correlated with aggressive tax planning.’’

3See Mills and Plesko (2003) for the proposed redesign ofSchedule M-1. For discussions of the problems in interpretingSchedule M-1 book-tax reconciliation data and problems withthe related Schedule L book balance sheet data, see Boynton,Dobbins, DeFilippes, and Cooper (2002), Mills, Newberry, andTrautman (2002), Boynton, DeFilippes, Lisowsky, and Mills(2004), Boynton, DeFilippes, and Legel (2005 and 2006), andBoynton and Wilson (forthcoming 2006). For discussions of theproblems in reconciling financial accounting income and taxincome, see McGill and Outslay (2002), Hanlon (2003), McGilland Outslay (2004), Plesko (2004), and Hanlon and Shevlin(2005).

4For a discussion of the development of Schedule M-3, seeBoynton and Mills (2004).

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Part I of Schedule M-3 is important. It defines thestarting point for the book-tax reconciliation for the firsttime in corporate tax history. On Schedule M-1, we knowwhere the reconciliation ends (tax net income), but notwhere it begins (book). Schedule M-3, Part I, line 11 iswhat Schedule M-1 line 1 should have been. Part I ofSchedule M-3 is one of the revisions proposed by Mills-Plesko (2003).

Parts II and III reconcile financial net income ofincludable corporations to taxable income reported onForm 1120, page 1, line 28. Part II generally reconcilesitems of income, gain, and loss. Part III deals withexpense and deduction items.

Parts II and III contain four columns to identify anddifferentiate the book and tax aspects of each line item.Column (a) represents financial statement income orexpense amounts maintained in the corporation’s booksand records, using the income statement source deter-mined in Part I. Column (d) represents amounts asreflected in the tax return. For each line item, the differ-ence between the amount shown in column (a) and theamount shown in column (d) is shown either as atemporary difference in column (b) or as a permanentdifference in column (c). The clear statement of both thebook and tax amounts, as well as the reconciling differ-ences, aids the IRS in setting materiality thresholds forthe reconciling differences shown.

The reporting of column (a) book income amounts andcolumn (d) tax income amounts is optional for the firstyear a corporation is required to file Schedule M-3. In2004 approximately 38 percent of the corporations withusable Schedule M-3 data (reporting approximately 56percent of the aggregate tax after credits of those corpo-rations) did not complete columns (a) and (d).

The detail required by Parts II and III is particularlyenhanced by the differentiation of temporary and perma-nent differences. Temporary (timing) differences occurbecause tax laws require the recognition of some items ofincome and expense in different periods than are re-quired for book purposes. Temporary differences origi-nate in one period and reverse or terminate in one ormore subsequent periods. Temporary differences be-tween book and tax are questions of when, not if. Thereare four basic categories of temporary differences:

1. income recognized in financial statements beforeit is taxable;

2. income reported as taxable before it is recognizedin financial statements;

3. expenses recognized in financial statements be-fore they are deducted on the tax return; and

4. expenses deductible on the tax return before theyare recognized on financial statements.

By their very nature, those items involve issues re-garding the correct year for the item’s inclusion in incomeor deduction as an expense. From a tax administrationstandpoint, they concern the time value of money. Overthe lifetime of an entity, cycle of a specific transaction, ordepreciable life of an asset, temporary differences be-tween book and tax net to zero. Purely temporary differ-ences are generally low risk for tax administration — and

important in terms of the magnitude of the difference andthe time before the temporary difference turns — becauseof the time value of money.

In contrast to temporary differences, permanent dif-ferences are adjustments that arise as a result of funda-mental permanent differences in financial and tax ac-counting rules. Those differences result from transactionsthat will not reverse in subsequent periods. In financialstatement reporting under generally accepted accountingprinciples, permanent differences are not considered inthe FAS No. 109 computation of deferred tax assets andliabilities, but do have a direct impact on the effective taxrate. Therefore, permanent differences have the potentialto substantially influence reported earnings per sharecomputations, and, in the case of public companies, stockprices. Accordingly, permanent differences of a compa-rable size generally have a greater audit risk than tem-porary differences.

Schedule M-3’s introduction of detailed reporting re-quirements for permanent and timing differences is an-other significant improvement over Schedule M-1, aswell as being an important enhancement to overalltransparency. When examining Schedule M-1, the char-acter of a particular book-tax difference usually was notdeterminable without further investigation. That oftenrequired contacting the taxpayer, resulting in some de-gree of burden to both taxpayers and the IRS. Further, thereporting of the book and tax amounts allows the IRS toconsider the relative magnitude of the differences beforecontacting the taxpayer.

4. Source of 2004 Tax Return Data

A statistical sample of tax return data is electronicallyencoded annually by the SOI Division for use by the OTAand the Joint Committee on Taxation. Those data includeSchedule M-1 data and, beginning with 2004, ScheduleM-3 data. The annual SOI corporate file is issued to theOTA and the JCT in three versions in the second calendaryear following the July-June tax year (in calendar year2006 for tax year 2004 — that is, for corporate tax yearsending July 2004 to June 2005). The advance file isprepared May 1, the preliminary file is prepared Septem-ber 1, and the final file is prepared December 1. Theadvance file contains a limited number of placeholderrecords and uses tentative weights. The preliminary filehas far fewer placeholders and uses revised weights. Thefinal file has no placeholders and uses final weights.Advance file placeholder records are data from the priortax year for a few complex returns still undergoing SOIediting and for a larger number of late returns not yetreceived as of the issuance of the advance file.5 Prelimi-nary file placeholder records are for late returns not

5Placeholder data are commonly the edited return data fromthe prior tax year, but may also be current-year data from theIRS Business Master File (limited return data tabulated by theIRS when the return is first received and processed) or, forreturns not yet received, current-year survey data collected bythe SOI Division directly from the taxpayer on a voluntary basison a limited number of critical variables.

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received as of the issuance of the preliminary file. Place-holder records are eliminated for the final file. The finalweights compensate for missing returns not received asof the final file. Researchers using SOI data may reportonly aggregate tax data for a minimum of three taxpayersto protect taxpayer confidentiality. For statistical reasons,the SOI Division prefers that reported aggregate data arereported for 10 or more taxpayers whenever possible.

The SOI Division annually summarizes selected taxreturn data from the final corporate file in Publication 16:Corporate Income Tax Returns. Corporate tax data in the2004 final file prepared December 2006 will be summa-rized in the 2004 SOI Publication 16, which will bepublished in 2007. Our tax return table values may notadd up and may differ from official 2004 SOI Publication16 values (when published in 2007) because of roundingand because we used data from the 2004 SOI advancecorporate file made available to us seven months beforethe issuance of the 2005 SOI final corporate file.6

5. Intercompany Dividends (ICD)Form 1120 Schedule M-3, Part II, line 30, column (d)

must equal Form 1120, page 1, line 28 when prepared bythe corporate taxpayer. Some taxpayers improperly in-clude U.S. intercompany dividends (ICD) in tax netincome on Form 1120, page 1, line 28, the reconciliationtarget for Schedule M-3.7 The taxpayer then removes thesame ICD amount as a 100 percent dividends receiveddeduction on line 29b so that it does not increase finalincome subject to tax on line 30. If the taxpayer includesICD on Form 1120, page 1, line 28, it must also include iton Schedule M-3, Part II, line 30 column (d).

In general, ICD should be eliminated in determiningtax net income. The SOI Division removes all ICDamounts that it identifies in tax net income in the SOIcorporate file.8 If the taxpayer includes ICD in tax net

income on Schedule M-3, Part II, line 30, column (d) andon Form 1120, page 1, line 28, the tax net income reportedon Schedule M-3, line 30, column (d) will be larger thantax net income on Form 1120, page 1, line 28 in the SOIcorporate file by the amount of the ICD removed by theSOI from line 28.9

We estimate the ICD adjustment as the (unedited)Schedule M-3, Part II, line 30, column (d) amount minusthe (edited) Form 1120, page 1, line 28 (if it is a positivedifference) for corporations filing a consolidated return.

6. Overview of Tables 1-11

We present our analysis of the 2004 Schedule M-3 datafrom the SOI advance corporate file in two types oftables. Tables 1 through 6 are distributional tables. Eachfocuses on a population characteristic and the distribu-tional impact of that population characteristic on aggre-gate amounts for selected Form 1120 tax return variablesand Schedule M-3 variables. Each of the six tables pre-sents an overall analysis of the population characteristicat the top of the table and then shows the effect of assetsize (four or six asset classes: over $25 billion, $2.5 billionto $25 billion, $250 million to $2.5 billion, $50 million to$250 million, $25 million to $50 million, and $10 millionto $25 million). In Table 1, the three smaller asset classesare combined into a single $10 million to $250 millionclass because of the small number of placeholder returns(seven) in that combined class.10

Tables 7 through 11 are each an aggregate ScheduleM-3: Table 7 for the total reconciled population; Tables 8and 9, for two financial statement type populationsidentified in Table 4; and Tables 10 and 11 for twopopulations based on the reporting or nonreporting ofcolumns A and D data identified in Table 3.

7. Pretax Benchmark and Sign Conventions

We calculate all book-tax difference as pretax differ-ences — that is, as the difference between the pretax book(measured before federal income tax expense) and the taxamounts (also pretax) reported on Schedule M-3. We dothis so that we are always comparing pretax amountsconsistent with the book-tax literature since Talisman(2000). To do this for total book-tax differences reportedon Part II, line 30 or Part III, line 36, we must back outfederal income tax expense from the columns (b) and (c)reconciliation differences reported by taxpayers on PartII, line 30 and Part III, line 36.

6SOI Publication 16 tables have not presented Schedule M-1data to date. It is not currently planned for SOI Publication 16 toinclude Schedule M-3 data. Before the publication of Boynton,DeFilippes, and Legel (2005 and 2006), only Plesko (2002) (for1996-1998) and Plesko-Shumofsky (2005) (for 1995-2001) pre-sented Schedule M-1 data for the SOI Publication 16 population.

7It is improper to include ICD in tax net income if aconsolidated tax group does not contain an insurance companysubsidiary. Schedule M-3 instructions recognize that consoli-dated tax groups containing insurance company subsidiariesmay be required for book accounting (under statutory account-ing rules for insurance companies), and tax accounting (underfederal income tax consolidation rules for insurance companies)to include certain intercompany dividends in book income andin tax income. See the 2004, 2005, and 2006 Form 1120 instruc-tions for Schedule M-3 Part I, lines 10 and 11 and Part II, lines 7and 26. In April 2006, Form 8916 was announced to supplementSchedule M-3 for some mixed groups including, in particular,tax consolidation groups with a Form 1120 parent and aninsurance subsidiary. Form 8916 is used by mixed groups toreconcile tax net income on Schedule M-3 with taxable incomeon the tax return.

8On the SOI corporate file, SOI removes all ICD that itidentifies from Form 1120 data including from page 1, line 28whether or not the tax consolidation group contains an insur-ance company subsidiary. See the discussion of the history of

ICD editing by SOI for 1990-2003 tax years in Boynton, DeFil-ippes, and Legel (2005 and 2006). Note that changes on the SOIcorporate file do not change the amounts on the tax return anddo not affect IRS audits (or lack of audits) for corporate taxreturns.

9SOI also corrects some taxpayer errors it finds on Form 1120page 1. The observed difference between Schedule M-3 Part II,line 30, column (d) and Form 1120, page 1, line 28 on the SOIcorporate file is the net effect of the SOI ICD adjustment and anyother SOI error adjustments made on the SOI corporate file.

10We may not report data for fewer than three taxpayers. Seethe discussion of placeholder returns in sections 4 and 9.

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The prior literature defines the sign of a pretax book-tax difference as positive if the book amount is higher thanthe tax amount. Schedule M-3 effectively reverses thisconvention by the nature of its reconciliation rules. Anegative total difference in columns (b) and (c) of Parts IIand III means that the book amount is higher.

8. Data Presented in Tables 1-6In Tables 1 through 6, we present selected Form 1120

tax return variables and Schedule M-3 variables. The taxnet income in the third dollar column of Panel 1 of thosetables is from Form 1120, page 1, line 28 and is after SOI’sediting to remove ICD. In the fourth dollar column is ourestimated ICD amount. The sum of those two columns isequal (except for taxpayer errors corrected by SOI) to thetax income amount for Schedule M-3, Part II, line 30,column (d) (shown in Panel 2 of Tables 3 to 6 in the fourthdollar column). The fifth dollar column in Panel 1 ofTables 1 to 6 is worldwide financial statement incomefrom Part I, line 4. The next to last dollar column in Panel1 of Tables 1 to 6 is book income from Part II, line 30,column (a). The last dollar column in Panel 1 of Tables 1to 6 is federal income tax expense calculated from Part III,lines 1 and 2. The sum of federal income tax expense andbook income is pretax book income shown in the firstdollar column of Panel 2 of Tables 3 to 6. The differencebetween pretax book income and M-3 tax income isshown as a temporary and a permanent pretax differencein Panel 2 of Tables 3 to 6. Also, the total pretax differenceis shown in addition to the positive and negative com-ponents of the temporary and permanent pretax differ-ences. Total pretax book-tax difference under the Talis-man (2000) approach is pretax book minus tax net incomeafter removal of ICD by SOI. In our data, the Talisman(2000) pretax book-tax difference is the negative of thesum of pretax temporary and permanent differences plusthe ICD amount.

9. Data Availability for the 2004 Schedule M-3

Table 1 identifies the population of tax returns on the2004 SOI advance corporate file potentially subject to therequirement to include the 2004 Form 1120, ScheduleM-3. The first requirement is that the corporation mustfile a Form 1120 and report assets of $10 million or moreon Form 1120, Schedule L.11 The 2004 SOI advance filecontains 33,353 records statistically representing 42,129tax returns for corporations filing Form 1120 with totalassets of $10 million or more.12 Those 42,129 tax returns

include 100 tax returns that are placeholder returns. Aplaceholder return is 2003 data for a record for which2004 editing is not complete when the advance file wasissued.13 The 2004 advance file includes 6,742 nonplace-holder returns for tax years ending November 2004 orearlier and 35,286 nonplaceholder tax returns for taxyears ending December 2004 or later.

For our 2004 Schedule M-3 study, placeholder returnson the 2004 SOI advance corporate file represent poten-tial missing Schedule M-3 data if the tax year ends inDecember 2004 or later for a corporation with $10 millionor more in assets. We estimate the possible importance toour study of placeholder returns and other returns thatwe eliminate for lack of reconciliation as missing data bydetermining the tax after credits associated with thosereturns.

The 42,129 tax returns with which Table 1 begins(corporations with assets of $10 million or more on the2004 advance file filing Form 1120) have an aggregate taxafter credits of $186,297 million. The 35,286 nonplace-holder tax returns for tax years ending December 2004 orlater on the 2004 advance file represent approximately 86percent of the tax after credits ($160,647 million). The6,742 nonplaceholder tax returns for tax years endingNovember 2004 or earlier represent approximately 9percent of the tax after credits ($16,178 million). The 100placeholder tax returns on the advance file representapproximately 5 percent of the tax after credits ($9,473million).

As we show in Table 2, if we assume all placeholdersare in fact subject to Schedule M-3 (tax years endingDecember 2004 or later), we have nonplaceholder taxreturn data for 35,286 tax returns representing approxi-mately 94 percent of the aggregate tax after credits for the35,386 tax returns (35,286 plus 100 placeholders) on the2004 SOI advance file assumed potentially subject to the2004 Schedule M-3 ($160,647 million compared with$160,647 million plus $9,473 million or $170,120).

Table 2 starts with the 35,286 nonplaceholder taxreturns for tax years ending December 2004 or later andthe 100 placeholder returns on the 2004 SOI advancecorporate file identified in Table 1 and identifies thepopulation of 30,430 tax returns for which we have

11In fact, approximately 200 companies with assets less than$10 million voluntarily filed Schedule M-3. We do not analyzethat data.

12The SOI corporate file is a statistical sample. The record fora smaller tax return (usually measured by total assets) may beweighted to represent more than one tax return. Generally, taxreturns for corporations with $50 million or more in assets havea weight of one — that is, the record represents only itself. Therecord for a smaller tax return generally has a weight greaterthan one (for example, five) — that is, the record representsseveral similar tax returns (for example, five tax returns). Thetotal 2004 SOI advance corporate file contains 112,928 records,

representing 5,614,795 corporate tax returns reporting aggregatetotal assets of $59,983,334 million and aggregate tax after creditsof $218,196 million. That total includes S corporations, regulatedinvestment trusts, and real estate investment trusts. Those donot normally pay corporate income tax. Excluding S corpora-tions, RICs, and REITs, the 2004 SOI advance file contains 63,739records representing 2,045,501 corporate tax returns reportingaggregate total assets of $46,941,900 million and aggregate taxafter credits of $217,705 million. The 33,353 records representing42,129 corporation tax returns filed on Form 1120, with eachreturn reporting assets of $10 million or more (2.1 percent of allcorporate returns excluding S, RIC, and REIT), have aggregatetotal assets of $40,137,268 million (85.5 percent of all corporatereturns excluding S corporations, RICs, and REITs) and aggre-gate tax after credits of $186,297 million (85.6 percent of allcorporate returns excluding S corporations, RICs, and REITs).

13See Section 4 for a fuller discussion of the sources ofplaceholder data.

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reconcilable Schedule M-3 data. We eliminate 2,418 re-turns for a lack of any Schedule M-3 reconciliation data.14

We eliminate 2,310 returns that present Schedule M-3data but either Part II, line 30, column (a) does notreconcile with Part I, line 11, or Part II, line 30, columns(a), (b), and (c) do not reconcile with column (d).15 Finally,we eliminate 128 returns because Part II, line 28 and PartIII, line 36 do not reconcile.16

The approximately 41 percent of corporations withassets below $25 million account for a large proportion ofthe Schedule M-3 data with problems. Approximately 7percent of the returns potentially subject to the 2004Schedule M-3 report no Schedule M-3 data (2,418 out of35,386). Approximately 66 percent of the nonreporters(1,601 out of 2,418) have assets below $25 million. Ap-proximately 7 percent of the returns potential subject tothe 2004 Schedule M-3 report Part II, line 30 data that donot reconcile (2,310 out of 35,386). Approximately 46percent of this group (1,058 out of 2,310) have assetsbelow $25 million. Approximately 37 percent of thereturns with Part II, line 27 reconciliation problems (47out of 128) have assets below $25 million.

The 30,430 tax returns that we retain from Table 2(with Schedule M-3 data for which both Part II, line 30and line 28 pass our reconciliation tests) represent 86percent of the 35,386 returns potentially subject to the

2004 Schedule M-3. The 30,430 tax returns have anaggregate tax after credits of $151,405 million, which is 89percent of the $170,120 million for the 35,386 returns.

10. Reporting of Columns A and D in 2004

Tables 3 through 7 focus on the 30,430 tax returns in2004 that have Schedule M-3 reconcilable data. Tables 3through 6 address specific characteristics of the 30,430returns. Table 7 presents aggregate Schedule M-3 data forthe 30,430 returns. Tables 8 through 11 present aggregateM-3 data for subpopulations of the 30,430 returns. Wedetermine if a corporation is a publicly traded companybased on its answer to Part I, line 3a.

Table 3 examines the reporting of book income and taxincome amounts in Parts II and III, columns (a) and (d).With the exception of Part II, line 30, a corporation mayomit the Parts II and III, columns (a) and (d) line-by-linebook income and tax income amounts in the first yearthat Schedule M-3 is required. Of the 30,430 corporationswith reconcilable Schedule M-3 data, 11,681 (38 percent)with 56 percent of tax after credits omitted this informa-tion, including 1,837 of the 3,922 publicly traded compa-nies (47 percent). Another 15,169 (50 percent) with 37percent of tax after credits provided reconcilable column(a) and (d) information for Parts II and III, including 1,803public companies (46 percent). The remaining 3,581 (12percent) with 6 percent of tax after credits provided theinformation, but one or more of the columns (a) and (d)in Parts II and III did not reconcile. That group includes282 public companies (7 percent). Nonreporting of col-umns (a) and (d) amounts appears to increase as the assetsize of the firm increases.

11. Financial Statement Type

Table 4 separates the 30,430 returns by financial state-ment class based on the answers to Schedule M-3, Part I,lines 1a, 1b, and 1c. The four classes are: SEC 10-K,audited but not SEC 10-K, unaudited, and books andrecords (no financial statements or no answer to Part I,line 1). The 4,195 returns (14 percent of 30,430) ofcorporations that file an SEC 10-K financial statementaccount for 70 percent of the tax after credits of the 30,430returns with 2004 Schedule M-3 reconcilable data, 91percent of the ICD, 95 percent of the net aggregatetemporary pretax book-tax difference, and 69 percent ofthe net aggregate permanent pretax book-tax difference.

12. Financial Statement Restatements

Table 5 focuses on Schedule M-3, Part I, lines 2b and2c, which asks questions about current-year restatementof financial statements and restatements within the fiveyears before the current year. The total population forTable 5 is the 30,430 returns with reconcilable ScheduleM-3 data. The 29,120 not reporting a restatement are 96percent of the returns but report 79 percent of the taxafter credits and include only 3,347 of the 3,922 publiclytraded companies, or 85 percent. The 5 percent of returnsthat report restatements report 21 percent of the tax aftercredits and include 15 percent of the public companies.

14We tested Part I, lines 4 through 11 and Part II, lines 26through 30 for any nonzero amount. In particular, a bookamount for the tax group should be reported on Part I, line 11and a reconciliation between that amount and tax net incomeshould be reported on Part II, line 30.

15We also eliminate a return if Schedule M-3, Part II, line 30,column (a) or column (d) is exactly zero. We do not test thereconciliation between Part II, line 30, column (d) and Form1120, page 1, line 28. Rather, if Part II, line 30, column (d) is notzero, we treat any positive difference with page 1, line 28 for aconsolidated return as the measure of the ICD removed by SOIfrom page 1, line 28.

