The Federal Supporting Form 1120-S serves as the U.S. Income Tax Return for an S Corporation, a crucial document used by S corporations to report their annual income, gains, losses, deductions, and credits to the Internal Revenue Service (IRS). It ensures compliance with tax obligations and aids in the determination of the tax liability for corporations that have elected the S corporation tax status under the Internal Revenue Code. If you're managing an S corporation's finances, understanding and accurately filling out Form 1120-S is imperative. To start preparing this form, click the button below.
The Federal Form 1120-S is a tax document for S corporations in the United States, carrying the official title "U.S. Income Tax Return for an S Corporation." Crucially, this form should not be filed unless the corporation has already filed or is attaching Form 2553 to elect the S corporation status. It provides a detailed accounting of the corporation's income, deductions, profits, losses, and tax payments for the year. Alongside basic identification and contact information, it requires corporations to indicate their eligibility for S corporation status and if this status begins with the current tax year. The form also covers aspects such as compensation of officers, salaries, wages, dividends, and various deductions businesses can claim to calculate their taxable income or loss. Moreover, it addresses shareholder specifics, assets, liabilities, and equity at the year's beginning and end, plus additional schedules for detailing international transactions, adjustments, and reconciliations necessary for the IRS's comprehensive understanding of the corporation's fiscal health. This form is pivotal for S corporations navigating their tax obligations, ensuring they comply with federal regulations while potentially optimizing their tax liabilities.
Form 1120-S
U.S. Income Tax Return for an S Corporation
OMB No. 1545-0123
▶ Do not file this form unless the corporation has filed or
2021
Department of the Treasury
is attaching Form 2553 to elect to be an S corporation.
Internal Revenue Service
▶ Go to www.irs.gov/Form1120S for instructions and the latest information.
For calendar year 2021 or tax year beginning
, 2021, ending
, 20
A S election effective date
Name
D Employer identification number
TYPE
B
Business activity code
Number, street, and room or suite no. If a P.O. box, see instructions.
E Date incorporated
OR
number (see instructions)
PRINT
City or town, state or province, country, and ZIP or foreign postal code
F Total assets (see instructions)
C Check if Sch. M-3 attached
$
G Is the corporation electing to be an S corporation beginning with this tax year? See instructions.
Yes
No
H
Check if: (1) Final return
(2) Name change (3) Address change
(4) Amended return (5)
S election termination
I
Enter the number of shareholders who were shareholders during any part of the tax year
. . . ▶
J
Check if corporation: (1)
Aggregated activities for section 465 at-risk purposes
(2) Grouped activities for section 469 passive activity purposes
Caution: Include only trade or business income and expenses on lines 1a through 21. See the instructions for more information.
Tax and Payments Deductions (see instructions for limitations) Income
1a
Gross receipts or sales
b
Returns and allowances
1b
c
Balance. Subtract line 1b from line 1a
. . . . . . . .
1c
2
Cost of goods sold (attach Form 1125-A)
3
Gross profit. Subtract line 2 from line 1c
4
Net gain (loss) from Form 4797, line 17 (attach Form 4797)
5
Other income (loss) (see instructions—attach statement)
6
Total income (loss). Add lines 3 through 5
. . . .
.
. .
▶
7
Compensation of officers (see instructions—attach Form 1125-E) . . .
8
Salaries and wages (less employment credits)
9
Repairs and maintenance
10
Bad debts
11
Rents
12
Taxes and licenses
13
Interest (see instructions)
14
Depreciation not claimed on Form 1125-A or elsewhere on return (attach Form 4562)
15
Depletion (Do not deduct oil and gas depletion.)
16
Advertising
17
Pension, profit-sharing, etc., plans
18
Employee benefit programs
19
Other deductions (attach statement)
20
Total deductions. Add lines 7 through 19
21
Ordinary business income (loss). Subtract line 20 from line 6 . . . .
22a
Excess net passive income or LIFO recapture tax (see instructions) . . .
Tax from Schedule D (Form 1120-S)
22b
Add lines 22a and 22b (see instructions for additional taxes)
22c
23a
2021 estimated tax payments and 2020 overpayment credited to 2021 .
