[Germanauto]

Haven't driven the IS500 but I've driven the IS350 F Sport quite a bit and autocrossed some of the V8 Lexus models

Save for long-term reliability, the M340 trounces it in every way. So the proper M3 will be on another level. The IS suffers from a slow transmission, slow steering, a top-heavy chassis at the limits, and a dated interior full of typical Lexus plastic and fake leather.

Have you considered the C63 or Giulia QV? Neither have an AWD option unfortunately. But if you keep the M340xi, then it shouldn't matter.