16Part III is designed to report expenses and deductions aspositive amounts. The column sums on Part III, line 36 are thencarried over to Part II, line 28 with a sign change and added onPart II in determining Part II, line 30 column amounts. We testto see if Part II, line 28, columns (b) and (c) are each the negativeof those columns on Part III, line 36, and if Part II, line 27,columns (b) and (c) and Part II, line 28, columns (b) and (c) eachadd to Part II, line 30, columns (b) and (c). In addition to the 128returns (103 records) that we eliminated with those tests, therewere an additional 139 returns that initially failed. For 119 of thereturns that initially failed our tests, we determined that thetaxpayer reported expenses and deductions on Part III asnegative amounts and carried those amounts to Part II, line 28without a sign change when those amounts could appropriatelybe added. For aggregation purposes in Tables 6 through 17, wechanged the sign of amounts on Part III of those 119 returns sothat expenses and deductions were reported as positiveamounts. For 20 returns that initially failed our tests, wedetermined that the taxpayer reported expenses and deductionson Part III as positive amounts and carried those amounts toPart II, line 28 without a sign change when the taxpayer thensubtracted the Part II, line 28 column amounts to determine PartII, line 30. For aggregation purposes in Tables 6 through 17, wechanged the sign of amounts on Part II, line 28 so that thoseamounts could be added.

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13. Book-Tax Difference by IndustryTable 6 separates the 30,430 returns into five industry

groups: manufacturing, finance, information, utilitiesand transportation, and all others.17 The 30,430 returnsreport an aggregate book-tax difference of ($131,718)million, approximately 38 percent permanent. The 6,351returns in manufacturing report an aggregate net pretaxbook-tax difference of ($98,810) million, approximately75 percent of the total aggregate net pretax book-taxdifference for the 30,430 returns. The difference is ap-proximately 71 percent permanent. The 7,882 returns infinance report an aggregate net pretax book-tax differ-ence of ($12,267) million, approximately 9 percent of thetotal aggregate net pretax book-tax difference for the30,430 returns. The difference is approximately 60 percentpermanent. The 1,772 returns in information report anaggregate net pretax book-tax difference of positive$16,349 million, approximately (12) percent of the totalaggregate net negative pretax book-tax difference for the30,430 returns. The permanent difference component ispositive $20,879 million.

14. Aggregate 2004 Schedule M-3: AllTable 7 presents aggregate Schedule M-3 data for the

30,430 tax returns with reconcilable Schedule M-3 data.The data are present in three panels. Panel 1 providespopulation overview data in its first section; data forSchedule M-3, Part I in its second section; and datareconciling Part I book with Part II tax income (and SOItax net income) in its third section.

The first data section of Panel 1 of Table 7 reportsaggregate total assets (Form 1120, Schedule L), tax lesscredits, and tax net income (Form 1120, page 1, line 28)for the 30,430 returns, and reconciles the tax net incometo the tax income reported by the taxpayers on Part II,line 30, column (d). Also shown is tax-exempt interest(Form 1120, Schedule K, item 9).18

The second data section of Panel 1 of Table 7 presentsaggregate Schedule M-3, Part I data for the 30,430 re-turns. Part I, line 4 reports aggregate worldwide financialstatement income of $568,010 million. Part I, lines 5through 10 adjusts that to $515,422 million as aggregatebook income of includable corporations. Part I, line 4aggregate worldwide income is 110 percent of line 11aggregate book income. Part I, line 5 removes $204,469million (40 percent of book) for foreign entities and$86,534 million (17 percent of book) for U.S. entitiesincluded in the financial statement consolidation but notin the tax consolidation. Part I, line 7 adds $3,785 million(1 percent of book) for U.S. corporations not included inthe financial statement consolidation but included in thetax consolidation. Part I, line 8 adds $184,101 million (36percent of book) as adjustments to eliminations becauseof lines 5 through 7, usually the recognition of dividend

income and adjustment to minority interest income. Thenet effect of Part I, lines 5 through 8 is to remove $103,118million (20 percent of book). Part I, line 9 adds adjust-ments of $6,136 million (1 percent of book) for thedifference between financial statement year and tax re-turn year. Part I, line 10 adds other adjustments of $33,723million (7 percent of book). Part I, line 10 will generallybe used by corporations with insurance subsidiaries toreflect adjustments required by the use of statutoryaccounting for subsidiary book income. Statutory ac-counting for subsidiaries differs from GAAP for financialstatements, in particular, in the inclusion of some ICD.Finally, Part I, line 11 includes $11,915 million (2 percentof book) not reflected in Part I, lines 4 through 10 forcorporations with only books and records.19

The third data section of Panel 1 of Table 7 reconcilesaggregate Schedule M-3, Part I, line 11 book data withPart II pretax temporary and permanent book-tax differ-ences and with SOI-reported tax net income for the 30,430returns.

Panel 2 of Table 7 presents aggregate Schedule M-3,Part II data for the 30,430 returns. We present aggregatenet taxpayer data for book income amount (column (a)),temporary difference (column (b)), permanent difference(column (c)), tax income amount (column (d)), totaldifference (sum of columns (b) and (c)), and the totalaggregate positive and negative reported differences forcolumns (b) and (c) that determined the net differences.We note that the net aggregate pretax temporary andpermanent book-tax difference amounts are the net dif-ferences between relatively large aggregate positive andnegative temporary and permanent amounts and that thenet differences are often small in comparison. We alsopresent the frequency with which any nonzero amountwas reported on the line.

At the foot of Panel 2, we present the necessarycorrection of the Schedule M-3 reconciliation totals to apretax basis (before federal income tax expense). Me-chanically, Schedule M-3 compares book income after taxwith pretax tax income and includes federal income taxexpense as a book expense in Part III. For analysis, it isnecessary to correct the Schedule M-3 data to a consistentpretax basis (before federal income tax expense). This hasbeen the approach since Talisman (2000). To do this, weback out federal income tax expense from book income.

Part II, line 30 reports a temporary difference of($74,502) million and a permanent difference of $134,455million for a net difference of $59,953 million. Column (a)book is $515,421 million and column (d) tax is $575,375million. Tax income in column (d) is shown as $59,953million greater than column (a) book income. After cor-rection to a pretax basis, pretax book income is $707,092.The tax income of $575,375 million is in fact less thanpretax book income by $131,717 million.

17The major SOI industry sector codes are: manufacturing 31;finance (including real estate and holding companies) 52, 53, 55;information 51; utilities and transportation 22, 48.

18Tax-exempt interest is a major component of the permanentdifference reported on Schedule M-3, Part II, line 13, interestincome.

19The amounts on Part I, lines 4 through 10 plus the amountsentered only on line 11 (without any other entry on lines 4through 10) do not add to line 11 because of reconciliation errorsof ($1,243) present in the Part I data. Starting in 2005, allcorporations are instructed to begin on Part I, line 4.

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We know federal income tax expense from Part III,lines 1 and 2 even without column (a) data. Since column(d) is zero by definition, column (a) must be the negativeof the sums of columns (b) and (c).

Federal income tax expense is $191,670 million, ofwhich ($7,085) million is classified as temporary and($184,585) million is classified as permanent. Pretax bookincome is the sum of federal tax expense and bookincome. The adjustment amounts for columns (b) and (c)must be in total the negative of the column (a) adjustmentamount so that the adjustment has no effect on column(d) just as the original federal tax expense had no effecton column (d). We adjust column (b) by ($7,085) millionand column (c) by ($184,585) million. The result is thatcolumn (b) becomes slightly more negative and the signof column (c) changes and becomes negative. The ad-justed pretax column (b) temporary difference is($81,587) million and the adjusted pretax column (c) is($50,131) million. The adjusted total pretax difference is($131,718) million, the difference between pretax bookincome of $707,092 million and pretax tax income of$575,375 million. Our pretax total difference benchmarkis ($131,718) million. Pretax book for 2004 is $707,092million and is higher than tax net income of $523,015 onForm 1120, page 1, line 28 by $184,077 million, $131,718million measured by Schedule M-1 plus $52,698 of ICD,plus ($339) million of taxpayer errors not identified here.

The pretax total difference of ($131,718) million is($81,587) million temporary (62 percent) and ($50,131)million permanent (38 percent).

We express all total line difference as a percentage ofpretax book to determine which lines contribute the mostto the total difference. For example, the total aggregatenet pretax book-tax difference of ($131,717) million is(18.6) percentage points of pretax book. Part II, line 13interest income contributes ($15,053) million or (2.1)percentage points of the net (18.6) percentage points.20

Panel 3 of Table 7 presents aggregate Schedule M-3Part III data for the 30,430 returns. In Part III, we havechanged the sign of all data to agree with Part II. Weshow deductions in Part III as negative amounts. Sched-ule M-3, Part III shows deductions as positive amountsand changes the sign for the totals carried over to Part IIline 28.21 The signs of the differences we show in Part IIIindicate the effect of that expense or deduction on the netdifference between pretax book and tax income.

A few of the lines on Parts II and III account for mostof the net negative difference of (18.6) percentage pointsof pretax book. Some lines contribute to the net negativedifference of (18.6) percentage points of pretax book andsome lines offset that net negative difference. The largestnet negative difference on a line with a specific descrip-tion is not unexpected. Part III, line 31, depreciation,

reports tax depreciation greater than book for a net effectof ($112,778) million, contributing (15.9) percentagepoints to the total pretax difference of (18.6) percentagepoints of pretax book. The effect of depreciation is almostall temporary.

Part II, line 12, reportable transactions, reports bookhigher than tax by ($44,837) million, contributing (6.3)percentage points to the total pretax difference of (18.6)percentage points of pretax book. The effect of reportabletransactions is largely temporary but with a substantialpermanent component. Part III, line 9, nonqualified stockoptions, reports tax deductions greater than book ex-pense for a net effect of ($40,430), contributing (5.7)percentage points of pretax book. The effect of stockoptions is almost all permanent. Part III, line 16, pensionand profit-sharing, reports tax deductions greater thanbook expense for a net effect of ($17,972) million, contrib-uting (2.5) percentage points of total pretax difference.The effect of pensions is largely temporary.

In the other direction, Part III, line 28, other amortiza-tion or impairment write-offs, reports book expensegreater than tax for a net effect of $50,865 million,offsetting 7.2 percentage points of total pretax difference.The effect of amortization and impairments has bothsubstantial temporary and permanent components. PartII, line 17, inventory valuation adjustment (cost of goodssold), reports book lower than tax by $45,611 million,offsetting 6.5 percentage points of the (18.6) percentagepoints pretax total. The effect of inventory adjustments isalmost all temporary. Part II, line 18, sale versus lease (forsellers or lessors), reports book lower than tax by $29,324million, offsetting 4.1 percentage points of the (18.6)percentage points pretax total. The effect of sale versuslease is almost all temporary. Part II, line 9, U.S. partner-ships, reports book lower than tax by $18,861 million,offsetting 2.7 percentage points of the total pretax differ-ence.

Note that the differences on Part II, lines 23a and 23bfor asset disposition (book) and capital gains transactions(tax) are almost offsetting and reflect the structure ofSchedule M-3, which separates the accounting on twoseparate book and tax lines.

Perhaps the most interesting line difference is that forPart II, line 26 other income (loss) items with difference,with book higher than tax by ($116,892) million contrib-uting (16.5) percentage points of the (18.6) percentagepoints pretax total. The effect of this line has approxi-mately equal temporary and permanent components.22

15. Aggregate 2004 Schedule M-3: SEC 10-KTable 8 presents aggregate Schedule M-3 data for the

4,195 returns out of the 30,430 tax returns with reconcil-able Schedule M-3 data that have SEC 10-K financialstatements. Those returns report a pretax difference of($112,019) million — that is, book higher than tax — 85

20The source of the permanent difference of ($12,006) on line13 is a combination of tax-exempt interest of $10,786 million(reported in the first data section of Panel 1 of Table 6 from Form1120 Schedule K, item 9) and hybrid securities (for example,payments that are interest for book but not for tax).

21See the discussion of Part III and Part II, line 28 in Section9.

22In 2004 and 2005, corporations with a Form 1120 parentand insurance subsidiaries were permitted to report all insur-ance subsidiary differences on Part II, line 26, other income(loss) items with difference. This may have confounded ourability to interpret aggregate data for this line.

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percent of the total difference for the 30,430 returns. Thetemporary difference of ($77,512) is 95 percent of the totaltemporary difference for the 30,430 returns. The perma-nent difference of ($34,507) million is 69 percent of thetotal permanent difference for the 30,430 returns. Pretaxtotal difference is (20.2) percentage points of pretax bookcompared to (18.6) percentage points for the 30,340returns. Reportable transactions on Part II, line 12 con-tribute (6.3) percentage points matching the average forthe 30,340 returns. Other items with differences in Part II,line 26 contribute (10.5) percentage points compared to(16.5) percentage points for the 30,340 returns.

16. Aggregate 2004 Schedule M-3: AuditedTable 9 presents aggregate Schedule M-3 data for the

13,544 returns out of the 30,430 tax returns with recon-cilable Schedule M-3 data that have audited financialstatements that are not SEC 10-K. Those returns report apretax difference of ($34,250) million — that is, bookhigher than tax — 26 percent of the total difference for the30,430 returns. The temporary difference of ($14,870) is 18percent of the total temporary difference for the 30,430returns. The permanent difference of ($19,380) million is39 percent of the total permanent difference for the 30,430returns. Pretax total difference is (28.3) percentage pointsof pretax book compared to (18.6) percentage points forthe 30,340 returns. Reportable transactions on Part II, line12 contribute (3.7) percentage points compared to (6.3)percentage points for the 30,340 returns. Other items withdifferences in Part II, line 26 contribute (41.4) percentagepoints compared to (16.5) percentage points for the 30,340returns.

17. Aggregate 2004 Schedule M-3: A & D ReconcileTable 10 presents aggregate Schedule M-3 data for the

15,169 returns out of the 30,430 tax returns with recon-cilable Schedule M-3 data in Parts II and III, columns (a)and (d). Those returns report a pretax difference of($46,322) million — that is, book higher than tax — or 35percent of the total difference for the 30,430 returns. Thetemporary difference of ($3,807) is 5 percent of the totaltemporary difference for the 30,430 returns. The perma-nent difference of ($42,515) million is 85 percent of thetotal permanent difference for the 30,430 returns. Pretaxtotal difference is (20.3) percentage points of pretax bookcompared to (18.6) percentage points for the 30,340returns. Reportable transactions on Part II, line 12 con-tribute (7.6) percentage points compared to (6.3) percent-age points for the 30,340 returns. Other items withdifferences in Part II, line 26 contribute (3.6) percentagepoints compared to (16.5) percentage points for the 30,340returns.

18. Aggregate 2004 Schedule M-3: A & D BlankTable 11 presents aggregate Schedule M-3 data for the

11,681 returns out of the 30,430 tax returns with reconcil-able Schedule M-3 data and blank Parts II and III,columns (a) and (d). Those returns report a pretaxdifference of ($73,083) million — that is, book higher thantax — or 55 percent of the total difference for the 30,430returns. The temporary difference of ($68,006) is 83percent of the total temporary difference for the 30,430

returns. The permanent difference of ($5,077) million is 10percent of the total permanent difference for the 30,430returns. Pretax total difference is (17.0) percentage pointsof pretax book compared to (18.6) percentage points forthe 30,340 returns. Reportable transactions on Part II, line12 contribute (7.6) percentage points compared to (6.3)percentage points for the 30,340 returns. Other items withdifferences in Part II, line 26 contribute (24.5) percentagepoints compared to (16.5) percentage points for the 30,340returns.

19. Review of Supporting DocumentationOne of the authors23 reviewed more than 100,000

pages of 2004 Schedule M-3 documentation for more than100 tax returns, each reporting a positive or negativeamount of over $10 million in absolute value on Part II,line 26, other income (loss) items with differences; on PartIII, line 35, other expense/deduction items with differ-ences; or on Part I, lines 8 or 10, adjustments to elimina-tions and other adjustments. The following commentsreflect that research.

Note: For 2004 and 2005, consolidated tax groups witha Form 1120 parent and insurance subsidiaries werepermitted a shortcut to report all insurance subsidiaryactivity on Part II, line 26. That will change in 2006. Largetemporary and permanent differences are reported onPart II, line 26 in 2004 as a result.Negative and positive large differences on Part II, line26. Some companies report positive temporary and per-manent differences on Part II, line 26 as ICD. Unless theyare ICD of insurance subsidiaries subject to line 26reporting in 2004 and 2005, they should be reported onPart II, line 7. In several cases, matching dividendamounts were not reported on Part I, line 10, suggestingthat the dividends were not insurance-related.

Some companies use Part I, line 8 to reverse all orsubstantially all financial statement eliminations, andthen use Part II, line 26 to remove income improperlyincluded on Part I, line 11 as a result of the Part I, line 8reversals. Part I, line 11 should be the amount of consoli-dated financial statement net income of includable cor-porations (the consolidated tax group listed on Form 851)after all appropriate eliminations.

Some companies report ICD on Part I, line 8 andreport a negative permanent difference on Part II, line 26as a reduction of those ICD subject to tax. If the dividendsare foreign dividends that are ICD for financial account-ing, but not for tax accounting, and if the negativeadjustment reflects dividends representing previouslytaxed subpart F income, the adjustment should be re-ported on Part II, line 5.

Some companies use Part II, line 26 for ‘‘eliminations’’of income without further explanation. This does notmeet the standard of ‘‘separately stated and adequatelydescribed.’’

Some companies report ‘‘Mark to market’’ on Part II,line 26. Those amounts should have been reported onPart II, line 16.

23The review of supporting documents was performed byLegel.

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Some companies use Part II, line 26 to report equityincome or loss of subsidiaries. Those amounts should bereported on Part II, lines 1 or 6.

Part II, line 26 was also used to report permanentpositive difference totals in inventory valuation adjust-ments that should have been included on Part II, line 17.

Substantial temporary differences were reported asforeign exchange transaction gains/losses, as cancella-tion of debt income, and as royalty income. This isappropriate, but perhaps Schedule M-3 lines should becreated for those items in the future.Negative and positive large differences on Part III, line35. Large amounts of interest expense were reported onPart III, line 35. In 2005 interest expense is specified on aseparate line in Part III.

Large amounts of write-offs were reported on Part III,line 35. If those amounts represent write-offs or change inreserve balances, each reserve should be separately statedand adequately described. If they represent write-offs ofgood will, they should be reported on Part III, line 26,amortization/impairment of good will. If they are write-offs of assets, they should be reported on Part III, line 28,other amortization or impairment write-offs.Negative and positive large differences on Part I, lines8 and 10. Part I, line 8 was generally used to adjustconsolidation eliminations for entity income and lossremoved or added on Part I, lines 5 through 7, which isappropriate. Note in Table 7, Panel 1, that 3,699 returnshad entries on Part I, line 5, but only 1,736 had entries onPart I, line 8. Some companies removed foreign entityincome or loss on Part I, line 5, but had no consolidationelimination adjustment on line 8. That may be appropri-ate if entities removed were 100 percent owned (nominority interest), carried on the cost basis (no equityincome), and paid no dividends. The instructions for PartI, line 8 permit but do not require the reporting of zeronet changes.

Part I, line 10 was generally used to report the additionof ICD, which is appropriate if the addition was requiredby statutory accounting for insurance subsidiaries of aForm 1120 parent. For 2004 the documentation is notalways clear as to why ICD are added. In 2006 a new line,10a, will separately report the addition of ICD requiredby statutory accounting.

Part I, line 10 was also used to report valuationadjustments, eliminations, addition of equity earnings,and the removal of income from bankruptcy reorganiza-tion. It appears that those items should have been re-ported on Part I, lines 5 through 8, or within Parts II andIII. In particular, the income reported on Part I, line 11should be the share of the worldwide consolidated netincome on Part I, line 4 that belongs to the includablecorporations (the consolidated tax group listed on Form851) after all appropriate consolidation eliminations. PartI, line 10 should not be used to reduce the book incomeon line 11 as a means of reducing the book-tax differenceto be reconciled in Parts II and III.

20. Summary and ConclusionFor most publicly traded and many privately held

corporations with assets of $10 million or more, the newSchedule M-3 book-tax reconciliation replaced the 40-year-old Schedule M-1 effective December 2004. Part I

reconciles worldwide consolidated financial statementincome with income per income statement of includablecorporations (members of the tax return consolidationgroup listed on Form 851). Parts II and III, reconcileincome per income statement of includable corporations(book) with tax net income on Form 1120, page 1, line 28.Differences between book and tax are characterized astemporary or permanent. Part I is considered extremelyimportant. For the first time, the starting point for thebook-tax reconciliation is specified.

We begin our analysis with 42,129 returns for corpo-rations with assets of $10 million or more filing Form1120 for 2004. We eliminated 6,742 that have a November2004 or earlier year-end. The remaining 35,386 include100 placeholder returns that are potentially subject to the2004 Schedule M-3. For the nonplaceholder 35,286, wedetermine that 30,430 have reconcilable Schedule M-3data.

We estimate the possible importance to our study ofplaceholder records and other record that we eliminatefor lack of reconciliation as missing data by determiningthe tax after credits associated with those records. As-suming all placeholders are in fact subject to ScheduleM-3 (tax years ending December 2004 or later), ournonplaceholder usable Schedule M-3 data for 30,430 taxreturns represents approximately 89 percent of the aggre-gate tax after credits for the 35,386 tax returns on the 2004SOI advance file assumed potentially subject to the 2004.

We discuss the need to convert Schedule M-3 data topretax differences by backing out the effects of federal taxexpense. The adjustment to a common pretax base forboth book and tax is consistent with the literature sinceTalisman (2000). For the 30,430 returns with reconcilableSchedule M-3 data, pretax book is higher than tax in-come, and in Schedule M-3, it is reflected with a negativesign. For the 30,430 returns, Table 7 presents an aggregatenet pretax total difference of ($131,718) million, of which($81,587) million is temporary (62 percent) and ($50,131)million is permanent (38 percent).

