Pro Golf Warehouse, Inc. (PGW), sells golf equipment throughout the United States. PGW also sells golf equipment in Canada through its subsidiary, Canadian Golf Warehouse (CGW), which is organized as a Canadian corporation. In addition, PGW has an American subsidiary, Tennis Supplies, Inc. (TSI). PGW includes income (loss) from both subsidiaries on its audited financial statements, which show net income of $97 million in 2010. CGW, which is not consolidated by PGW for U.S. tax purposes, had net income of $31 million. TSI, which is consolidated for U.S. tax purposes, had a loss of $16 million.

How is this information reported on Schedule M–3?

For years ending after December 31, 2004, corporate taxpayers with total assets of $10 million or more are required to report much greater detail relative to differences between book and taxable income (loss).

What were the government’s objectives in creating this reporting requirement?


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