Table 8 presents aggregate Schedule M-3 data for the4,195 returns out of the 30,430 tax returns with reconcil-able Schedule M-3 data than have SEC 10-K financialstatements. These returns report an aggregate net pretaxdifference of ($112,019) million, that is book higher thantax, 85 percent of the total difference for the 30,430. Thetemporary difference of ($77,512) is 95 percent of the totaltemporary difference for the 30,430. The permanent dif-ference of ($34,507) million is 69 percent of the totalpermanent difference for the 30,430. The share of tax aftercredits of those firms is 70 percent.

Perhaps the most interesting line difference in Table 7for the 30,430 returns is that for Part II, line 26, otherincome (loss) items with differences.24 It is 89 percent ofthe total pretax difference with book higher than tax by($116,892) million with approximately equal temporary

24In 2004 and 2005, corporations with a Form 1120 parentand insurance subsidiaries were permitted to report all insur-ance subsidiary differences on Part II, line 26, other income(loss) items with difference. This may have confounded ourability to interpret aggregate data for this line.

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and permanent components (each approximately 44 per-cent of the total pretax difference.) For the 13,544 returnsin Table 9 with audited financial statements that are nota SEC 10-K, other items with differences on Part II line 26contribute (41.4) percentage points of pretax book to totalpretax difference compared to (16.5) percentage pointsfor the 30,340 returns. For the 11,681 returns in Table 11with blank Parts II and III columns (a) and (d), Part II line26 contributes (24.5) percentage points of pretax book tototal pretax difference again compared to (16.5) percent-age points for the 30,340 returns. The IRS needs toinvestigate the supporting documentation for Part II line26 and determine if some items included there shouldhave new separate lines on Schedule M-3 in future years.

ReferencesBoynton, Charles, and Lillian Mills. ‘‘The Evolving

Schedule M-3: A New Era of Corporate Show andTell?’’ National Tax Journal 57, No. 3 (September 2004):757-772.

Boynton, Charles, and William Wilson. ‘‘A Review ofSchedule M-3, the Internal Revenue Service’s NewBook-Tax Reconciliation Tool.’’ Petroleum Accountingand Financial Management Journal 25, No. 1 (Spring2006): 1-16.

Boynton, Charles, Paul Dobbins, Portia DeFilippes, andMichael Cooper. ‘‘Consolidation Issues in SOI 1997Form 1120 Book Data Compared to Matched COM-PUSTAT Data.’’ Unpublished Working Paper. Wash-ington, D.C.: Office of Tax Analysis, U.S. Departmentof the Treasury (May 2002).

Boynton, Charles, Portia DeFilippes, and Ellen Legel.‘‘Distribution of Schedule M-1 Corporate Book-TaxDifference Data 1990-2003 for Three Large-Size andThree Industry Groups.’’ Tax Notes 111, No. 2 (Apr. 10,2006): 177-212.

Boynton, Charles, Portia DeFilippes, and Ellen Legel.‘‘Prelude to Schedule M-3: Schedule M-1 CorporateBook-Tax Difference Data 1990-2003.’’ Tax Notes 109,No. 12 (Dec. 19, 2005): 1579-99.

Boynton, Charles, Portia DeFilippes, Petro Lisowsky, andLillian Mills. ‘‘Consolidation Anomalies in Form 1120Corporate Tax Return Data.’’ Tax Notes 104, No. 4 (July26, 2004): 405-417.

Hanlon, Michelle. ‘‘What Can We Infer About a Firm’sTaxable Income From Its Financial Statements?’’ Na-tional Tax Journal 56, No. 4 (December 2003): 831-863.

Hanlon, Michelle, and Terry Shevlin, ‘‘Book-Tax Confor-mity for Corporate Income: An Introduction to theIssues,’’ in Tax Policy and the Economy No. 19, edited byJames M. Poterba, National Bureau of Economic Re-search, Cambridge, Mass. (2005).

McGill, Gary A., and Edmund Outslay. ‘‘Did Enron PayTaxes?: Using Accounting Information to Decipher TaxStatus.’’ Tax Notes 96, No. 8 (Aug. 19, 2002): 1125-1136.

McGill, Gary, and Edmund Outslay. ‘‘Lost in Translation:Detecting Tax Shelter Activity in Financial State-ments.’’ National Tax Journal 57, No. 3 (September2004): 739-756.

Mills, Lillian. ‘‘Book-Tax Differences and Internal Rev-enue Service Adjustments.’’ Journal of Accounting Re-search 36, No. 2 (Autumn 1998): 343-356.

Mills, Lillian, and George Plesko. ‘‘Bridging the Gap: AProposal for More Informative Reconciling of Bookand Tax Income.’’ National Tax Journal 56, No. 4 (De-cember 2003): 865-893.

Mills, Lillian, Kaye Newberry, and William B. Trautman.‘‘Trends in Book-Tax Income and Balance Sheet Differ-ences.’’ Tax Notes 96, No. 8 (Aug. 19, 2002): 1109-1124

Plesko, George A. ‘‘Corporate Tax Avoidance and theProperties of Corporate Earnings.’’ National Tax Journal57, No. 3 (September 2004): 729-737.

Plesko, George A. ‘‘Reconciling Corporate Book and TaxNet Income, Tax Years 1996-1998.’’ Statistics of IncomeBulletin 21, No. 4 (Spring 2002): 1-16.

Plesko, George A., and Nina L. Shumofsky. ‘‘ReconcilingCorporate Book and Tax Net Income, Tax Years 1995-2001.’’ Data Release. Statistics of Income Bulletin 24, No.4 (Spring 2005): 103-108.

Talisman, Jonathan. ‘‘Corporate Tax Shelters and theCorporate Tax Base,’’ pp. 4-6, in ‘‘Penalty and InterestProvisions, Corporate Tax Shelters.’’ Testimony ofJonathan Talisman, Assistant Secretary (Tax Policy),U.S. Department of the Treasury, before the U.S.Senate, Committee on Finance, Washington, D.C.(Mar. 8, 2000).

U.S. Department of the Treasury. ‘‘Evidence of Growth inCorporate Tax Shelters.’’ The Problem of Corporate TaxShelters: Discussion, Analysis, and Legislative Proposals.Washington, D.C.: Government Printing Office (July1999): 31-33.

(Tables and Exhibit begin on the next page.)

COMMENTARY / SPECIAL REPORT

TAX NOTES, September 11, 2006 953

(C) T

ax Analysts 2006. A

ll rights reserved. Tax A

nalysts does not claim copyright in any public dom

ain or third party content.

Tabl

e1.

U.S

.C

orpo

rati

ons

Wit

hA

sset

sof

$10

Mill

ion

orM

ore

Pot

enti

ally

Subj

ect

orN

otSu

bjec

tto

2004

Sche

dule

M-3

Dol

lar

amou

nts

inm

illio

ns.T

able

amou

nts

may

not

add

due

toro

undi

ng.A

dvan

cefi

leda

ta.V

alue

sm

aydi

ffer

from

Fin

alfi

lean

dof

fici

alSO

IP

ublic

atio

n16

valu

es.

2004

Adv

ance

d(8

,14,

20)

Ret

urns

Tota

lAss

ets

Tax

Aft

erC

redi

tsTa

xN

etIn

com

eE

stim

ated

ICD

Wor

ldw

ide

Inco

me

(Par

t1

Ln

4)B

ook

Inco

me

(Par

tII

Ln

30A

)F

edTa

xE

xpen

se

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

All

42,1

2910

040

,137

,268

100

186,

297

100

635,

757

100

57,5

9610

060

4,46

210

054

1,65

810

020

0,17

310

0

Stat

us

2004

Dec

orla

ter

35,2

8684

33,8

84,1

6484

160,

647

8654

9,81

886

57,3

7510

060

4,32

210

054

1,60

610

020

0,09

310

0

Plac

ehol

der

100

02,

485,

878

69,

473

538

,019

60

00

00

00

0

Subt

otal

:Po

tent

ially

subj

ect

toM

-335

,386

8436

,370

,042

9017

0,12

091

587,

837

9257

,375

100

604,

322

100

541,

606

100

200,

093

100

2004

Nov

orea

rlie

r6,

742

163,

767,

227

916

,178

947

,919

822

10

140

053

080

0

a≥

$25B

orM

ore

All

183

027

,095

,197

6882

,678

4437

2,21

559

38,5

1167

360,

403

6033

5,86

462

91,6

3046

2004

Dec

orla

ter

154

022

,737

,395

5774

,626

4033

1,82

952

38,5

1167

360,

403

6033

5,86

462

91,6

3046

2004

Nov

orea

rlie

r10

02,

331,

876

62,

144

113

,082

20

00

00

00

0

Plac

ehol

der

190

2,02

5,92

55

5,90

83

27,3

054

00

00

00

00

b≥

$2.5

Bto

$25B

All

1,05

43

7,51

2,68

219

53,2

5929

167,

751

2614

,100

2415

1,02

025

133,

990

2557

,555

29

2004

Dec

orla

ter

882

26,

309,

401

1643

,088

2313

3,21

921

14,0

9024

150,

894

2513

3,79

025

57,5

2729

2004

Nov

orea

rlie

r11

20

768,

162

26,

827

422

,224

311

012

60

200

028

0

Plac

ehol

der

600

435,

119

13,

345

212

,308

20

00

00

00

0

c≥

$250

Mto

$2.5

BA

ll5,

248

123,

817,

733

1033

,053

1878

,940

124,

516

882

,971

1464

,525

1237

,307

19

2004

Dec

orla

ter

4,68

811

3,37

1,66

68

28,5

8615

70,5

6811

4,30

57

82,8

1714

64,3

7512

37,2

9619

2004

Nov

orea

rlie

r54

71

421,

495

14,

247

29,

808

221

00

154

014

90

110

Plac

ehol

der

140

24,5

720

220

0-1

,436

00

00

00

00

0

d≥

$10M

to$2

50M

All

35,6

4485

1,71

1,65

64

17,3

089

16,8

513

470

110

,067

27,

279

113

,681

7

2004

Dec

orla

ter

29,5

6370

1,46

5,70

24

14,3

468

14,2

032

470

110

,207

27,

576

113

,640

7

2004

Nov

orea

rlie

r6,

074

1424

5,69

31

2,96

12

2,80

50

00

-140

0-2

970

410

Plac

ehol

der

70

261

01

0-1

570

00

00

00

00

COMMENTARY / SPECIAL REPORT

954 TAX NOTES, September 11, 2006

(C) T

ax Analysts 2006. A

ll rights reserved. Tax A

nalysts does not claim copyright in any public dom

ain or third party content.

Tabl

e2.

U.S

.C

orpo

rati

ons

Pot

enti

ally

Subj

ect

to20

04Sc

hedu

leM

-3W

ith

Rec

onci

labl

eD

ata

Dol

lar

amou

nts

inm

illio

ns.T

able

amou

nts

may

not

add

due

toro

undi

ng.A

dvan

cefi

leda

ta.V

alue

sm

aydi

ffer

from

Fin

alfi

lean

dof

fici

alSO

IP

ublic

atio

n16

valu

es.

2004

Adv

ance

d(8

,14,

20)

Ret

urns

Tota

lAss

ets

Tax

Aft

erC

redi

tsTa

xN

etIn

com

eE

stim

ated

ICD

Wor

ldw

ide

Inco

me

(Par

tI

Ln

4)B

ook

Inco

me

(Par

tII

Ln

30A

)F

edTa

xE

xpen

se

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

2004

Dec

orla

ter

35,2

8610

033

,884

,164

9316

0,64

794

549,

818

9457

,375

100

604,

322

100

541,

606

100

200,

093

100

Plac

ehol

der

100

02,

485,

878

79,

473

638

,019

60

00

00

00

0

Pote

ntia

llysu

bjec

tto

M-3

35,3

8610

036

,370

,042

100

170,

120

100

587,

837

100

57,3

7510

060

4,32

210

054

1,60

610

020

0,09

310

0

M3

Dat

a

aL

30R

econ

cile

s30

,430

8632

,544

,249

8915

1,40

589

523,

015

8952

,698

9256

8,01

094

515,

421

9519

1,67

096

bL

30Pr

oble

ms

2,31

07

1,08

5,76

03

7,91

85

24,3

414

4,54

48

34,8

376

24,2

394

8,20

34

cL

28Pr

oble

ms

128

074

,463

040

70

1,05

60

133

01,

475

01,

946

022

00

dN

oI,

II2,

418

717

9,69

10

917

11,

406

00

00

00

00

0

a≥

$25B

orM

ore

All

154

022

,737

,395

6374

,626

4433

1,82

956

38,5

1167

360,

403

6033

5,86

462

91,6

3046

aL

30R

econ

cile

s15

00

22,3

89,6

1362

71,7

6842

321,

075

5538

,129

6635

0,84

058

329,

605

6187

,810

44

bL

30Pr

oble

ms

40

347,

782

12,

859

210

,754

238

21

9,56

42

6,25

91

3,82

02

b≥

$2.5

Bto

$25B

All

882

26,

309,

401

1743

,088

2513

3,21

923

14,0

9025

150,

894

2513

3,79

025

57,5

2729

aL

30R

econ

cile

s81

02

5,78

1,52

316

40,3

7424

126,

457

2210

,041

1813

7,46

323

124,

763

2354

,945

27

bL

30Pr

oble

ms

620

452,

925

12,

425

15,

769

13,

922

712

,255

27,

309

12,

377

1

cL

28Pr

oble

ms

50

41,9

110

251

088

70

126

01,

176

01,

718

020

60

dN

oI,

II4

033

,042

037

010

60

00

00

00

00

c≥

$250

Mto

$2.5

BA

ll4,

688

133,

371,

666

928

,586

1770

,568

124,

305

882

,817

1464

,375

1237

,296

19

aL

30R

econ

cile

s4,

303

123,

072,

159

826

,599

1664

,675

114,

093

772

,867

1255

,129

1035

,680

18

bL

30Pr

oble

ms

252

119

6,35

61

1,55

71

4,96

11

206

09,

699

29,

032

21,

608

1

cL

28Pr

oble

ms

310

28,2

730

109

015

70

60

251

021

50

80

dN

oI,

II10

20

74,8

790

321

077

50

00

00

00

00

d≥

$50

Mto

$250

MA

ll8,

822

251,

021,

378

39,

146

514

,635

233

41

12,2

072

10,7

292

9,02

15

aL

30R

econ

cile

s7,

943

2292

6,13

63

8,19

15

12,1

422

308

19,

515

29,

347

28,

840

4

bL

30Pr

oble

ms

517

157

,358

069

10

2,11

10

250

2,66

00

1,36

70

169

0

cL

28Pr

oble

ms

290

3,06

00

280

-40

00

310

140

120

dN

oI,

II33

31

34,8

240

235

038

60

00

00

00

0

e≥

$25

Mto

$50M

All

6,24

618

219,

588

12,

517

11,

230

010

80

-578

0-9

920

2,34

21

aL

30R

econ

cile

s5,

436

1519

1,02

51

2,22

71

824

010

30

-944

0-1

,006

02,

242

1

bL

30Pr

oble

ms

416

114

,997

017

00

319

05

035

50

70

103

0

cL

28Pr

oble

ms

160

520

06

017

00

011

07

0-4

0

dN

oI,

II37

91

13,0

450

113

069

00

00

00

00

0

f≥

$10

Mto

$25M

All

14,4

9441

224,

736

12,

683

2-1

,662

028

0-1

,421

0-2

,160

02,

278

1

aL

30R

econ

cile

s11

,789

3318

3,79

41

2,24

51

-2,1

580

240

-1,7

320

-2,4

170

2,15

31

bL

30Pr

oble

ms

1,05

83

16,3

420

216

042

70

40

304

026

40

125

0

cL

28Pr

oble

ms

470

699

013

00

00

06

0-8

0-1

0

dN

oI,

II1,

601

523

,901

021

00

690

00

00

00

00

COMMENTARY / SPECIAL REPORT

TAX NOTES, September 11, 2006 955

(C) T

ax Analysts 2006. A

ll rights reserved. Tax A

nalysts does not claim copyright in any public dom

ain or third party content.

Tabl

e3.

U.S

.C

orpo

rati

ons

Subj

ect

to20

04Sc

hedu

leM

-3W

ith

Rec

onci

labl

eD

ata

byP

rese

nce

of20

04O

ptio

nal

Col

umns

Aan

dD

Dat

aD

olla

ram

ount

sin

mill

ions

.Tab

leam

ount

sm

ayno

tad

ddu

eto

roun

ding

.Adv

ance

file

data

.Val

ues

may

diff

erfr

omF

inal

file

and

offi

cial

SOI

Pub

licat

ion

16va

lues

.

Pan

el1

of2

2004

Adv

ance

d(8

,14,

20)

Ret

urns

Pub

licTo

talA

sset

sTa

xA

fter

Cre

dits

Tax

Net

Inco

me

Est

imat

edIC

D

Wor

ldw

ide

Inco

me

(Par

tI

Ln

4)B

ook

Inco

me

(Par

tII

Ln

30A

)F

edTa

xE

xpen

se

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

Sum

Col

%

All

30,4

3010

03,

922

100

32,5

44,2

4910

015

1,40

510

052

3,01

510

052

,698

100

568,

010

100

515,

421

100

191,

670

100

A/D

Dat

a

A/D

Rec

onci

le15

,169

501,

803

4610

,448

,839

3256

,251

3716

4,44

131

17,1

3333

192,

238

3415

5,04

430

72,7

9638

A/D

Prob

lem

s3,

581

1228

27

1,96

2,36

56

9,78

36

35,8

667

1,56

63

42,6

058

38,1

637

11,4

236

A/D

Bla

nk11

,681

381,

837

4720

,133

,045

6285

,371

5632

2,70

862

33,9

9965

333,

167

5932

2,21

463

107,

451

56

a≥

$25B

orM

ore

All

150

011

83

22,3

89,6

1369

71,7

6847

321,

075

6138

,129

7235

0,84

062

329,

605

6487

,810

46

A/D

Rec

onci

le51

038

15,

830,

829

1822

,145

1577

,767

1511

,535

2210

1,85

418

74,9

8515

27,5

4214

A/D

Prob

lem

s13

09

01,

139,

450

44,

093

327

,518

574

61

29,1

565

25,2

095

4,48

52

A/D

Bla

nk86

071

215

,419

,335

4745

,529

3021

5,79

041

25,8

4949

219,

830

3922

9,41

145

55,7

8329

b≥

$2.5

Bto

$25B

All

810

349

713

5,78

1,52

318

40,3

7427

126,

457

2410

,041

1913

7,46

324

124,

763

2454

,945

29

A/D

Rec

onci

le35

31

207

52,

481,

116

815

,907

1151

,596

103,

155

648

,941

946

,171

922

,408

12

A/D

Prob

lem

s62

034

143

2,05

41

2,37

82

732

046

01

5,37

31

6,14

51

3,60

42

A/D

Bla

nk39

51

256

72,

868,

353

922

,089

1574

,130

146,

426

1283

,150

1572

,446

1428

,933

15

c≥

$250

Mto

$2.5

B

All

4,30

314

1,58

340

3,07

2,15

99

26,5

9918

64,6

7512

4,09

38

72,8

6713

55,1

2911

35,6

8019

A/D

Rec

onci

le2,

077

774

019

1,47

4,10

95

11,7

298

27,4

125

2,22

04

34,8

056

28,1

095

15,9

928

A/D

Prob

lem

s33

51

902

254,

884

12,

140

17,

073

127

51

8,20

11

6,47

71

2,31

01

A/D

Bla

nk1,

890

675

319

1,34

3,16

64

12,7

308

30,1

896

1,59

73

29,8

625

20,5

424

17,3

779

d≥

$50M

to$2

50M

All

7,94

326

1,10

028

926,

136

38,

191

512

,142

230

81

9,51

52

9,34

72

8,84

05

A/D

Rec

onci

le4,

075

1352

213

473,

625

14,

133

37,

741

119

80

5,72

21

6,03

31

4,51

02

A/D

Prob

lem

s77

53

782

86,8

570

668

039

00

40

465

045

10

597

0

A/D

Bla

nk3,

092

1050

113

365,

653

13,

389

24,

010

110

70

3,32

81

2,86

31

3,73

32

e≥

$25M

to$5

0M

All

5,43

618

302

819

1,02

51

2,22

71

824

010

30

-944

0-1

,006

02,

242

1

A/D

Rec

onci

le2,

792

914

94

98,0

310

1,16

31

669

013

081

80

890

1,18

31

A/D

Prob

lem

s64

12

271

22,1

830

204

023

90

780

-617

014

00

167

0

A/D

Bla

nk2,

003

712

63

70,8

110

859

1-8

30

120

-1,1

450

-1,2

350

892

0

f≥

$10

Mto

$25

M

All

11,7

8939

322

818

3,79

41

2,24

51

-2,1

580

240

-1,7

320

-2,4

170

2,15

31

A/D

Rec

onci

le5,

820

1914

74

91,1

300

1,17

21

-744

013

098

0-3

440

1,16

11

A/D

Prob

lem

s1,

754

645

126

,937

029

90

-86

03

027

0-2

600

259

0

A/D

Bla

nk4,

215

1413

03

65,7

270

775

1-1

,328

09

0-1

,858

0-1

,813

073

30

COMMENTARY / SPECIAL REPORT

956 TAX NOTES, September 11, 2006

(C) T

ax Analysts 2006. A

ll rights reserved. Tax A

nalysts does not claim copyright in any public dom

ain or third party content.

Tabl

e3.

U.S

.C

orpo

rati

ons

Subj

ect

to20

04Sc

hedu

leM

-3W

ith

Rec

onci

labl

eD

ata

byP

rese

nce

of20

04O

ptio

nal

Col

umns

Aan

dD

Dat

aD

olla

ram

ount

sin

mill

ions

.Tab

leam

ount

sm

ayno

tad

ddu

eto

roun

ding

.Adv

ance

file

data

.Val

ues

may

diff

erfr

omF

inal

file

and

offi

cial

SOI

Pub

licat

ion

16va

lues

.

Pan

el2

of2

2004

Adv

ance

d(8

,14,

20)

Pre

tax

Boo

kP

reta

xTe

mp

Dif

fP

reta

xP

erm

Dif

fTa

xIn

com

e(P

art

IIL

n30

D)

Tota

lP

reta

xD

iff

Neg

ativ

eP

reta

xTe

mp

Dif

fP

osit

ive

Pre

tax

Tem

pD

iff

Neg

ativ

eP

reta

xP

erm

Dif

fP

osit

ive

Pre

tax

Per

mD

iff

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

Sum

Col

%

All

707,

092

100

-81,

587

100

-50,

131

100

575,

374

100

-131

,718

100

-674

,451

100

592,

864

100

-327

,974

100

277,

843

100

A/D

Dat

a

A/D

Rec

onci

le22

7,84

032

-3,8

075

-42,

515

8518

1,51

932

-46,

322

35-2

20,7

0733

216,

900

37-1

17,6

5936

75,1

4427

A/D

Prob

lem

s49

,586

7-9

,773

12-2

,539

537

,273

6-1

2,31

29

-38,

324

628

,551

5-2

3,24

97

20,7

107

A/D

Bla

nk42

9,66

661

-68,

006

83-5

,077

1035

6,58

262

-73,

083

55-4

15,4

1962

347,

413

59-1

87,0

6757

181,

989

66

a≥

$25

Bor

Mor

e

All

417,

415

59-2

8,75

535

-29,

472

5935

9,18

862

-58,

227

44-3

52,8

6552

324,

111

55-1

82,7

5356

153,

281

55

A/D

Rec

onci

le10

2,52

814

23,1

58-2

8-3

6,39

273

89,2

9416

-13,

233

10-7

1,83

411

94,9

9316

-60,

564

1824

,172

9

A/D

Prob

lem

s29

,694

4-3

,497

42,

067

-428

,264

5-1

,430

1-1

2,69

52

9,19

82

-9,3

143

11,3

814

A/D

Bla

nk28

5,19

440

-48,

416

594,

853

-10

241,

631

42-4

3,56

333

-268

,336

4021

9,92

037

-112

,874

3411

7,72

742

b≥

$2.5

Bto

$25B

All

179,

708

25-3

4,34

042

-8,9

6118

136,

407

24-4

3,30

133

-183

,496

2714

9,15

625

-87,

404

2778

,443

28

A/D

Rec

onci

le68

,579

10-1

3,66

017

-172

054

,748

10-1

3,83

211

-76,

855

1163

,195

11-3

1,36

010

31,1

8911

A/D

Prob

lem

s9,

750

1-4

,370

5-4

,191

81,

189

0-8

,561

6-1

5,49

62

11,1

272

-10,

523

36,

332

2

A/D

Bla

nk10

1,37

914

-16,

311

20-4

,598

980

,470

14-2

0,90

916

-91,

145

1474

,835

13-4

5,52

114

40,9

2215

c≥

$250

Mto

$2.5

B

All

90,8

0913

-13,

212

16-9

,020

1868

,577

12-2

2,23

217

-93,

141

1479

,929

13-4

2,78

713

33,7

6712

A/D

Rec

onci

le44

,102

6-1

0,27

713

-4,2

198

29,6

055

-14,

497

11-4

8,78

07

38,5

036

-18,

756

614

,537

5

A/D

Prob

lem

s8,

787

1-1

,435

2-1

670

7,18

61

-1,6

021

-5,7

281

4,29

41

-2,3

151

2,14

81

A/D

Bla

nk37

,920

5-1

,500

2-4

,634

931

,786

6-6

,134

5-3

8,63

36

37,1

336

-21,

715

717

,082

6

d≥

$50

Mto

$250

M

All

18,1

873

-3,5

294

-2,2

144

12,4

442

-5,7

444

-30,

151

426

,622

4-1

1,12

43

8,91

03

A/D

Rec

onci

le10

,542

1-1

,594

2-1

,012

27,

936

1-2

,606

2-1

5,17

72

13,5

832

-4,5

861

3,57

51

A/D

Prob

lem

s1,

049

0-4

161

-239

039

40

-655

0-2

,694

02,

279

0-7

530

514

0

A/D

Bla

nk6,

596

1-1

,519

2-9

632

4,11

31

-2,4

832

-12,

280

210

,760

2-5

,784

24,

821

2

e≥

$25M

to$5

0M

All

1,23

60

-553

121

90

902

0-3

340

-7,4

661

6,91

21

-1,3

810

1,60

01

A/D

Rec

onci

le1,

273

0-5

761

-27

066

90

-604

0-3

,926

13,

350

1-8

540

827

0

A/D

Prob

lem

s30

70

570

-45

031

80

120

-1,0

230

1,08

10

-192

014

60

A/D

Bla

nk-3

430

-35

029

2-1

-85

025

80

-2,5

160

2,48

20

-334

062

70

f≥

$10M

to$2

5M

All

-263

0-1

,197

1-6

831

-2,1

440

-1,8

801

-7,3

311

6,13

51

-2,5

261

1,84

21

A/D

Rec

onci

le81

70

-857

1-6

931

-733

0-1

,550

1-4

,135

13,

278

1-1

,538

084

40

A/D

Prob

lem

s-1

0-1

140

370

-78

0-7

70

-687

057

30

-151

018

80

A/D

Bla

nk-1

,080

0-2

260

-27

0-1

,332

0-2

530

-2,5

090

2,28

40

-837

081

00

COMMENTARY / SPECIAL REPORT

TAX NOTES, September 11, 2006 957

(C) T

ax Analysts 2006. A

ll rights reserved. Tax A

nalysts does not claim copyright in any public dom

ain or third party content.

Tabl

e4.

U.S

.C

orpo

rati

ons

Subj

ect

to20

04Sc

hedu

leM

-3W

ith

Rec

onci

labl

eD

ata

byF

inan

cial

Stat

emen

tT

ype

Dol

lar

amou

nts

inm

illio

ns.T

able

amou

nts

may

not

add

due

toro

undi

ng.A

dvan

cefi

leda

ta.V

alue

sm

aydi

ffer

from

Fin

alfi

lean

dof

fici

alSO

IP

ublic

atio

n16

valu

es.

Pan

el1

of2

2004

Adv

ance

d(8

,14,

20)

Ret

urns

Pub

licTo

talA

sset

sTa

xA

fter

Cre

dits

Tax

Net

Inco

me

Est

imat

edIC

D

Wor

ldw

ide

Inco

me

(Par

tI

Ln

4)B

ook

Inco

me

(Par

tII

Ln

30A

)F

edTa

xE

xpen

se

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

Sum

Col

%

All

30,4

3010

03,

922

100

32,5

44,2

4910

015

1,40

510

052

3,01

510

052

,698

100

568,

010

100

515,

421

100

191,

670

100

Type

aSE

C10

-K4,

195

143,

673

9422

,287

,327

6810

5,53

370

394,

570

7548

,046

9144

0,91

278

414,

124

8014

0,25

673

bA

udite

d13

,544

4517

34

5,69

5,53

318

29,1

3919

85,2

1116

1,61

03

82,2

0914

87,7

8617

33,2

3417

cU

naud

ited

7,71

525

682

2,81

8,89

59

10,9

557

31,6

706

779

141

,150

7-5

580

11,9

446

dB

ooks

/Rec

4,97

616

80

1,74

2,49

35

5,77

84

11,5

632

2,26

34

3,73

81

14,0

683

6,23

63

a≥

$25B

orM

ore

All

150

011

83

22,3

89,6

1369

71,7

6847

321,

075

6138

,129

7235

0,84

062

329,

605

6487

,810

46

aSE

C10

-K11

60

**

16,7

80,0

7952

59,8

2540

275,

706

5337

,404

7128

8,07

551

297,

682

5874

,038

39

bA

udite

d19

0*

*3,

309,

556

108,

725

635

,138

721

60

32,0

856

43,6

378

9,91

15

cU

naud

ited

90

**

1,52

9,56

55

2,65

82

10,0

092

120

28,7

395

-11,

533

-22,

869

1

dB

ooks

/Rec

60

**

770,

413

256

00

221

049

71

1,94

10

-182

099

21

b≥

$2.5

Bto

$25B

All

810

349

713

5,78

1,52

318

40,3

7427

126,

457

2410

,041

1913

7,46

324

124,

763

2454

,945

29

aSE

C10

-K51

42

**

3,89

0,35

412

31,0

2820

95,5

9218

7,86

015

117,

813

2194

,891

1844

,734

23

bA

udite

d12

70

**

756,

786

24,

848

312

,551

264

61

12,9

072

12,3

102

5,78

73

cU

naud

ited

950

**

613,

440

22,

523

211

,821

243

51

4,93

41

5,96

21

3,34

12

dB

ooks

/Rec

750

**

520,

942

21,

976

16,

494

11,

100

21,

809

011

,599

21,

083

1

c≥

$250

Mto

$2.5

B

All

4,30

314

1,58

340

3,07

2,15

99

26,5

9918

64,6

7512

4,09

38

72,8

6713

55,1

2911

35,6

8019

aSE

C10

-K1,

745

61,

529

391,

442,

075

413

,250

927

,769

52,

701

539

,133

726

,052

519

,835

10

bA

udite

d1,

611

531

197

4,04

33

8,51

36

24,8

735

591

125

,110

421

,929

410

,071

5

cU

naud

ited

560

223

139

1,47

51

3,12

82

8,51

72

239

08,

907

26,

696

13,

167

2

dB

ooks

/Rec

386

10

026

4,56

61

1,70

91

3,51

61

563

1-2

830

452

02,

607

1

d≥

$50M

to$2

50M

All

7,94

326

1,10

028

926,

136

38,

191

512

,142

230

81

9,51

52

9,34

72

8,84

05

aSE

C10

-K1,

160

498

725

157,

550

01,

303

1-2

,471

077

0-2

,082

0-2

,346

01,

502

1

bA

udite

d4,

195

1490

248

1,96

61

4,77

13

12,3

482

151

012

,149

211

,167

25,

156

3

cU

naud

ited

1,56

85

201

172,

290

11,

332

190

50

690

-850

0-9

960

1,34

41

dB

ooks

/Rec

1,02

03

40

114,

330

078

51

1,36

00

120

298

01,

522

083

80

e≥

$25M

to$5

0M

All

5,43

618

302

819

1,02

51

2,22

71

824

010

30

-944

0-1

,006

02,

242

1

aSE

C10

-K31

71

266

711

,371

084

0-1

,267

00

0-1

,608

0-1

,358

096

0

bA

udite

d2,

693

925

195

,099

01,

260

11,

368

03

074

60

265

01,

321

1

cU

naud

ited

1,45

25

80

50,7

980

562

039

10

210

-208

0-3

850

478

0

dB

ooks

/Rec

974

33

033

,758

032

10

333

079

012

60

472

034

70

f≥

$10M

to$2

5M

All

11,7

8939

322

818

3,79

41

2,24

51

-2,1

580

240

-1,7

320

-2,4

170

2,15

31

aSE

C10

-K34

31

292

75,

898

043

0-7

580

40

-419

0-7

970

500

bA

udite

d4,

899

1622

178

,083

01,

022

1-1

,066

04

0-7

880

-1,5

220

988

1

cU

naud

ited

4,03

213

80

61,3

280

751

027

04

0-3

720

-302

074

50

dB

ooks

/Rec

2,51

58

00

38,4

850

428

0-3

600

120

-153

020

50

370

0

COMMENTARY / SPECIAL REPORT

958 TAX NOTES, September 11, 2006

(C) T

ax Analysts 2006. A

ll rights reserved. Tax A

nalysts does not claim copyright in any public dom

ain or third party content.

Tabl

e4.

U.S

.C

orpo

rati

ons

Subj

ect

to20

04Sc

hedu

leM

-3W

ith

Rec

onci

labl

eD

ata

byF

inan

cial

Stat

emen

tT

ype

Dol

lar

amou

nts

inm

illio

ns.T

able

amou

nts

may

not

add

due

toro

undi

ng.A

dvan

cefi

leda

ta.V

alue

sm

aydi

ffer

from

Fin

alfi

lean

dof

fici

alSO

IP

ublic

atio

n16

valu

es.

Pan

el2

of2

2004

Adv

ance

d(8

,14,

20)

Pre

tax

Boo

kP

reta

xTe

mp

Dif

fP

reta

xP

erm

Dif

fTa

xIn

com

e(P

art

IIL

n30

D)

Tota

lP

reta

xD

iff

Neg

ativ

eP

reta

xTe

mp

Dif

fP

osit

ive

Pre

tax

Tem

pD

iff

Neg

ativ

eP

reta

xP

erm

Dif

fP

osit

ive

Pre

tax

Per

mD

iff

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

Sum

Col

%

All

707,

092

100

-81,

587

100

-50,

131

100

575,

374

100

-131

,718

100

-674

,451

100

592,

864

100

-327

,974

100

277,

843

100

Type

aSE

C10

-K55

4,38

078

-77,

512

95-3

4,50

769

442,

362

77-1

12,0

1985

-440

,975

6536

3,46

361

-252

,166

7721

7,65

978

bA

udite

d12

1,02

017

-14,

870

18-1

9,38

039

86,7

7015

-34,

250

26-1

45,9

3222

131,

061

22-4

6,45

314

27,0

7310

cU

naud

ited

11,3

862

16,0

02-2

05,

038

-10

32,4

276

21,0

41-1

6-5

1,18

68

67,1

8911

-14,

617

419

,655

7

dB

ooks

/Rec

20,3

053

-5,2

076

-1,2

833

13,8

162

-6,4

895

-36,

357

531

,151

5-1

4,73

84

13,4

555

a≥

$25B

orM

ore

All

417,

415

59-2

8,75

535

-29,

472

5935

9,18

862

-58,

227

44-3

52,8

6552

324,

111

55-1

82,7

5356

153,

281

55

aSE

C10

-K37

1,72

053

-52,

045

64-6

,572

1331

3,10

354

-58,

618

45-2

55,6

4338

203,

598

34-1

53,3

1347

146,

741

53

bA

udite

d53

,549

81,

811

-2-2

0,00

640

35,3

546

-18,

195

14-7

9,22

112

81,0

3314

-23,

607

73,

601

1

cU

naud

ited

-8,6

64-1

21,9

80-2

7-3

,302

710

,014

218

,678

-14

-12,

852

234

,832

6-4

,304

11,

002

0

dB

ooks

/Rec

810

0-5

011

409

-171

80

-92

0-5

,149

14,

648

1-1

,528

01,

937

1

b≥

$2.5

Bto

$25B

All

179,

708

25-3

4,34

042

-8,9

6118

136,

407

24-4

3,30

133

-183

,496

2714

9,15

625

-87,

404

2778

,443

28

aSE

C10

-K13

9,62

620

-17,

290

21-1

8,97

138

103,

365

18-3

6,26

128

-129

,013

1911

1,72

219

-68,

372

2149

,401

18

bA

udite

d18

,097

3-8

,432

103,

532

-713

,197

2-4

,901

4-2

3,25

43

14,8

223

-6,1

402

9,67

23

cU

naud

ited

9,30

21

-5,6

387

8,58

8-1

712

,253

22,

950

-2-1

5,64

02

10,0

022

-3,3

921

11,9

804

dB

ooks

/Rec

12,6

822

-2,9

804

-2,1

104

7,59

31

-5,0

904

-15,

589

212

,609

2-9

,500

37,

390

3

c≥

$250

Mto

$2.5

B

All

90,8

0913

-13,

212

16-9

,020

1868

,577

12-2

2,23

217

-93,

141

1479

,929

13-4

2,78

713

33,7

6712

aSE

C10

-K45

,887

6-7

,507

9-8

,066

1630

,314

5-1

5,57

312

-48,

471

740

,964

7-2

6,27

88

18,2

117

bA

udite

d32

,000

5-5

,487

7-1

,083

225

,430

4-6

,570

5-2

4,34

14

18,8

543

-10,

322

39,

239

3

cU

naud

ited

9,86

31

-21

0-1

,088

28,

755

2-1

,108

1-1

1,29

32

11,2

732

-4,6

261

3,53

81

dB

ooks

/Rec

3,05

90

-197

01,

217

-24,

079

11,

019

-1-9

,036

18,

839

1-1

,561

02,

777

1

d≥

$50M

to$2

50M

All

18,1

873

-3,5

294

-2,2

144

12,4

442

-5,7

444

-30,

151

426

,622

4-1

1,12

43

8,91

03

aSE

C10

-K-8

430

-641

1-9

102

-2,3

940

-1,5

511

-6,7

881

6,14

71

-3,8

711

2,96

01

bA

udite

d16

,322

2-2

,601

3-1

,225

212

,496

2-3

,827

3-1

2,68

02

10,0

792

-4,3

881

3,16

21

cU

naud

ited

348

022

60

399

-197

30

624

0-7

,429

17,

655

1-1

,690

12,

089

1

dB

ooks

/Rec

2,36

00

-513

1-4

771

1,36

90

-990

1-3

,254

02,

741

0-1

,176

069

90

e≥

$25M

to$5

0M

All

1,23

60

-553

121

90

902

0-3

340

-7,4

661

6,91

21

-1,3

810

1,60

01

aSE

C10

-K-1

,262

0-1

80

100

-1,2

710

-90

-684

066

60

-178

018

80

bA

udite

d1,

586

0-2

450

200

1,36

10

-225

0-3

,456

13,

210

1-5

680

588

0

cU

naud

ited

940

100

303

-140

60

313

0-1

,740

01,

750

0-3

360

639

0

dB

ooks

/Rec

819

0-3

000

-114

040

60

-413

0-1

,586

01,

286

0-2

990

185

0

f≥

$10M

to$2

5M

All

-263

0-1

,197

1-6

831

-2,1

440

-1,8

801

-7,3

311

6,13

51

-2,5

261

1,84

21

aSE

C10

-K-7

470

-10

03

0-7

540

-70

-377

036

60

-154

015

70

bA

udite

d-5

330

840

-617

1-1

,066

0-5

330

-2,9

780

3,06

31

-1,4

290

811

0

cU

naud

ited

442

0-5

551

139

026

0-4

160

-2,2

320

1,67

80

-269

040

70

dB

ooks

/Rec

575

0-7

161

-207

0-3

490

-924

1-1

,744

01,

028

0-6

750

467

0

COMMENTARY / SPECIAL REPORT

TAX NOTES, September 11, 2006 959

(C) T

ax Analysts 2006. A

ll rights reserved. Tax A

nalysts does not claim copyright in any public dom

ain or third party content.

Tabl

e5.

U.S

.C

orpo

rati

ons

Subj

ect

to20

04Sc

hedu

leM

-3W

ith

Rec

onci

labl

eD

ata

byF

inan

cial

Stat

emen

tR

esta

tem

ents

Dol

lar

amou

nts

inm

illio

ns.T

able

amou

nts

may

not

add

due

toro

undi

ng.A

dvan

cefi

leda

ta.V

alue

sm

aydi

ffer

from

Fin

alfi

lean

dof

fici

alSO

IP

ublic

atio

n16

valu

es.

Pan

el1

of2

2004

Adv

ance

d(8

,14,

20)

Ret

urns

Pub

licTo

talA

sset

sTa

xA

fter

Cre

dits

Tax

Net

Inco

me

Est

imat

edIC

D

Wor

ldw

ide

Inco

me

(Par

tI

Ln

4)B

ook

Inco

me

(Par

tII

Ln

30A

)F

edTa

xE

xpen

se

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

Sum

Col

%

All

30,4

3010

03,

922

100

32,5

44,2

4910

015

1,40

510

052

3,01

510

052

,698

100

568,

010

100

515,

421

100

191,

670

100

Res

tate

No

Res

tate

men

t29

,120

963,

347

8526

,315

,984

8111

9,99

079

403,

194

7749

,045

9342

8,62

875

419,

030

8115

0,28

778

Res

tate

Prio

r5

Yrs

only

1,15

04

475

125,

724,

441

1829

,736

2011

3,87

822

2,97

66

127,

549

2287

,092

1736

,849

19

Cur

rent

Yea

rR

esta

te16

11

100

350

3,82

42

1,67

81

5,94

31

677

111

,833

29,

299

24,

535

2

a≥

$25B

orM

ore

All

150

011

83

22,3

89,6

1369

71,7

6847

321,

075

6138

,129

7235

0,84

062

329,

605

6487

,810

46

No

Res

tate

men

t11

10

842

17,5

23,0

6454

50,7

1333

214,

983

4136

,927

7022

5,51

240

248,

383

4860

,284

31

Res

tate

Prio

r5

Yrs

only

330

281

4,56

4,19

014

20,8

9214

103,

452

201,

202

211

6,51

021

75,1

2815

25,1

3313

Cur

rent

Yea

rR

esta

te6

06

030

2,35

91

163

02,

640

10

08,

817

26,

094

12,

392

1

b≥

$2.5

Bto

$25B

All

810

349

713

5,78

1,52

318

40,3

7427

126,

457

2410

,041

1913

7,46

324

124,

763

2454

,945

29

No

Res

tate

men

t69

82

401

104,

795,

149

1533

,233

2211

5,98

722

8,25

516

124,

989

2211

1,11

822

45,5

1824

Res

tate

Prio

r5

Yrs

only

100

082

283

9,85

93

6,19

34

8,76

12

1,13

32

10,9

252

11,9

222

8,06

24

Cur

rent

Yea

rR

esta

te13

013

014

6,51

50

949

11,

709

065

31

1,54

90

1,72

40

1,36

51

c≥

$250

Mto

$2.5

B

All

4,30

314

1,58

340

3,07

2,15

99

26,5

9918

64,6

7512

4,09

38

72,8

6713

55,1

2911

35,6

8019

No

Res

tate

men

t3,

898

131,

313

332,

751,

552

823

,906

1661

,419

123,

430

770

,828

1253

,744

1031

,915

17

Res

tate

Prio

r5

Yrs

only

344

122

16

272,

529

12,

177

11,

644

063

81

603

0-7

40

3,03

62

Cur

rent

Yea

rR

esta

te60

049

148

,077

051

60

1,61

20

250

1,43

60

1,45

90

729

0

d≥

$50M

to$2

50M

All

7,94

326

1,10

028

926,

136

38,

191

512

,142

230

81

9,51

52

9,34

72

8,84

05

No

Res

tate

men

t7,

592

2598

325

880,

915

37,

763

511

,889

230

61

9,55

52

8,80

52

8,24

34

Res

tate

Prio

r5

Yrs

only

307

110

13

39,3

890

384

024

80

20

-104

051

00

560

0

Cur

rent

Yea

rR

esta

te44

017

05,

831

044

05

00

064

033

036

0

e≥

$25M

to$5

0M

All

5,43

618

302

819

1,02

51

2,22

71

824

010

30

-944

0-1

,006

02,

242

1

No

Res

tate

men

t5,

276

1726

97

185,

426

12,

169

188

80

103

0-7

540

-810

02,

197

1

Res

tate

Prio

r5

Yrs

only

139

023

14,

833

055

0-4

30

00

-162

0-1

850

360

Cur

rent

Yea

rR

esta

te20

010

076

60

30

-20

00

0-2

80

-11

09

0

f≥

$10M

to$2

5M

All

11,7

8939

322

818

3,79

41

2,24

51

-2,1

580

240

-1,7

320

-2,4

170

2,15

31

No

Res

tate

men

t11

,545

3829

78

179,

878

12,

206

1-1

,971

024

0-1

,503

0-2

,210

02,

129

1

Res

tate

Prio

r5

Yrs

only

227

120

13,

640

037

0-1

830

00

-223

0-2

080

210

Cur

rent

Yea

rR

esta

te17

04

027

60

30

-30

00

-50

10

30

COMMENTARY / SPECIAL REPORT

960 TAX NOTES, September 11, 2006

(C) T

ax Analysts 2006. A

ll rights reserved. Tax A

nalysts does not claim copyright in any public dom

ain or third party content.

Tabl

e5.

U.S

.C

orpo

rati

ons

Subj

ect

to20

04Sc

hedu

leM

-3W

ith

Rec

onci

labl

eD

ata

byF

inan

cial

Stat

emen

tR

esta

tem

ents

Dol

lar

amou

nts

inm

illio

ns.T

able

amou

nts

may

not

add

due

toro

undi

ng.A

dvan

cefi

leda

ta.V

alue

sm

aydi

ffer

from

Fin

alfi

lean

dof

fici

alSO

IP

ublic

atio

n16

valu

es.

Pan

el2

of2

2004

Adv

ance

d(8

,14,

20)

Pre

tax

Boo

kP

reta

xTe

mp

Dif

fP

reta

xP

erm

Dif

fTa

xIn

com

e(P

art

IIL

n30

D)

Tota

lP

reta

xD

iff

Neg

ativ

eP

reta

xTe

mp

Dif

fP

osit

ive

Pre

tax

Tem

pD

iff

Neg

ativ

eP

reta

xP

erm

Dif

fP

osit

ive

Pre

tax

Per

mD

iff

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

Sum

Col

%

All

707,

092

100

-81,

587

100

-50,

131

100

575,

374

100

-131

,718

100

-674

,451

100

592,

864

100

-327

,974

100

277,

843

100

Res

tate

No

Res

tate

men

t56

9,31

681

-77,

226

95-4

0,17

680

451,

914

79-1

17,4

0289

-522

,357

7744

5,13

175

-264

,042

8122

3,86

581

Res

tate

Prio

r5

Yrs

only

123,

941

184,

069

-5-1

1,17

022

116,

841

20-7

,100

5-1

33,1

4120

137,

210

23-5

7,36

817

46,1

9817

Cur

rent

Yea

rR

esta

te13

,834

2-8

,430

101,

215

-26,

619

1-7

,215

5-1

8,95

33

10,5

232

-6,5

642

7,78

03

a≥

$25B

orM

ore

All

417,

415

59-2

8,75

535

-29,

472

5935

9,18

862

-58,

227

44-3

52,8

6552

324,

111

55-1

82,7

5356

153,

281

55

No

Res

tate

men

t30

8,66

844

-35,

790

44-2

0,98

442

251,

894

44-5

6,77

443

-267

,915

4023

2,12

539

-140

,084

4311

9,10

143

Res

tate

Prio

r5

Yrs

only

100,

261

1414

,140

-17

-9,7

4719

104,

654

184,

393

-3-7

2,60

411

86,7

4315

-40,

351

1230

,604

11

Cur

rent

Yea

rR

esta

te8,

486

1-7

,105

91,

258

-32,

640

0-5

,846

4-1

2,34

72

5,24

21

-2,3

171

3,57

61

b≥

$2.5

Bto

$25B

All

179,

708

25-3

4,34

042

-8,9

6118

136,

407

24-4

3,30

133

-183

,496

2714

9,15

625

-87,

404

2778

,443

28

No

Res

tate

men

t15

6,63

522

-24,

386

30-8

,098

1612

4,15

122

-32,

485

25-1

35,7

2420

111,

338

19-7

2,38

722

64,2

8923

Res

tate

Prio

r5

Yrs

only

19,9

843

-9,0

4211

-1,0

482

9,89

42

-10,

090

8-4

3,14

56

34,1

046

-11,

837

410

,789

4

Cur

rent

Yea

rR

esta

te3,

089

0-9

121

185

02,

362

0-7

271

-4,6

271

3,71

51

-3,1

801

3,36

51

c≥

$250

Mto

$2.5

B

All

90,8

0913

-13,

212

16-9

,020

1868

,577

12-2

2,23

217

-93,

141

1479

,929

13-4

2,78

713

33,7

6712

No

Res

tate

men

t85

,659

12-1

2,20

215

-8,7

8418

64,6

7411

-20,

986

16-7

6,90

311

64,7

0111

-37,

495

1128

,711

10

Res

tate

Prio

r5

Yrs

only

2,96

20

-567

1-1

280

2,26

70

-695

1-1

4,56

22

13,9

952

-4,4

021

4,27

42

Cur

rent

Yea

rR

esta

te2,

187

0-4

431

-108

01,

636

0-5

510

-1,6

760

1,23

30

-890

078

10

d≥

$50M

to$2

50M

All

18,1

873

-3,5

294

-2,2

144

12,4

442

-5,7

444

-30,

151

426

,622

4-1

1,12

43

8,91

03

No

Res

tate

men

t17

,048

2-3

,034

4-1

,827

412

,187

2-4

,861

4-2

7,43

84

24,4

044

-10,

262

38,

435

3

Res

tate

Prio

r5

Yrs

only

1,07

10

-530

1-2

881

252

0-8

191

-2,4

420

1,91

20

-709

042

10

Cur

rent

Yea

rR

esta

te69

035

0-9

90

50

-64

0-2

700

306

0-1

530

540

e≥

$25M

to$5

0M

All

1,23

60

-553

121

90

902

0-3

340

-7,4

661

6,91

21

-1,3

810

1,60

01

No

Res

tate

men

t1,

387

0-6

221

201

096

60

-421

0-7

,200

16,

578

1-1

,322

01,

523

1

Res

tate

Prio

r5

Yrs

only

-149

068

038

0-4

30

106

0-2

490

317

0-3

70

740

Cur

rent

Yea

rR

esta

te-2

01

0-2

00

-21

0-1

90

-17

017

0-2

20

20

f≥

$10M

to$2

5M

All

-263

0-1

,197

1-6

831

-2,1

440

-1,8

801

-7,3

311

6,13

51

-2,5

261

1,84

21

No

Res

tate

men

t-8

10

-1,1

911

-685

1-1

,957

0-1

,877

1-7

,177

15,

986

1-2

,491

11,

805

1

Res

tate

Prio

r5

Yrs

only

-187

00

03

0-1

830

40

-138

013

90

-32

036

0

Cur

rent

Yea

rR

esta

te4

0-6

0-1

0-3

0-7

0-1

60

100

-30

10

COMMENTARY / SPECIAL REPORT

TAX NOTES, September 11, 2006 961

(C) T

ax Analysts 2006. A

ll rights reserved. Tax A

nalysts does not claim copyright in any public dom

ain or third party content.

Tabl

e6.

U.S

.C

orpo

rati

ons

Subj

ect

to20

04Sc

hedu

leM

-3W

ith

Rec

onci

labl

eD

ata

byIn

dust

ryD

olla

ram

ount

sin

mill

ions

.Tab

leam

ount

sm

ayno

tad

ddu

eto

roun

ding

.Adv

ance

file

data

.Val

ues

may

diff

erfr

omF

inal

file

and

offi

cial

SOI

Pub

licat

ion

16va

lues

.

Pan

el1

of2

2004

Adv

ance

d(8

,14,

20)

Ret

urns

Pub

licTo

talA

sset

sTa

xA

fter

Cre

dits

Tax

Net

Inco

me

Est

imat

edIC

D

Wor

ldw

ide

Inco

me

(Par

tI

Ln

4)B

ook

Inco

me

(Par

tII

Ln

30A

)F

edTa

xE

xpen

se

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

Sum

Col

%A

ll30

,430

100

3,92

210

032

,544

,249

100

151,

405

100

523,

015

100

52,6

9810

056

8,01

010

051

5,42

110

019

1,67

010

0

Indu

stry

a.M

anuf

actu

ring

6,35

121

1,09

528

7,26

9,59

122

48,6

1532

232,

670

4411

,475

2225

5,82

845

282,

629

5560

,319

31

b.Fi

nanc

e7,

882

2686

122

7,32

1,84

422

21,4

8814

58,7

4011

2,47

65

61,6

2011

47,9

319

25,3

6713

c.In

form

atio

n1,

772

637

29

1,90

0,42

06

8,93

76

10,2

062

13,6

2826

-3,9

80-1

-3,5

44-1

11,0

256

d.U

tiliti

es/T

rans

p.97

63

174

41,

574,

761

56,

600

44,

658

12,

706

544

,940

82,

006

010

,861

6

e.A

llO

ther

13,4

5044

1,41

836

14,4

77,6

3344

65,7

6443

216,

741

4122

,414

4320

9,60

237

186,

399

3684

,097

44

a≥

$25B

orM

ore

All

150

011

83

22,3

89,6

1369

71,7

6847

321,

075

6138

,129

7235

0,84

062

329,

605

6487

,810

46

a.M

anuf

actu

ring

380

301

4,80

3,03

815

26,0

1817

162,

728

313,

913

717

0,16

630

216,

311

4226

,270

14

b.Fi

nanc

e30

015

05,

057,

784

169,

219

636

,173

772

81

36,9

227

27,7

295

11,2

736

c.In

form

atio

n15

0*

*1,

150,

614

43,

740

212

,429

213

,298

25-2

,331

0-2

,702

-14,

727

2

d.U

tiliti

es/T

rans

p.19

0*

*80

0,19

92

2,96

52

3,68

71

1,43

63

36,6

606

-446

06,

148

3

e.A

llO

ther

480

421

10,5

77,9

7833

29,8

2620

106,

058

2018

,754

3610

9,42

319

88,7

1217

39,3

9121

b≥

$2.5

Bto

$25B

All

810

349

713

5,78

1,52

318

40,3

7427

126,

457

2410

,041

1913

7,46

324

124,

763

2454

,945

29

a.M

anuf

actu

ring

214

113

84

1,50

5,11

15

13,0

449

50,7

3710

5,43

810

66,9

1612

54,1

8411

21,1

7311

b.Fi

nanc

e18

31

682

1,22

7,56

34

5,10

53

13,6

853

1,10

52

12,7

382

12,6

662

6,65

23

c.In

form

atio

n62

0*

*47

3,96

01

3,22

32

3,81

21

590

499

03,

012

13,

548

2

d.U

tiliti

es/T

rans

p.67

0*

*60

1,39

82

2,06

61

-793

01,

205

23,

255

1-6

010

2,41

41

e.A

llO

ther

284

119

05

1,97

3,49

16

16,9

3511

59,0

1611

2,23

54

54,0

5510

55,5

0211

21,1

5811

c≥

$250

Mto

$2.5

B

All

4,30

314

1,58

340

3,07

2,15

99

26,5

9918

64,6

7512

4,09

38

72,8

6713

55,1

2911

35,6

8019

a.M

anuf

actu

ring

921

338

710

691,

658

26,

107

417

,587

31,

985

418

,975

312

,751

28,

983

5

b.Fi

nanc

e99

63

270

768

9,70

72

4,67

73

10,2

932

523

114

,480

39,

692

25,

330

3

c.In

form

atio

n25

21

136

320

4,93

91

1,33

21

-4,4

79-1

265

1-1

,021

0-2

,793

-12,

180

1

d.U

tiliti

es/T

rans

p.15

61

702

137,

026

01,

129

11,

073

065

03,

845

12,

155

01,

729

1

e.A

llO

ther

1,97

87

721

181,

348,

829

413

,355

940

,201

81,

254

236

,588

633

,324

617

,458

9

d≥

$50M

to$2

50M

All

7,94

326

1,10

028

926,

136

38,

191

512

,142

230

81

9,51

52

9,34

72

8,84

05

a.M

anuf

actu

ring

1,66

35

348

919

1,61

11

2,37

82

2,93

01

119

01,

487

094

80

2,77

61

b.Fi

nanc

e2,

139

731

98

247,

127

11,

537

11,

123

035

058

40

848

01,

249

1

c.In

form

atio

n41

51

113

348

,131

036

50

-646

00

0-7

90

-71

030

60

d.U

tiliti

es/T

rans

p.21

41

221

24,4

700

280

050

70

00

739

066

00

381

0

e.A

llO

ther

3,51

212

299

841

4,79

61

3,63

12

8,22

82

154

06,

784

16,

963

14,

129

2

e≥

$25M

to$5

0M

All

5,43

618

302

819

1,02

51

2,22

71

824

010

30

-944

0-1

,006

02,

242

1

a.M

anuf

actu

ring

1,14

14

922

40,3

100

593

037

015

0-1

780

-266

060

90

b.Fi

nanc

e1,

508

597

252

,920

043

30

-768

078

0-2

,209

0-1

,728

041

00

c.In

form

atio

n33

61

301

11,7

080

140

0-1

080

00

-103

0-1

040

155

0

d.U

tiliti

es/T

rans

p.17

31

60

6,18

00

890

123

00

011

80

173

010

80

e.A

llO

ther

2,27

77

772

79,9

080

972

11,

540

09

01,

428

092

00

961

1

f≥

$10M

to$2

5M

All

11,7

8939

322

818

3,79

41

2,24

51

-2,1

580

240

-1,7

320

-2,4

170

2,15

31

a.M

anuf

actu

ring

2,37

38

102

337

,863

047

60

-1,3

500

40

-1,5

380

-1,2

980

509

0

b.Fi

nanc

e3,

025

1093

246

,742

051

70

-1,7

660

80

-894

0-1

,276

045

40

c.In

form

atio

n69

32

341

11,0

690

136

0-8

010

50

-946

0-8

870

109

0

d.U

tiliti

es/T

rans

p.34

71

40

5,48

90

710

620

00

323

065

082

0

e.A

llO

ther

5,35

118

892

82,6

320

1,04

51

1,69

80

70

1,32

40

979

01,

000

1

COMMENTARY / SPECIAL REPORT

962 TAX NOTES, September 11, 2006

(C) T

ax Analysts 2006. A

ll rights reserved. Tax A

nalysts does not claim copyright in any public dom

ain or third party content.

Tabl

e6.

U.S

.C

orpo

rati

ons

Subj

ect

to20

04Sc

hedu

leM

-3W

ith

Rec

onci

labl

eD

ata

byIn

dust

ryD

olla

ram

ount

sin

mill

ions

.Tab

leam

ount

sm

ayno

tad

ddu

eto

roun

ding

.Adv

ance

file

data

.Val

ues

may

diff

erfr

omF

inal

file

and

offi

cial

SOI

Pub

licat

ion

16va

lues

.

Pan

el2

of2

2004

Adv

ance

d(8

,14,

20)

Pre

tax

Boo

kP

reta

xTe

mp

Dif

fP

reta

xP

erm

Dif

fTa

xIn

com

e(P

art

IIL

n30

D)

Tota

lP

reta

xD

iff

Neg

ativ

eP

reta

xTe

mp

Dif

fP

osit

ive

Pre

tax

Tem

pD

iff

Neg

ativ

eP

reta

xP

erm

Dif

fP

osit

ive

Pre

tax

Per

mD

iff

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

Sum

Col

%Su

mC

ol%

Sum

Col

%A

ll70

7,09

210

0-8

1,58

710

0-5

0,13

110

057

5,37

410

0-1

31,7

1810

0-6

74,4

5110

059

2,86

410

0-3

27,9

7410

027

7,84

310

0

Indu

stry

a.M

anuf

actu

ring

342,

948

49-2

9,09

336

-69,

716

139

244,

139

42-9

8,81

075

-249

,879

3722

0,78

537

-187

,704

5711

7,98

742

b.Fi

nanc

e73

,298

10-4

,897

6-7

,371

1561

,031

11-1

2,26

79

-71,

979

1167

,082

11-2

6,94

68

19,5

757

c.In

form

atio

n7,

481

1-4

,531

620

,879

-42

23,8

294

16,3

49-1

2-7

9,46

712

74,9

3613

-26,

549

847

,428

17

d.U

tiliti

es/T

rans

p.12

,868

2-3

,093

4-2

,415

57,

359

1-5

,508

4-7

7,03

811

73,9

4512

-19,

804

617

,389

6

e.A

llO

ther

270,

496

38-3

9,97

349

8,49

2-1

723

9,01

642

-31,

481

24-1

96,0

8829

156,

115

26-6

6,97

120

75,4

6427

a≥

$25

Bor

Mor

e

All

417,

415

59-2

8,75

535

-29,

472

5935

9,18

862

-58,

227

44-3

52,8

6552

324,

111

55-1

82,7

5356

153,

281

55

a.M

anuf

actu

ring

242,

581

34-1

8,79

723

-57,

143

114

166,

641

29-7

5,94

058

-158

,593

2413

9,79

524

-125

,719

3868

,576

25

b.Fi

nanc

e39

,003

61,

011

-1-3

,121

636

,893

6-2

,109

2-2

7,70

54

28,7

175

-10,

004

36,

883

2

c.In

form

atio

n2,

026

0-2

,676

326

,377

-53

25,7

274

23,7

01-1

8-3

8,54

36

35,8

666

-7,8

742

34,2

5112

d.U

tiliti

es/T

rans

p.5,

703

14,

324

-5-4

,903

105,

123

1-5

790

-38,

872

643

,195

7-9

,515

34,

612

2

e.A

llO

ther

128,

103

18-1

2,61

615

9,31

7-1

912

4,80

422

-3,2

993

-89,

153

1376

,537

13-2

9,64

09

38,9

5814

b≥

$2.5

Bto

$25

B

All

179,

708

25-3

4,34

042

-8,9

6118

136,

407

24-4

3,30

133

-183

,496

2714

9,15

625

-87,

404

2778

,443

28

a.M

anuf

actu

ring

75,3

5711

-8,9

8611

-10,

196

2056

,175

10-1

9,18

215

-53,

775

844

,789

8-4

0,95

412

30,7

5811

b.Fi

nanc

e19

,318

3-3

,002

4-1

,527

314

,788

3-4

,529

3-1

9,43

63

16,4

343

-7,6

632

6,13

62

c.In

form

atio

n6,

560

1-1

,730

2-9

622

3,86

81

-2,6

922

-24,

585

422

,855

4-1

0,19

53

9,23

33

d.U

tiliti

es/T

rans

p.1,

813

0-3

,757

52,

352

-540

80

-1,4

051

-27,

041

423

,284

4-8

,908

311

,260

4

e.A

llO

ther

76,6

6011

-16,

865

211,

372

-361

,167

11-1

5,49

312

-58,

659

941

,794

7-1

9,68

46

21,0

578

c≥

$250

Mto

$2.5

B

All

90,8

0913

-13,

212

16-9

,020

1868

,577

12-2

2,23

217

-93,

141

1479

,929

13-4

2,78

713

33,7

6712

a.M

anuf

actu

ring

21,7

343

-993

1-1

,165

219

,576

3-2

,158

2-2

5,70

34

24,7

114

-16,

041

514

,876

5

b.Fi

nanc

e15

,022

2-2

,691

3-1

,673

310

,658

2-4

,364

3-1

4,89

12

12,2

002

-5,5

202

3,84

71

c.In

form

atio

n-6

130

269

0-3

,870

8-4

,214

-1-3

,602

3-1

1,55

62

11,8

252

-6,7

442

2,87

31

d.U

tiliti

es/T

rans

p.3,

884

1-2

,859

411

30

1,13

80

-2,7

462

-9,1

541

6,29

51

-1,1

490

1,26

20

e.A

llO

ther

50,7

827

-6,9

389

-2,4

245

41,4

207

-9,3

627

-31,

836

524

,898

4-1

3,33

24

10,9

094

d≥

$50

Mto

$250

M

All

18,1

873

-3,5

294

-2,2

144

12,4

442

-5,7

444

-30,

151

426

,622

4-1

1,12

43

8,91

03

a.M

anuf

actu

ring

3,72

31

500

-724

13,

049

1-6

741

-8,3

271

8,37

81

-3,8

241

3,10

01

b.Fi

nanc

e2,

097

0-2

940

-650

11,

152

0-9

441

-5,6

391

5,34

51

-2,2

661

1,61

51

c.In

form

atio

n23

50

-115

0-7

672

-647

0-8

821

-3,5

871

3,47

21

-1,5

090

742

0

d.U

tiliti

es/T

rans

p.1,

040

0-4

961

-37

050

70

-533

0-1

,305

080

90

-176

013

90

e.A

llO

ther

11,0

922

-2,6

743

-35

08,

382

1-2

,710

2-1

1,29

32

8,61

91

-3,3

501

3,31

51

e≥

$25

Mto

$50

M

All

1,23

60

-553

121

90

902

0-3

340

-7,4

661

6,91

21

-1,3

810

1,60

01

a.M

anuf

actu

ring

343

0-2

280

-68

047

0-2

960

-1,8

610

1,63

20

-422

035

40

b.Fi

nanc

e-1

,318

036

40

255

-1-6

990

619

0-2

,056

02,

421

0-2

790

534

0

c.In

form

atio

n50

0-2

180

600

-107

0-1

580

-620

040

20

-106

016

60

d.U

tiliti

es/T

rans

p.28

10

-190

030

012

10

-160

0-4

180

228

0-3

10

610

e.A

llO

ther

1,88

10

-281

0-5

80

1,54

10

-339

0-2

,510

02,

229

0-5

420

484

0

f≥

$10

Mto

$25

M

All

-263

0-1

,197

1-6

831

-2,1

440

-1,8

801

-7,3

311

6,13

51

-2,5

261

1,84

21

a.M

anuf

actu

ring

-789

0-1

400

-420

1-1

,349

0-5

600

-1,6

200

1,48

00

-743

032

30

b.Fi

nanc

e-8

220

-286

0-6

541

-1,7

620

-939

1-2

,252

01,

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00

c.In

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atio

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d.U

tiliti

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rans

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ther

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039

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220

742

0

COMMENTARY / SPECIAL REPORT

TAX NOTES, September 11, 2006 963

(C) T

ax Analysts 2006. A

ll rights reserved. Tax A

nalysts does not claim copyright in any public dom

ain or third party content.

Tabl

e7.

Agg

rega

te20

04Sc

hedu

leM

-3D

ata

for

U.S

.C

orpo

rati

ons

Wit

hR

econ

cila

ble

Dat

aD

olla

ram

ount

sin

mill

ions

.Tab

leam

ount

sm

ayno

tad

ddu

eto

roun

ding

.Adv

ance

file

data

.Val

ues

may

diff

erfr

omF

inal

file

and

offi

cial

SOI

Pub

licat

ion

16va

lues

.

Pan

el1

of3

Pop

ulat

ion

Ove

rvie

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Ret

urns

30,4

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Tota

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32,5

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Tax

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Net

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me

523,

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8

Est

imat

edIC

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Tax

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ion

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736

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9A

djus

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10O

ther

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nter

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line

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ly(B

ooks

and

Rec

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)4,

734

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111.

526

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BT

OTA

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516,

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le.

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etin

com

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rin

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atem

ent

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clud

ible

corp

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ions

30,4

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5,42

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me

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cebe

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ral

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port

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SOI

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%

COMMENTARY / SPECIAL REPORT

964 TAX NOTES, September 11, 2006

(C) T

ax Analysts 2006. A

ll rights reserved. Tax A

nalysts does not claim copyright in any public dom

ain or third party content.

Tabl

e7.

Agg

rega

te20

04Sc

hedu

leM

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ata

for

U.S

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rati

ons

Wit

hR

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cila

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data

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cial

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licat

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me

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uity

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ign

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orat

ions

881

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>>

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Per

cent

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4%39

.3%

COMMENTARY / SPECIAL REPORT

TAX NOTES, September 11, 2006 965

(C) T

ax Analysts 2006. A

ll rights reserved. Tax A

nalysts does not claim copyright in any public dom

ain or third party content.

Tabl

e7.

Agg

rega

te20

04Sc

hedu

leM

-3D

ata

for

U.S

.C

orpo

rati

ons

Wit

hR

econ

cila

ble

Dat

aD

olla

ram

ount

sin

mill

ions

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ount

sm

ayno

tad

ddu

eto

roun

ding

.Adv

ance

file

data

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ues

may

diff

erfr

omF

inal

file

and

offi

cial

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licat

ion

16va

lues

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el3

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me

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9,70

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ate

and

loca

lde

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342

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7

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ther

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ty-b

ased

com

pens

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85.8

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63.9

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nes

and

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nitiv

eda

mag

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999.

00.

026

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14Pa

rach

ute

paym

ents

47-2

0.1

6.7

103.

6-5

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13.3

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112.

8

15C

ompe

nsat

ion

with

sect

ion

162(

m)

limita

tion

776

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460

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0.3

1,21

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onan

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ring

10,1

89-2

2,28

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505.

2-1

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7,56

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725.

410

,220

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4.2

17O

ther

post

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ent

bene

fits

7,47

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08.3

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406.

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786.

40.

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94,

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119.

63,

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hari

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26.5

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219

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852

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her

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191.

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nce

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458.

1

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rcha

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rsus

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84.4

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>>

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me

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258.

7-9

4,58

5.8

96,7

38.8

COMMENTARY / SPECIAL REPORT

966 TAX NOTES, September 11, 2006

(C) T

ax Analysts 2006. A

ll rights reserved. Tax A

nalysts does not claim copyright in any public dom

ain or third party content.

Tabl

e8.

Agg

rega

te20

04Sc

hedu

leM

-3D

ata

for

U.S

.C

orpo

rati

ons

Wit

hR

econ

cila

ble

Dat

a:SE

C10

-KF

inan

cial

Stat

emen

tD

olla

ram

ount

sin

mill

ions

.Tab

leam

ount

sm

ayno

tad

ddu

eto

roun

ding

.Adv

ance

file

data

.Val

ues

may

diff

erfr

omF

inal

file

and

offi

cial

SOI

Pub

licat

ion

16va

lues

.

Pan

el1

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Pop

ulat

ion

Ove

rvie

w

Ret

urns

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5

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Tax

Net

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me

394,

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1

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imat

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Tax

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786

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ther

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607

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191.

177

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46.3

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BT

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%

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etin

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me

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book

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me

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mpo

rary

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cebe

fore

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ral

tax

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nse

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ther

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ents

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**Ta

xne

tin

com

ere

port

edby

SOI

.39

4,57

0.1

71.2

%

COMMENTARY / SPECIAL REPORT

TAX NOTES, September 11, 2006 967

(C) T

ax Analysts 2006. A

ll rights reserved. Tax A

nalysts does not claim copyright in any public dom

ain or third party content.

Tabl

e8.

Agg

rega

te20

04Sc

hedu

leM

-3D

ata

for

U.S

.C

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rati

ons

Wit

hR

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cila

ble

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cial

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emen

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ram

ount

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mill

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.Tab

leam

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ayno

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eto

roun

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ance

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data

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may

diff

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omF

inal

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and

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cial

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licat

ion

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lues

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Pan

el2

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tII

INC

OM

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EM

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req

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AC

olB

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f%

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BN

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me

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ign

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332

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23.3

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ible

corp

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ions

164

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from

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rtne

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ps1,

481

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from

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ners

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261

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ory

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nad

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men

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line

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me

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5%39

.3%

COMMENTARY / SPECIAL REPORT

968 TAX NOTES, September 11, 2006

(C) T

ax Analysts 2006. A

ll rights reserved. Tax A

nalysts does not claim copyright in any public dom

ain or third party content.

Tabl

e8.

Agg

rega

te20

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hedu

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ata

for

U.S

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orpo

rati

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Wit

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cila

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file

data

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may

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file

and

offi

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licat

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7

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327

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hari

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333

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COMMENTARY / SPECIAL REPORT

TAX NOTES, September 11, 2006 969

(C) T

ax Analysts 2006. A

ll rights reserved. Tax A

nalysts does not claim copyright in any public dom

ain or third party content.

Tabl

e9.

Agg

rega

te20

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hedu

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ata

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COMMENTARY / SPECIAL REPORT

970 TAX NOTES, September 11, 2006

(C) T

ax Analysts 2006. A

ll rights reserved. Tax A

nalysts does not claim copyright in any public dom

ain or third party content.

Tabl

e9.

Agg

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xpen

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fore

Fede

ral

tax

expe

nse

..

..

.-1

9,12

7.3

-15.

8%-5

7,27

9.2

31,3

80.9

-7,2

32.0

14,0

02.9

29O

ther

item

sw

ithno

diff

eren

ces

7,84

959

2,04

0.9

..

592,

084.

8

**SU

BT

OTA

L.

52,6

30.6

-13,

502.

512

,542

.936

,783

.9

**A

mou

ntto

Rec

onci

le.

35,1

55.6

-101

.144

.849

,986

.4-5

6.3

-0.0

%-1

21.1

20.0

0.0

44.8

30R

econ

cilia

tion

tota

ls(c

ombi

nelin

es27

-29)

13,5

4487

,786

.2-1

3,60

3.5

12,5

87.6

86,7

70.3

>>

Rev

erse

fede

ral

inco

me

tax

expe

nse

.33

,234

.2-1

,266

.9-3

1,96

7.3

.

>>P

reta

xbo

okin

com

ean

dM

-3di

ffer

ence

s.

121,

020.

4-1

4,87

0.4

-19,

379.

786

,770

.3-3

4,25

0.1

-28.

3%-1

45,9

31.5

131,

061.

1-4

6,45

2.9

27,0

73.1

>>

Per

cent

ofP

reta

xbo

ok10

0.0%

-12.

3%-1

6.0%

71.7

%-2

8.3%

-120

.6%

108.

3%-3

8.4%

22.4

%

COMMENTARY / SPECIAL REPORT

TAX NOTES, September 11, 2006 971

(C) T

ax Analysts 2006. A

ll rights reserved. Tax A

nalysts does not claim copyright in any public dom

ain or third party content.

Tabl

e9.

Agg

rega

te20

04Sc

hedu

leM

-3D

ata

for

U.S

.C

orpo

rati

ons

Wit

hR

econ

cila

ble

Dat

a:A

udit

edF

inan

cial

Stat

emen

t(N

otSE

C10

-K)

Dol

lar

amou

nts

inm

illio

ns.T

able

amou

nts

may

not

add

due

toro

undi

ng.A

dvan

cefi

leda

ta.V

alue

sm

aydi

ffer

from

Fin

alfi

lean

dof

fici

alSO

IP

ublic

atio

n16

valu

es.

Pan

el3

of3

Par

tII

IE

XP

EN

SEIT

EM

S(s

ign

mat

ches

Par

tII

)F

req

Col

AC

olB

Col

CC

olD

Tot

Dif

f%

PT

BN

egB

Pos

BN

egC

Pos

C01

U.S

.cu

rren

tin

com

eta

xex

pens

e10

,022

-14,

757.

581

0.7

29,1

34.4

.29

,945

.124

.7%

-156

.896

7.5

-2,6

60.5

31,7

94.9

02U

.S.

defe

rred

inco

me

tax

expe

nse

5,15

0-3

,295

.645

6.2

2,83

3.0

.3,

289.

12.

7%-4

41.1

897.

3-3

,860

.76,

693.

7

03St

ate

and

loca

lcu

rren

tin

com

eta

xex

pens

e7,

613

-2,4

95.0

-105

.911

8.6

-2,3

86.0

12.7

0.0%

-820

.971

5.1

-232

.935

1.4

04St

ate

and

loca

lde

ferr

edin

com

eta

xex

pens

e2,

667

-306

.017

6.1

337.

2.

513.

30.

4%-3

48.2

524.

3-9

8.6

435.

8

05Fo

reig

ncu

rren

tin

com

eta

xex

pens

e(o

ther

than

WH

)45

5-3

80.7

34.3

1,51

5.6

-122

.51,

549.

91.

3%-1

1.6

45.9

-323

.21,

838.

8

06Fo

reig

nde

ferr

edin

com

eta

xex

pens

e70

41.2

6.9

-131

.2.

-124

.2-0

.1%

-12.

619

.5-1

44.2

13.0

07Fo

reig

nw

ithho

ldin

gta

xes

296

-63.

22.

369

.7-3

1.1

72.0

0.1%

-2.3

4.7

-8.0

77.7

08In

cent

ive

stoc

kop

tions

198

.57

.7-3

4.0

-62.

523

.70.

0%-4

6.3

104.

0-7

5.5

41.5

09N

onqu

alif

ied

stoc

kop

tion

s58

4-1

86.7

191.

1-9

45.6

-364

.1-7

54.5

-0.6

%-1

42.1

333.

2-9

80.1

34.4

10O

ther

equi

ty-b

ased

com

pens

atio

n41

0-2

17.0

-101

.9-4

12.5

-779

.1-5

14.4

-0.4

%-2

66.9

165.

0-4

55.6

43.1

11M

eals

and

ente

rtai

nmen

t11

,907

-1,9

03.8

11.4

1,30

4.9

-992

.81,

316.

21.

1%-0

.111

.5-1

.51,

306.

4

12Fi

nes

and

pena

lties

3,37

3-8

2.4

24.5

61.9

-8.5

86.4

0.1%

-0.4

24.9

-8.5

70.4

13Pu

nitiv

eda

mag

es23

-0.3

11.4

0.3

-5.0

11.7

0.0%

-5.0

16.5

0.0

0.3

14Pa

rach

ute

paym

ents

80.

0-0

.149

.3-0

.649

.20.

0%-0

.10.

00.

049

.3

15C

ompe

nsat

ion

with

sect

ion

162(

m)

limita

tion

81-7

91.8

0.8

8.7

-787

.59.

50.

0%-2

.12.

90.

08.

7

16P

ensi

onan

dpr

ofit

-sha

ring

4,68

4-5

,150

.4-1

,793

.7-2

1.2

-5,9

26.2

-1,8

14.9

-1.5

%-2

,908

.61,

114.

9-5

6.7

35.5

17O

ther

post

-ret

irem

ent

bene

fits

3,18

3-3

,484

.91,

132.

2-2

72.5

-2,9

79.5

859.

70.

7%-2

37.3

1,36

9.5

-278

.15.

6

18D

efer

red

com

pens

atio

n2,

677

-4,9

21.5

1,32

7.9

-3.6

-4,3

97.4

1,32

4.4

1.1%

-412

.11,

740.

0-5

4.2

50.6

19C

hari

tabl

eco

ntri

butio

nof

cash

and

tang

ible

prop

5,68

5-8

19.1

93.4

-104

.1-8

51.4

-10.

7-0

.0%

-22.

511

5.9

-116

.612

.6

20C

hari

tabl

eco

ntri

butio

nof

inta

ngib

lepr

oper

ty12

9-3

1.5

-2.7

-10.

9-3

0.6

-13.

6-0

.0%

-5.1

2.5

-12.

01.

0

21C

hari

tabl

eco

ntri

butio

nlim

itatio

n3,

649

.14

0.3

84.4

136.

022

4.7

0.2%

-10.

815

1.1

-0.3

84.7

22C

hari

tabl

eco

ntri

butio

nca

rryf

orw

ard

used

1,05

9.

-196

.2-7

2.3

-97.

4-2

68.4

-0.2

%-1

97.8

1.6

-72.

50.

2

23C

urre

ntac

q./r

eorg

.in

vest

men

tba

nkin

gfe

es38

-7.4

-49.

8-1

0.8

-19.

9-6

0.6

-0.1

%-5

2.9

3.1

-23.

812

.9

24C

urre

ntac

q./r

eorg

.le

gal/a

ccou

ntin

gfe

es17

2-4

1.2

-0.8

13.3

-25.

912

.50.

0%-1

6.7

15.8

-8.6

21.9

25C

urre

ntac

q./r

eorg

.ot

her

cost

s18

1-8

1.3

10.3

-314

.0-4

3.1

-303

.7-0

.3%

-40.

751

.0-3

61.9

47.9

26A

mor

tizat

ion/

impa

irm

ent

ofgo

odw

ill2,

271

-4,3

95.9

-1,1

86.7

4,24

6.9

-1,7

34.2

3,06

0.2

2.5%

-2,2

96.6

1,10

9.9

-79.

14,

326.

0

27A

mor

tizat

ion

ofac

q./r

eorg

.an

dst

artu

pco

sts

1,89

3-3

55.2

-304

.212

7.4

-523

.7-1

76.8

-0.1

%-5

63.5

259.

3-1

1.3

138.

6

28O

ther

amor

tiza

tion

orim

pair

men

tw

rite

-off

s5,

627

-6,2

66.0

3,10

5.2

146.

9-4

,675

.23,

252.

12.

7%-2

,846

.55,

951.

7-3

0.2

177.

0

29Se

c19

8en

viro

nmen

tal

rem

edia

tion

cost

s57

-17.

6-2

3.6

0.6

-42.

1-2

3.0

-0.0

%-3

7.3

13.8

0.0

0.6

30D

eple

tion

337

-909

.120

4.7

-354

.4-1

,095

.4-1

49.7

-0.1

%-4

29.9

634.

6-3

54.4

0.0

31D

epre

ciat

ion

12,5

05-2

4,41

1.8

-26,

874.

724

.1-3

9,61

2.7

-26,

850.

5-2

2.2%

-30,

069.

63,

194.

9-2

3.3

47.5

32B

adde

btex

pens

e8,

694

-3,9

29.9

-1,8

24.5

14.9

-3,5

36.8

-1,8

09.6

-1.5

%-4

,373

.02,

548.

5-4

8.0

62.9

33C

orpo

rate

owne

dlif

ein

sura

nce

prem

ium

s2,

829

-71.

0-3

1.8

62.5

-17.

130

.70.

0%-6

7.0

35.2

-81.

214

3.6

34Pu

rcha

seve

rsus

leas

e17

9-1

98.3

-110

.10.

1-2

16.9

-109

.9-0

.1%

-220

.411

0.3

0.0

0.1

35O

ther

expe

nse/

dedc

tnite

ms

with

diff

eren

ces

11,7

27-1

26,4

56.5

161.

51,

270.

1-1

25,0

70.9

1,43

1.6

1.2%

-10,

808.

210

,969

.7-3

,278

.94,

549.

1

**SU

BT

OTA

L.

-205

,987

.6-2

4,64

7.5

38,7

37.7

-196

,300

.014

,090

.211

.6%

-57,

873.

133

,225

.7-1

3,74

0.3

52,4

78.0

**A

mou

ntto

Rec

onci

le.

1,12

7.7

16.1

0.6

-216

.816

.70.

0%-3

.920

.0-1

2.9

13.5

36To

tal

expe

nse

item

s(c

ombi

nelin

es1-

35)

13,3

37-2

04,8

59.9

-24,

631.

438

,738

.3-1

96,5

16.8

14,1

07.0

11.7

%-5

7,87

7.1

33,2

45.7

-13,

753.

252

,491

.5

>>

Rev

erse

fede

ral

inco

me

tax

expe

nse

.18

,053

.1-1

,266

.9-3

1,96

7.3

.-3

3,23

4.2

-27.

5%59

7.9

-1,8

64.8

6,52

1.2

-38,

488.

6

>>

Tota

lex

pens

eite

ms

befo

reFe

dera

lta

xex

pens

e.

-186

,806

.7-2

5,89

8.3

6,77

1.0

-196

,516

.8-1

9,12

7.3

-15.

8%-5

7,27

9.2

31,3

80.9

-7,2

32.0

14,0

02.9

COMMENTARY / SPECIAL REPORT

972 TAX NOTES, September 11, 2006

(C) T

ax Analysts 2006. A

ll rights reserved. Tax A

nalysts does not claim copyright in any public dom

ain or third party content.

Tabl

e10

.Agg

rega

te20

04Sc

hedu

leM

-3D

ata

for

U.S

.C

orpo

rati

ons

Wit

hR

econ

cila

ble

Dat

a:C

olum

nsA

and

DR

econ

cile

Dol

lar

amou

nts

inm

illio

ns.T

able

amou

nts

may

not

add

due

toro

undi

ng.A

dvan

cefi

leda

ta.V

alue

sm

aydi

ffer

from

Fin

alfi

lean

dof

fici

alSO

IP

ublic

atio

n16

valu

es.

Pan

el1

of3

Pop

ulat

ion

Ove

rvie

w

Ret

urns

15,1

69

Tota

lAss

ets

10,4

48,8

39.2

Tax

Les

sC

redi

ts56

,250

.7

Tax

Net

Inco

me

164,

440.

6

Est

imat

edIC

D17

,133

.4

Oth

erSO

IA

djus

tmen

ts-5

5.2

Part

IIL

ine

30C

olA

181,

518.

8

Tax

Exe

mpt

Inte

rest

3,20

8.2

Par

tI

FIN

AN

CIA

LST

AT

EM

EN

TD

AT

AF

req

Inco

me

Neg

Pos

%B

ook

Inco

me

Neg

Pos

4W

orld

wid

eco

nsol

idat

edne

tin

com

e(l

oss)

12,2

2519

2,23

8.2

-57,

287.

124

9,52

5.3

124.

0%-3

6.9%

160.

9%

5In

com

e(lo

ss)

from

noni

nclu

dibl

efo

reig

nen

titie

s1,

724

-42,

455.

1-6

5,56

7.5

23,1

12.5

-27.

4%-4

2.3%

14.9

%

6In

com

e(lo

ss)

from

noni

nclu

dibl

eU

.S.

entit

ies

742

-12,

765.

2-3

1,35

6.1

18,5

91.0

-8.2

%-2

0.2%

12.0

%

7In

com

e(lo

ss)

ofot

her

incl

udib

leco

rpor

atio

ns19

2-4

7.6

-1,4

59.9

1,41

2.3

-0.0

%-0

.9%

0.9%

8A

djus

tco

nsol

idat

ion

elim

inat

ions

(bec

ause

oflin

es5-

7)80

325

,641

.6-6

,544

.532

,186

.116

.5%

-4.2

%20

.8%

9A

djus

tbo

okye

arto

tax

year

186

2,32

9.3

-277

.92,

607.

21.

5%-0

.2%

1.7%

10O

ther

adju

stm

ents

612

-17,

836.

6-5

1,37

5.5

33,5

38.9

-11.

5%-3

3.1%

21.6

%

**E

nter

edon

line

11on

ly(B

ooks

and

Rec

ords

)2,

920

8,27

1.2

-6,2

48.0

14,5

19.2

5.3%

-4.0

%9.

4%

**SU

BT

OTA

L.

155,

375.

910

0.2%

**A

mou

ntto

Rec

onci

le.

-331

.7-0

.2%

11N

etin

com

epe

rin

com

est

atem

ent

ofin

clib

leco

rpor

atio

ns15

,169

155,

044.

1-8

9,31

0.9

244,

355.

110

0.0%

%P

reta

xB

ook

Inco

me

Neg

Pos

**A

mou

ntto

Rec

onci

le.

0.0

0.0%

**N

etin

com

epe

rPa

rtII

Lin

e30

Col

umn

A.

155,

044.

268

.0%

**R

ever

seFe

dera

lta

xex

pens

e.

72,7

96.1

32.0

%

**Pr

etax

book

Inco

me

.22

7,84

0.3

100.

0%

**Te

mpo

rary

diff

eren

cebe

fore

Fede

ral

tax

expe

nse

.-3

,807

.4-2

20,7

07.5

216,

900.

1-1

.7%

-96.

9%95

.2%

**Pe

rman

ent

diff

eren

cebe

fore

Fede

ral

tax

expe

nse

.-4

2,51

4.5

-117

,658

.675

,144

.0-1

8.7%

-51.

6%33

.0%

**N

etta

xin

com

epe

rPa

rtII

Lin

e30

Col

umn

D.

181,

518.

879

.7%

**SO

Ire

mov

edIC

D.

-17,

133.

4-7

.5%

**O

ther

SOI

adju

stm

ents

.55

.20.

0%

**Ta

xne

tin

com

ere

port

edby

SOI

.16

4,44

0.6

72.2

%

COMMENTARY / SPECIAL REPORT

TAX NOTES, September 11, 2006 973

(C) T

ax Analysts 2006. A

ll rights reserved. Tax A

nalysts does not claim copyright in any public dom

ain or third party content.

Tabl

e10

.A

ggre

gate

2004

Sche

dule

M-3

Dat

afo

rU

.S.

Cor

pora

tion

sW

ith

Rec

onci

labl

eD

ata:

Col

umns

Aan

dD

Rec

onci

leD

olla

ram

ount

sin

mill

ions

.Tab

leam

ount

sm

ayno

tad

ddu

eto

roun

ding

.Adv

ance

file

data

.Val

ues

may

diff

erfr

omF

inal

file

and

offi

cial

SOI

Pub

licat

ion

16va

lues

.

Pan

el2

of3

Par

tII

INC

OM

EIT

EM

SF

req

Col

AC

olB

Col

CC

olD

Tot

Dif

f%

PT

BN

egB

Pos

BN

egC

Pos

C01

Inco

me

(los

s)fr

omeq

uity

met

hod

fore

ign

corp

orat

ions

404

4,10

6.2

-1,0

83.0

-2,8

72.4

.-3

,955

.4-1

.7%

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41.4

58.3

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22.4

750.

0

02G

ross

fore

ign

divi

dend

sno

tpr

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taxe

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822.

3-9

2.5

3,63

9.7

8,53

0.6

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8.7

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597.

9

03Su

bpar

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F,an

dsi

mila

rin

com

ein

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ions

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914.

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ctio

n78

gros

s-up

353

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1.0

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7.2

4,63

8.2

4,63

8.3

2.0%

0.0

401.

00.

04,

237.

2

05G

ross

fore

ign

dist

ribu

tions

prev

ious

lyta

xed

881,

024.

4-2

02.2

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35.2

-1,1

59.9

-0.5

%-2

09.5

7.3

-1,0

87.1

129.

3

06In

com

e(l

oss)

from

equi

tym

etho

dU

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corp

orat

ions

880

23,2

44.9

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46.5

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507.

8.

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254.

3-1

0.2%

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54.6

608.

1-2

5,24

6.4

3,73

8.6

07U

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divi

dend

sno

tel

imin

ated

inta

xco

nsol

idat

ion

4,03

524

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663.

1-1

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14,6

10.9

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251.

1-4

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302.

5-1

5,20

2.7

3,28

8.4

08M

inor

ityin

tere

stfo

rin

clud

ible

corp

orat

ions

287

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0.7

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1.6

0.1%

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569

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12.7

343.

4

09In

com

e(l

oss)

from

U.S

.pa

rtne

rshi

ps3,

408

15,5

71.4

7,89

6.3

1,68

2.2

25,0

49.8

9,57

8.5

4.2%

-6,6

68.7

14,5

65.0

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93.1

3,17

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10In

com

e(l

oss)

from

fore

ign

part

ners

hips

246

267.

41,

087.

4-4

7.4

1,41

0.2

1,04

0.0

0.5%

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550.

1-3

73.2

325.

9

11In

com

e(l

oss)

from

othe

rpa

ss-t

hrou

ghen

titie

s42

455

9.4

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71.4

6.0

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06.0

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65.4

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,828

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7.1

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710

2.7

12It

ems

rela

ting

tore

port

able

tran

sact

ions

177

2,16

0.0

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65.1

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93.5

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52.5

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58.6

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7

13In

tere

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com

e13

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986.

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3,14

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83.4

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260.

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4.3

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tal

accr

ual

toca

shad

just

men

t46

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51.0

176.

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311.

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edgi

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ansa

ctio

ns36

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69.6

63.8

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77.1

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48.3

1,57

8.7

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69.2

16M

ark-

to-m

arke

tin

com

e(l

oss)

396

7,79

5.0

-544

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9.1

-1,0

45.8

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86.5

1,14

1.6

-206

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7.1

17In

vent

ory

valu

atio

nad

just

men

ts6,

510

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24,8

07.5

4,99

9.1

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725.

62.

1%-6

,952

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03.4

629.

9

18Sa

leve

rsus

leas

e(f

orse

llers

and/

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s)15

73,

726.

810

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.513

.113

,903

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7%-2

13.2

10,9

81.7

0.0

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ctio

n48

1(a)

adju

stm

ents

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762.

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near

ned/

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rred

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nue

1,33

433

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96.6

198.

233

,648

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60.

0%-2

,774

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578.

1-1

0.4

208.

6

21In

com

ere

cogn

ition

from

long

-ter

mco

ntra

cts

196

8,97

4.1

70.8

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9,04

0.8

70.6

0.0%

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0.1

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0.1

22O

rigi

nal

issu

edi

scou

ntan

dot

her

impu

ted

inte

rest

163

106.

012

6.4

18.1

216.

414

4.4

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230

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Boo

kdi

spos

itio

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asse

tsot

her

than

inve

ntor

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114

19,9

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940.

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287.

95,

347.

1-5

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026.

9

23b

Gro

ssca

pita

lga

ins

Sch.

D,

excl

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584

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292.

819

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Gro

ssca

pita

llo

ssSc

h.D

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clud

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flow

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ough

1,28

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74.6

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50.4

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7-5

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4

23d

Net

gain

/loss

repo

rted

onFo

rm47

97,

line

178,

644

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862.

582

0.9

7,72

0.8

7,68

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19.2

14,4

81.7

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014.

1

23e

Aba

ndon

men

tlo

sses

345

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79.6

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9.0

15.3

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Wor

thle

ssst

ock

loss

es95

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14.5

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37.8

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ition

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clud

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1,96

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687.

8-8

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low

edca

pita

llo

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exce

ssof

capi

tal

gain

s78

4.

4,56

3.8

1,98

6.6

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4,56

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72,

059.

3

25U

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atio

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capi

tal

loss

carr

yfor

war

d74

6.

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25.4

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62.0

36.6

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1

26O

ther

inco

me

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ffer

ence

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987

784,

778.

2-6

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BT

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mou

ntto

Rec

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le.

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628

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0.0%

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33.0

0.0

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tal

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me

item

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tal

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nse

item

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>>

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.

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6%33

.0%

COMMENTARY / SPECIAL REPORT

974 TAX NOTES, September 11, 2006

(C) T

ax Analysts 2006. A

ll rights reserved. Tax A

nalysts does not claim copyright in any public dom

ain or third party content.

Tabl

e10

.A

ggre

gate

2004

Sche

dule

M-3

Dat

afo

rU

.S.

Cor

pora

tion

sW

ith

Rec

onci

labl

eD

ata:

Col

umns

Aan

dD

Rec

onci

leD

olla

ram

ount

sin

mill

ions

.Tab

leam

ount

sm

ayno

tad

ddu

eto

roun

ding

.Adv

ance

file

data

.Val

ues

may

diff

erfr

omF

inal

file

and

offi

cial

SOI

Pub

licat

ion

16va

lues

.

Pan

el3

of3

Par

tII

IE

XP

EN

SEIT

EM

S(s

ign

mat

ches

Par

tII

)F

req

Col

AC

olB

Col

CC

olD

Tot

Dif

f%

PT

BN

egB

Pos

BN

egC

Pos

C01

U.S

.cu

rren

tin

com

eta

xex

pens

e11

,490

-64,

950.

71,

096.

863

,794

.0.

64,8

90.8

28.5

%-3

35.7

1,43

2.5

-5,3

30.1

69,1

24.1

02U

.S.

defe

rred

inco

me

tax

expe

nse

4,67

9-7

,795

.01,

378.

86,

526.

5.

7,90

5.3

3.5%

-562

.51,

941.

3-8

,632

.615

,159

.0

03St

ate

and

loca

lcu

rren

tin

com

eta

xex

pens

e10

,381

-8,6

56.3

145.

4-3

47.0

-8,8

04.6

-201

.6-0

.1%

-1,4

67.6

1,61

3.0

-1,2

10.0

863.

0

04St

ate

and

loca

lde

ferr

edin

com

eta

xex

pens

e2,

393

-424

.127

2.9

158.

7.

431.

60.

2%-7

16.1

989.

0-4

63.9

622.

6

05Fo

reig

ncu

rren

tin

com

eta

xex

pens

e(o

ther

than

WH

)64

9-1

,641

.312

4.2

1,26

0.5

-246

.11,

384.

70.

6%-5

5.2

179.

4-4

73.5

1,73

4.0

06Fo

reig

nde

ferr

edin

com

eta

xex

pens

e14

4-1

75.8

21.9

153.

9.

175.

90.

1%-1

1.7

33.6

-219

.337

3.2

07Fo

reig

nw

ithho

ldin

gta

xes

490

-522

.910

.235

8.4

-164

.236

8.7

0.2%

-31.

541

.7-5

9.5

417.

9

08In

cent

ive

stoc

kop

tions

585

.-1

50.5

-2,3

29.8

-2,7

61.6

-2,4

80.3

-1.1

%-2

92.8

142.

3-2

,442

.111

2.3

09N

onqu

alif

ied

stoc

kop

tion

s1,

375

-1,8

28.0

-610

.9-1

3,40

3.6

-15,

732.

6-1

4,01

4.5

-6.2

%-1

,839

.21,

228.

3-1

3,45

6.2

52.7

10O

ther

equi

ty-b

ased

com

pens

atio

n80

3-4

,908

.782

.0-1

,381

.8-6

,332

.8-1

,299

.8-0

.6%

-1,2

30.8

1,31

2.8

-1,5

27.5

145.

7

11M

eals

and

ente

rtai

nmen

t12

,958

-5,9

29.3

15.2

2,30

1.7

-3,3

87.0

2,31

7.0

1.0%

-0.5

15.7

-1.0

2,30

2.7

12Fi

nes

and

pena

lties

3,83

5-8

28.2

7.4

663.

9-9

1.2

671.

30.

3%-0

.68.

0-5

.366

9.2

13Pu

nitiv

eda

mag

es38

-29.

5-6

.125

.2-4

.319

.10.

0%-6

.10.

00.

025

.2

14Pa

rach

ute

paym

ents

16-1

7.8

0.8

11.3

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12.1

0.0%

-0.3

1.1

-9.2

20.5

15C

ompe

nsat

ion

with

sect

ion

162(

m)

limita

tion

400

-2,6

76.5

4.6

385.

5-2

,310

.239

0.1

0.2%

-18.

022

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.938

8.5

16P

ensi

onan

dpr

ofit

-sha

ring

7,58

5-1

9,96

8.3

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02.0

-253

.0-2

3,90

5.1

-3,9

55.1

-1.7

%-7

,360

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658.

6-3

19.0

65.9

17O

ther

post

-ret

irem

ent

bene

fits

6,02

0-1

1,02

4.2

2,42

8.6

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,961

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073.

10.

9%-7

57.1

3,18

5.8

-367

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18D

efer

red

com

pens

atio

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401

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322.

81,

932.

8-9

7.7

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483.

91,

835.

10.

8%-5

08.9

2,44

1.7

-213

.211

5.5

19C

hari

tabl

eco

ntri

butio

nof

cash

and

tang

ible

prop

10,1

57-2

,810

.2-1

1.1

-494

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,310

.8-5

06.0

-0.2

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3.6

82.5

-528

.433

.5

20C

hari

tabl

eco

ntri

butio

nof

inta

ngib

lepr

oper

ty23

3-1

28.0

-29.

6-3

1.4

-169

.3-6

1.1

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0.5

0.8

-32.

51.

1

21C

hari

tabl

eco

ntri

butio

nlim

itatio

n4,

221

.42

5.6

263.

066

6.3

688.

60.

3%-3

3.8

459.

5-0

.326

3.3

22C

hari

tabl

eco

ntri

butio

nca

rryf

orw

ard

used

1,18

1.

-157

.7-4

3.8

-197

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01.5

-0.1

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62.9

5.2

-43.

90.

1

23C

urre

ntac

q./r

eorg

.in

vest

men

tba

nkin

gfe

es66

-46.

9-1

7.7

5.8

-58.

7-1

1.9

-0.0

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7.4

9.7

-19.

225

.0

24C

urre

ntac

q./r

eorg

.le

gal/a

ccou

ntin

gfe

es22

4-4

71.6

50.0

122.

9-2

98.6

172.

90.

1%-6

1.8

111.

8-8

.813

1.8

25C

urre

ntac

q./r

eorg

.ot

her

cost

s22

2-9

76.5

377.

572

.8-5

30.9

450.

40.

2%-1

64.2

541.

8-3

2.4

105.

3

26A

mor

tizat

ion/

impa

irm

ent

ofgo

odw

ill2,

424

-8,3

96.3

-4,9

86.3

5,40

2.4

-7,8

77.2

416.

10.

2%-6

,558

.81,

572.

5-3

00.9

5,70

3.4

27A

mor

tizat

ion

ofac

q./r

eorg

.an

dst

artu

pco

sts

1,74

8-1

,000

.6-3

63.6

68.5

-1,3

94.2

-295

.0-0

.1%

-799

.443

5.8

-23.

992

.4

28O

ther

amor

tiza

tion

orim

pair

men

tw

rite

-off

s7,

536

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554.

17,

970.

0-4

29.1

-21,

962.

87,

540.

93.

3%-7

,649

.515

,619

.5-2

,066

.61,

637.

5

29Se

c19

8en

viro

nmen

tal

rem

edia

tion

cost

s92

-150

.6-1

4.9

0.6

-167

.8-1

4.3

-0.0

%-9

0.6

75.7

0.0

0.6

30D

eple

tion

463

-3,5

10.7

822.

1-1

,216

.2-3

,922

.5-3

94.1

-0.2

%-1

,082

.01,

904.

1-1

,224

.78.

5

31D

epre

ciat

ion

14,1

90-9

7,79

4.7

-48,

729.

435

7.5

-146

,125

.5-4

8,37

1.9

-21.

2%-5

3,93

4.5

5,20

5.1

-58.

141

5.6

32B

adde

btex

pens

e10

,230

-24,

055.

9-1

,338

.2-5

35.8

-25,

919.

2-1

,874

.0-0

.8%

-4,8

89.4

3,55

1.2

-597

.161

.3

33C

orpo

rate

owne

dlif

ein

sura

nce

prem

ium

s2,

657

-70.

420

.4-3

0.9

-80.

6-1

0.5

-0.0

%-2

9.6

50.0

-179

.914

9.1

34Pu

rcha

seve

rsus

leas

e17

8-6

21.5

-380

.3-6

5.8

-1,1

67.5

-446

.2-0

.2%

-549

.316

9.0

-66.

00.

2

35O

ther

expe

nse/

dedc

tnite

ms

with

diff

eren

ces

12,7

91-7

34,2

88.1

29,4

70.4

-2,3

92.1

-707

,104

.127

,078

.311

.9%

-26,

076.

855

,547

.2-1

1,33

2.2

8,94

0.2

**SU

BT

OTA

L.

-1,0

57,5

75.5

-13,

840.

658

,524

.7-1

,012

,812

.744

,684

.119

.6%

-117

,429

.310

3,58

8.8

-51,

247.

610

9,77

2.3

**A

mou

ntto

Rec

onci

le.

-5.0

1.1

0.7

-9.4

1.8

0.0%

-0.1

1.2

0.0

0.7

36To

tal

expe

nse

item

s(c

ombi

nelin

es1-

35)

15,1

69-1

,057

,580

.5-1

3,83

9.5

58,5

25.4

-1,0

12,8

22.2

44,6

85.9

19.6

%-1

17,4

29.5

103,

590.

0-5

1,24

7.6

109,

773.

0

>>

Rev

erse

fede

ral

inco

me

tax

expe

nse

.72

,745

.7-2

,475

.6-7

0,32

0.5

.-7

2,79

6.1

-32.

0%89

8.2

-3,3

73.8

13,9

62.6

-84,

283.

1

>>

Tota

lex

pens

eite

ms

befo

reFe

dera

lta

xex

pens

e.

-984

,834

.8-1

6,31

5.1

-11,

795.

1-1

,012

,822

.2-2

8,11

0.2

-12.

3%-1

16,5

31.3

100,

216.

2-3

7,28

5.0

25,4

89.9

COMMENTARY / SPECIAL REPORT

TAX NOTES, September 11, 2006 975

(C) T

ax Analysts 2006. A

ll rights reserved. Tax A

nalysts does not claim copyright in any public dom

ain or third party content.

Tabl

e11

.Agg

rega

te20

04Sc

hedu

leM

-3D

ata

for

U.S

.C

orpo

rati

ons

Wit

hR

econ

cila

ble

Dat

a:C

olum

nsA

and

DB

lank

Dol

lar

amou

nts

inm

illio

ns.T

able

amou

nts

may

not

add

due

toro

undi

ng.A

dvan

cefi

leda

ta.V

alue

sm

aydi

ffer

from

Fin

alfi

lean

dof

fici

alSO

IP

ublic

atio

n16

valu

es.

Pan

el1

of3

Pop

ulat

ion

Ove

rvie

w

Ret

urns

11,6

81

Tota

lAss

ets

20,1

33,0

44.5

Tax

Les

sC

redi

ts85

,371

.4

Tax

Net

Inco

me

322,

707.

8

Est

imat

edIC

D33

,999

.2

Oth

erSO

IA

djus

tmen

ts-1

24.8

Part

IIL

ine

30C

olA

356,

582.

2

Tax

Exe

mpt

Inte

rest

7,30

7.5

Par

tI

FIN

AN

CIA

LST

AT

EM

EN

TD

AT

AF

req

Inco

me

Neg

Pos

%B

ook

Inco

me

Neg

Pos

4W

orld

wid

eco

nsol

idat

edne

tin

com

e(l

oss)

10,5

4433

3,16

6.9

-90,

679.

542

3,84

6.5

103.

4%-2

8.1%

131.

5%

5In

com

e(lo

ss)

from

noni

nclu

dibl

efo

reig

nen

titie

s1,

698

-145

,302

.0-2

18,4

47.9

73,1

45.9

-45.

1%-6

7.8%

22.7

%

6In

com

e(lo

ss)

from

noni

nclu

dibl

eU

.S.

entit

ies

736

-65,

765.

9-7

7,64

8.5

11,8

82.6

-20.

4%-2

4.1%

3.7%

7In

com

e(lo

ss)

ofot

her

incl

udib

leco

rpor

atio

ns16

43,

458.

2-8

91.9

4,35

0.1

1.1%

-0.3

%1.

4%

8A

djus

tco

nsol

idat

ion

elim

inat

ions

(bec

ause

oflin

es5-

7)79

814

0,09

0.4

-8,0

14.9

148,

105.

343

.5%

-2.5

%46

.0%

9A

djus

tbo

okye

arto

tax

year

205

4,21

7.7

-1,0

26.2

5,24

3.9

1.3%

-0.3

%1.

6%

10O

ther

adju

stm

ents

577

50,7

46.9

-10,

114.

660

,861

.515

.7%

-3.1

%18

.9%

**E

nter

edon

line

11on

ly(B

ooks

and

Rec

ords

)1,

106

1,73

4.6

-6,4

41.2

8,17

5.9

0.5%

-2.0

%2.

5%

**SU

BT

OTA

L.

322,

346.

810

0.0%

**A

mou

ntto

Rec

onci

le.

-132

.1-0

.0%

11N

etin

com

epe

rin

com

est

atem

ent

ofin

clib

leco

rpor

atio

ns11

,681

322,

214.

7-9

2,67

2.1

414,

886.

810

0.0%

%P

reta

xB

ook

Inco

me

Neg

Pos

**A

mou

ntto

Rec

onci

le.

-0.6

-0.0

%

**N

etin

com

epe

rPa

rtII

Lin

e30

Col

umn

A.

322,

214.

175

.0%

**R

ever

seFe

dera

lta

xex

pens

e.

107,

451.

525

.0%

**Pr

etax

book

Inco

me

.42

9,66

5.6

100.

0%

**Te

mpo

rary

diff

eren

cebe

fore

Fede

ral

tax

expe

nse

.-6

8,00

5.9

-415

,419

.034

7,41

3.1

-15.

8%-9

6.7%

80.9

%

**Pe

rman

ent

diff

eren

cebe

fore

Fede

ral

tax

expe

nse

.-5

,077

.5-1

87,0

66.8

181,

989.

3-1

.2%

-43.

5%42

.4%

**N

etta

xin

com

epe

rPa

rtII

Lin

e30

Col

umn

D.

356,

582.

283

.0%

**SO

Ire

mov

edIC

D.

-33,

999.

2-7

.9%

**O

ther

SOI

adju

stm

ents

.12

4.8

0.0%

**Ta

xne

tin

com

ere

port

edby

SOI

.32

2,70

7.8

75.1

%

COMMENTARY / SPECIAL REPORT

976 TAX NOTES, September 11, 2006

(C) T

ax Analysts 2006. A

ll rights reserved. Tax A

nalysts does not claim copyright in any public dom

ain or third party content.

Tabl

e11

.A

ggre

gate

2004

Sche

dule

M-3

Dat

afo

rU

.S.

Cor

pora

tion

sW

ith

Rec

onci

labl

eD

ata:

Col

umns

Aan

dD

Bla

nkD

olla

ram

ount

sin

mill

ions

.Tab

leam

ount

sm

ayno

tad

ddu

eto

roun

ding

.Adv

ance

file

data

.Val

ues

may

diff

erfr

omF

inal

file

and

offi

cial

SOI

Pub

licat

ion

16va

lues

.

Pan

el2

of3

Par

tII

INC

OM

EIT

EM

SF

req

Col

AC

olB

Col

CC

olD

Tot

Dif

f%

PT

BN

egB

Pos

BN

egC

Pos

C01

Inco

me

(los

s)fr

omeq

uity

met

hod

fore

ign

corp

orat

ions

387

0.0

-2,2

35.3

-2,2

10.4

.-4

,445

.7-1

.0%

-2,3

97.7

162.

4-3

,109

.289

8.8

02G

ross

fore

ign

divi

dend

sno

tpr

evio

usly

taxe

d36

40.

02,

841.

16,

279.

10.

09,

120.

22.

1%-1

,419

.64,

260.

7-5

,871

.412

,150

.4

03Su

bpar

tF,

QE

F,an

dsi

mila

rin

com

ein

clus

ions

533

.6,

450.

318

,397

.30.

024

,847

.65.

8%-1

9.5

6,46

9.8

-17.

818

,415

.1

04Se

ctio

n78

gros

s-up

424

.45

4.4

17,1

37.8

0.0

17,5

92.2

4.1%

0.0

454.

4-0

.317

,138

.1

05G

ross

fore

ign

dist

ribu

tions

prev

ious

lyta

xed

106

0.0

-4,7

76.9

-10,

024.

10.

0-1

4,80

1.0

-3.4

%-4

,858

.982

.0-1

0,05

6.8

32.7

06In

com

e(l

oss)

from

equi

tym

etho

dU

.S.

corp

orat

ions

613

0.0

-5,4

90.7

-9,6

18.1

.-1

5,10

8.8

-3.5

%-6

,791

.41,

300.

7-1

1,37

2.8

1,75

4.7

07U

.S.

divi

dend

sno

tel

imin

ated

inta

xco

nsol

idat

ion

966

0.0

1,36

6.8

24,9

73.1

0.0

26,3

39.9

6.1%

-2,3

96.7

3,76

3.5

-9,4

19.5

34,3

92.7

08M

inor

ityin

tere

stfo

rin

clud

ible

corp

orat

ions

227

0.0

15.1

316.

5.

331.

50.

1%-6

4.6

79.7

-210

.352

6.7

09In

com

e(l

oss)

from

U.S

.pa

rtne

rshi

ps2,

210

0.0

4,05

2.1

5,45

9.5

0.0

9,51

1.6

2.2%

-14,

033.

318

,085

.4-1

,629

.27,

088.

7

10In

com

e(l

oss)

from

fore

ign

part

ners

hips

245

0.0

302.

121

.00.

032

3.1

0.1%

-1,6

88.4

1,99

0.5

-300

.932

2.0

11In

com

e(l

oss)

from

othe

rpa

ss-t

hrou

ghen

titie

s43

30.

088

.7-2

46.6

0.0

-157

.9-0

.0%

-387

.547

6.2

-359

.911

3.4

12It

ems

rela

ting

tore

port

able

tran

sact

ions

159

0.0

-25,

070.

5-7

,412

.20.

0-3

2,48

2.7

-7.6

%-2

5,44

6.8

376.

2-7

,589

.217

7.0

13In

tere

stin

com

e2,

812

0.0

-1,2

74.8

-8,1

39.2

0.0

-9,4

14.0

-2.2

%-6

,914

.75,

639.

9-8

,711

.057

1.8

14To

tal

accr

ual

toca

shad

just

men

t40

40.

020

.5-5

.90.

014

.70.

0%-1

14.5

135.

0-8

.22.

3

15H

edgi

ngtr

ansa

ctio

ns28

70.

019

0.4

-282

.20.

0-9

1.7

-0.0

%-5

,376

.15,

566.

5-3

87.9

105.

7

16M

ark-

to-m

arke

tin

com

e(l

oss)

396

0.0

1,58

5.9

-798

.60.

078

7.3

0.2%

-2,6

39.6

4,22

5.5

-799

.00.

4

17In

vent

ory

valu

atio

nad

just

men

ts3,

325

0.0

42,7

44.7

-497

.30.

042

,247

.49.

8%-6

,771

.649

,516

.3-2

,162

.01,

664.

6

18Sa

leve

rsus

leas

e(f

orse

llers

and/

orle

ssor

s)15

00.

019

,719

.1-1

,762

.70.

017

,956

.54.

2%-7

34.3

20,4

53.4

-1,7

69.7

7.1

19Se

ctio

n48

1(a)

adju

stm

ents

1,00

3.

-209

.222

.40.

0-1

86.8

-0.0

%-2

,402

.22,

193.

0-1

4.5

37.0

20U

near

ned/

defe

rred

reve

nue

1,89

30.

072

9.6

-98.

10.

063

1.5

0.1%

-3,8

42.0

4,57

1.5

-144

.446

.4

21In

com

ere

cogn

ition

from

long

-ter

mco

ntra

cts

166

0.0

-6.9

21.1

0.0

14.3

0.0%

-258

.325

1.4

-1.2

22.3

22O

rigi

nal

issu

edi

scou

ntan

dot

her

impu

ted

inte

rest

244

0.0

182.

54.

20.

018

6.6

0.0%

-2,0

08.8

2,19

1.3

-87.

992

.0

23a

Boo

kdi

spos

itio

nof

asse

tsot

her

than

inve

ntor

y4,

159

0.0

-32,

428.

3-2

,773

.3.

-35,

201.

6-8

.2%

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633.

66,

205.

3-3

,693

.191

9.8

23b

Gro

ssca

pita

lga

ins

Sch.

D,

excl

udin

gfl

ow-t

hrou

gh1,

375

.25

,849

.97,

108.

50.

032

,958

.47.

7%-2

61.4

26,1

11.3

-198

.87,

307.

3

23c

Gro

ssca

pita

llo

ssSc

h.D

,ex

clud

ing

flow

-thr

ough

640

.-8

,215

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,492

.00.

0-9

,707

.5-2

.3%

-8,6

77.9

462.

4-1

,524

.132

.1

23d

Net

gain

/loss

repo

rted

onFo

rm47

97,

line

175,

474

.17

,032

.992

5.6

0.0

17,9

58.5

4.2%

-6,7

48.1

23,7

81.1

-191

.91,

117.

5

23e

Aba

ndon

men

tlo

sses

337

.-9

59.1

-54.

40.

0-1

,013

.5-0

.2%

-1,3

49.5

390.

4-6

0.5

6.1

23f

Wor

thle

ssst

ock

loss

es12

4.

-676

.3-1

,285

.90.

0-1

,962

.3-0

.5%

-683

.06.

6-1

,287

.21.

2

23g

Oth

erdi

spos

ition

sex

clud

ing

inve

ntor

y83

9.

1,41

8.1

187.

90.

01,

606.

00.

4%-4

08.4

1,82

6.6

-15.

420

3.3

24D

isal

low

edca

pita

llo

ssin

exce

ssof

capi

tal

gain

s62

8.

8,78

3.5

1,23

7.7

0.0

10,0

21.1

2.3%

-19.

78,

803.

2-2

0.4

1,25

8.1

25U

tiliz

atio

nof

capi

tal

loss

carr

yfor

war

d53

3.

-3,0

34.9

-1,9

00.0

0.0

-4,9

34.9

-1.1

%-3

,035

.00.

1-1

,900

.10.

0

26O

ther

inco

me

(los

s)it

ems

wit

hdi

ffer

ence

s5,

221

0.0

-53,

848.

8-5

1,60

4.4

0.0

-105

,453

.2-2

4.5%

-82,

487.

528

,638

.6-6

1,55

4.7

9,95

0.3

**SU

BT

OTA

L.

0.0

-4,3

99.4

-18,

113.

50.

0-2

2,51

3.0

-5.2

%-2

32,8

70.4

228,

471.

0-1

34,4

69.2

116,

355.

7

**A

mou

ntto

Rec

onci

le.

0.0

-5.2

65.1

0.0

59.9

0.0%

-5.6

0.4

0.0

65.1

27To

tal

inco

me

item

s(c

ombi

nelin

es1

thru

26)

9,73

60.

0-4

,404

.6-1

8,04

8.5

0.0

-22,

453.

1-5

.2%

-232

,876

.122

8,47

1.4

-134

,469

.211

6,42

0.8

28To

tal

expe

nse

item

s(f

rom

Part

III

line

36)

11,3

410.

0-5

8,60

5.1

115,

423.

80.

0

**E

xpen

sebe

fore

Fede

ral

tax

expe

nse

..

..

.-5

0,63

2.8

-11.

8%-1

82,2

37.5

118,

922.

3-5

2,42

9.2

65,1

11.6

29O

ther

item

sw

ithno

diff

eren

ces

00.

0.

.0.

0

**SU

BT

OTA

L.

0.0

-63,

009.

797

,375

.40.

0

**A

mou

ntto

Rec

onci

le.

322,

214.

1-2

86.1

288.

635

6,58

2.2

2.5

0.0%

-305

.419

.3-1

68.4

456.

9

30R

econ

cilia

tion

tota

ls(c

ombi

nelin

es27

-29)

11,6

8132

2,21

4.1

-63,

295.

897

,663

.935

6,58

2.2

>>

Rev

erse

fede

ral

inco

me

tax

expe

nse

.10

7,45

1.5

-4,7

10.1

-102

,741

.4.

>>P

reta

xbo

okin

com

ean

dM

-3di

ffer

ence

s.

429,

665.

6-6

8,00

5.9

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77.5

356,

582.

2-7

3,08

3.3

-17.

0%-4

15,4

19.0

347,

413.

1-1

87,0

66.8

181,

989.

3

>>

Per

cent

ofP

reta

xbo

ok10

0.0%

-15.

8%-1

.2%

83.0

%-1

7.0%

-96.

7%80

.9%

-43.

5%42

.4%

COMMENTARY / SPECIAL REPORT

TAX NOTES, September 11, 2006 977

(C) T

ax Analysts 2006. A

ll rights reserved. Tax A

nalysts does not claim copyright in any public dom

ain or third party content.

Tabl

e11

.A

ggre

gate

2004

Sche

dule

M-3

Dat

afo

rU

.S.

Cor

pora

tion

sW

ith

Rec

onci

labl

eD

ata:

Col

umns

Aan

dD

Bla

nkD

olla

ram

ount

sin

mill

ions

.Tab

leam

ount

sm

ayno

tad

ddu

eto

roun

ding

.Adv

ance

file

data

.Val

ues

may

diff

erfr

omF

inal

file

and

offi

cial

SOI

Pub

licat

ion

16va

lues

.

Pan

el3

of3

Par

tII

IE

XP

EN

SEIT

EM

S(s

ign

mat

ches

Par

tII

)F

req

Col

AC

olB

Col

CC

olD

Tot

Dif

f%

PT

BN

egB

Pos

BN

egC

Pos

C01

U.S

.cu

rren

tin

com

eta

xex

pens

e8,

221

0.0

5,14

5.0

96,9

90.1

.10

2,13

5.1

23.8

%-1

52.0

5,29

7.0

-9,4

02.6

106,

392.

7

02U

.S.

defe

rred

inco

me

tax

expe

nse

4,12

50.

0-4

34.9

5,75

1.3

.5,

316.

41.

2%-1

,626

.51,

191.

6-1

9,03

2.3

24,7

83.6

03St

ate

and

loca

lcu

rren

tin

com

eta

xex

pens

e5,

059

0.0

431.

4-1

41.0

0.0

290.

40.

1%-2

,581

.03,

012.

4-1

,426

.01,

285.

1

04St

ate

and

loca

lde

ferr

edin

com

eta

xex

pens

e2,

183

0.0

-747

.616

4.1

.-5

83.5

-0.1

%-2

,084

.41,

336.

8-6

22.0

786.

1

05Fo

reig

ncu

rren

tin

com

eta

xex

pens

e(o

ther

than

WH

)56

20.

048

1.5

12,0

70.6

0.0

12,5

52.2

2.9%

-132

.161

3.6

-323

.712

,394

.4

06Fo

reig

nde

ferr

edin

com

eta

xex

pens

e11

80.

0-1

39.1

64.6

.-7

4.5

-0.0

%-2

21.6

82.6

-442

.350

6.9

07Fo

reig

nw

ithho

ldin

gta

xes

336

0.0

-170

.12,

002.

50.

01,

832.

40.

4%-1

86.3

16.2

-125

.32,

127.

8

08In

cent

ive

stoc

kop

tions

770

.-2

08.4

-3,2

57.3

0.0

-3,4

65.6

-0.8

%-4

42.0

233.

6-3

,368

.811

1.6

09N

onqu

alif

ied

stoc

kop

tion

s1,

498

0.0

-1,0

70.8

-23,

932.

20.

0-2

5,00

3.0

-5.8

%-2

,889

.61,

818.

8-2

4,19

6.2

264.

0

10O

ther

equi

ty-b

ased

com

pens

atio

n98

90.

01,

474.

2-3

,062

.00.

0-1

,587

.8-0

.4%

-821

.62,

295.

8-3

,629

.656

7.7

11M

eals

and

ente

rtai

nmen

t10

,050

0.0

0.2

3,02

2.5

0.0

3,02

2.6

0.7%

-12.

412

.6-7

.53,

030.

0

12Fi

nes

and

pena

lties

3,49

80.

067

.61,

296.

80.

01,

364.

40.

3%-0

.668

.1-2

4.9

1,32

1.8

13Pu

nitiv

eda

mag

es21

0.0

972.

50.

80.

097

3.3

0.2%

-1.5

974.

00.

00.

8

14Pa

rach

ute

paym

ents

250.

05.

090

.30.

095

.30.

0%-6

.311

.30.

090

.3

15C

ompe

nsat

ion

with

sect

ion

162(

m)

limita

tion

316

0.0

15.2

755.

20.

077

0.5

0.2%

-3.8

19.1

-3.7

758.

9

16P

ensi

onan

dpr

ofit

-sha

ring

1,90

40.

0-1

1,63

4.5

-1,0

05.3

0.0

-12,

639.

8-2

.9%

-17,

835.

26,

200.

6-1

,100

.695

.3

17O

ther

post

-ret

irem

ent

bene

fits

978

0.0

831.

5-1

,351

.20.

0-5

19.7

-0.1

%-3

,595

.34,

426.

8-1

,359

.17.

9

18D

efer

red

com

pens

atio

n3,

092

0.0

2,08

0.3

-98.

10.

01,

982.

10.

5%-2

,456

.94,

537.

1-2

50.9

152.

8

19C

hari

tabl

eco

ntri

butio

nof

cash

and

tang

ible

prop

1,42

90.

012

6.5

-391

.90.

0-2

65.4

-0.1

%-1

50.5

277.

0-4

23.3

31.4

20C

hari

tabl

eco

ntri

butio

nof

inta

ngib

lepr

oper

ty46

0.0

-20.

8-4

4.0

0.0

-64.

8-0

.0%

-22.

92.

2-4

5.1

1.1

21C

hari

tabl

eco

ntri

butio

nlim

itatio

n3,

251

.60

8.1

234.

50.

084

2.6

0.2%

-42.

465

0.4

-2.4

237.

0

22C

hari

tabl

eco

ntri

butio

nca

rryf

orw

ard

used

844

.-4

83.8

-141

.60.

0-6

25.5

-0.1

%-4

85.0

1.1

-141

.70.

0

23C

urre

ntac

q./r

eorg

.in

vest

men

tba

nkin

gfe

es60

0.0

-58.

420

.50.

0-3

7.9

-0.0

%-9

6.5

38.1

-56.

577

.0

24C

urre

ntac

q./r

eorg

.le

gal/a

ccou

ntin

gfe

es24

00.

025

.225

4.4

0.0

279.

60.

1%-7

4.8

100.

0-1

0.6

265.

1

25C

urre

ntac

q./r

eorg

.ot

her

cost

s25

80.

011

2.9

112.

80.

022

5.7

0.1%

-454

.256

7.0

-375

.648

8.4

26A

mor

tizat

ion/

impa

irm

ent

ofgo

odw

ill2,

511

0.0

-5,5

39.8

3,41

0.0

0.0

-2,1

29.8

-0.5

%-8

,002

.82,

463.

0-9

40.5

4,35

0.4

27A

mor

tizat

ion

ofac

q./r

eorg

.an

dst

artu

pco

sts

1,87

10.

0-2

6.1

120.

30.

094

.30.

0%-8

75.0

848.

9-5

3.7

174.

1

28O

ther

amor

tiza

tion

orim

pair

men

tw

rite

-off

s4,

169

0.0

22,6

92.2

19,2

08.9

0.0

41,9

01.1

9.8%

-9,1

21.8

31,8

14.1

-329

.919

,538

.8

29Se

c19

8en

viro

nmen

tal

rem

edia

tion

cost

s89

0.0

396.

1-1

.20.

039

4.9

0.1%

-182

.757

8.8

-1.3

0.1

30D

eple

tion

289

0.0

1,04

5.8

-763

.50.

028

2.3

0.1%

-1,4

08.7

2,45

4.5

-844

.881

.3

31D

epre

ciat

ion

9,83

40.

0-6

0,43

4.7

25.1

0.0

-60,

409.

7-1

4.1%

-70,

960.

210

,525

.5-1

26.7

151.

7

32B

adde

btex

pens

e6,

714

0.0

-4,7

74.2

-146

.50.

0-4

,920

.7-1

.1%

-10,

724.

95,

950.

7-2

30.4

83.9

33C

orpo

rate

owne

dlif

ein

sura

nce

prem

ium

s2,

530

0.0

-57.

9-3

03.3

0.0

-361

.2-0

.1%

-73.

615

.7-5

91.5

288.

1

34Pu

rcha

seve

rsus

leas

e26

70.

0-1

85.4

-16.

50.

0-2

01.9

-0.0

%-5

87.2

401.

8-1

6.7

0.2

35O

ther

expe

nse/

dedc

tnite

ms

with

diff

eren

ces

9,67

20.

0-9

,032

.94,

281.

90.

0-4

,751

.0-1

.1%

-45,

493.

936

,461

.0-1

1,34

9.2

15,6

31.1

**SU

BT

OTA

L.

0.0

-58,

508.

211

5,22

1.6

0.0

56,7

13.3

13.2

%-1

83,8

06.0

125,

297.

8-8

0,85

5.7

196,

077.

3

**A

mou

ntto

Rec

onci

le.

0.0

-96.

920

2.2

0.0

105.

40.

0%-2

10.0

113.

2-8

.421

0.6

36To

tal

expe

nse

item

s(c

ombi

nelin

es1-

35)

11,3

410.

0-5

8,60

5.1

115,

423.

80.

056

,818

.713

.2%

-184

,016

.112

5,41

1.0

-80,

864.

119

6,28

7.9

>>

Rev

erse

fede

ral

inco

me

tax

expe

nse

.0.

0-4

,710

.1-1

02,7

41.4

.-1

07,4

51.5

-25.

0%1,

778.

5-6

,488

.628

,435

.0-1

31,1

76.3

>>

Tota

lex

pens

eite

ms

befo

reFe

dera

lta

xex

pens

e.

0.0

-63,

315.

212

,682

.40.

0-5

0,63

2.8

-11.

8%-1

82,2

37.5

118,

922.

3-5

2,42

9.2

65,1

11.6

COMMENTARY / SPECIAL REPORT

978 TAX NOTES, September 11, 2006

(C) T

ax Analysts 2006. A

ll rights reserved. Tax A

nalysts does not claim copyright in any public dom

ain or third party content.

Exhibit 1: 2004 Form 1120 Schedule M-3

COMMENTARY / SPECIAL REPORT

TAX NOTES, September 11, 2006 979

(C) T

ax Analysts 2006. A

ll rights reserved. Tax A

nalysts does not claim copyright in any public dom

ain or third party content.

Exhibit 1: 2004 Form 1120 Schedule M-3(Continued)

COMMENTARY / SPECIAL REPORT

980 TAX NOTES, September 11, 2006

(C) T

ax Analysts 2006. A

ll rights reserved. Tax A

nalysts does not claim copyright in any public dom

ain or third party content.

Exhibit 1: 2004 Form 1120 Schedule M-3(Continued)

COMMENTARY / SPECIAL REPORT

TAX NOTES, September 11, 2006 981

(C) T

ax Analysts 2006. A

ll rights reserved. Tax A

nalysts does not claim copyright in any public dom

ain or third party content.