Tax deposited with Form 7004
23b
Credit for federal tax paid on fuels (attach Form 4136)
23c
d
Add lines 23a through 23c
23d
24
Estimated tax penalty (see instructions). Check if Form 2220 is attached .
. ▶
25
Amount owed. If line 23d is smaller than the total of lines 22c and 24, enter amount owed . . .
26
Overpayment. If line 23d is larger than the total of lines 22c and 24, enter amount overpaid . . .
27
Enter amount from line 26: Credited to 2022 estimated tax ▶
Refunded ▶
Sign Here
Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.
▲
May the IRS discuss this return
with the preparer shown below?
Signature of officer
Date
Title
See instructions.
Paid
Print/Type preparer’s name
Preparer’s signature
Check
if
PTIN
Preparer
self-employed
Firm’s name ▶
Firm’s EIN ▶
Use Only
Firm’s address ▶
Phone no.
For Paperwork Reduction Act Notice, see separate instructions.
Cat. No. 11510H
Form 1120-S (2021)
Page 2
Schedule B
Other Information (see instructions)
1 Check accounting method: a
Cash
Accrual
c Other (specify) ▶
2 See the instructions and enter the:
a Business activity ▶
b Product or service ▶
3At any time during the tax year, was any shareholder of the corporation a disregarded entity, a trust, an estate, or a nominee or similar person? If “Yes,” attach Schedule B-1, Information on Certain Shareholders of an S Corporation . .
4At the end of the tax year, did the corporation:
aOwn directly 20% or more, or own, directly or indirectly, 50% or more of the total stock issued and outstanding of any foreign or domestic corporation? For rules of constructive ownership, see instructions. If “Yes,” complete (i) through (v)
below . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Yes No
(i)Name of Corporation
(ii)Employer Identification
Number (if any)
(iii)Country of Incorporation
(iv)Percentage of Stock Owned
(v)If Percentage in (iv) Is 100%, Enter the Date (if applicable) a Qualified Subchapter
S Subsidiary Election Was Made
bOwn directly an interest of 20% or more, or own, directly or indirectly, an interest of 50% or more in the profit, loss, or capital in any foreign or domestic partnership (including an entity treated as a partnership) or in the beneficial interest of a trust? For rules of constructive ownership, see instructions. If “Yes,” complete (i) through (v) below . . . . . . .
(i)Name of Entity
(iii)Type of Entity
(iv)Country of Organization
(v)Maximum Percentage Owned in Profit, Loss, or Capital
5a At the end of the tax year, did the corporation have any outstanding shares of restricted stock? . . . . . . . .
If “Yes,” complete lines (i) and (ii) below.
(i)
Total shares of restricted stock
(ii)
Total shares of non-restricted stock
bAt the end of the tax year, did the corporation have any outstanding stock options, warrants, or similar instruments? . If “Yes,” complete lines (i) and (ii) below.
Total shares of stock outstanding at the end of the tax year
(ii)Total shares of stock outstanding if all instruments were executed ▶
6Has this corporation filed, or is it required to file, Form 8918, Material Advisor Disclosure Statement, to provide
information on any reportable transaction?
. . . . . . . . . . . . . . . . . . . . . . . .
Check this box if the corporation issued publicly offered debt instruments with original issue discount . . . . ▶
If checked, the corporation may have to file Form 8281, Information Return for Publicly Offered Original Issue Discount
Instruments.
8If the corporation (a) was a C corporation before it elected to be an S corporation or the corporation acquired an asset with a basis determined by reference to the basis of the asset (or the basis of any other property) in the hands of a C corporation, and
(b) has net unrealized built-in gain in excess of the net recognized built-in gain from prior years, enter the net unrealized built-in
gain reduced by net recognized built-in gain from prior years. See instructions . . . . . . ▶ $
9Did the corporation have an election under section 163(j) for any real property trade or business or any farming business
in effect during the tax year? See instructions . . . . . . . . . . . . . . . . . . . . . . . .
10 Does the corporation satisfy one or more of the following? See instructions . . . . . . . . . . . . . .
aThe corporation owns a pass-through entity with current, or prior year carryover, excess business interest expense.
bThe corporation’s aggregate average annual gross receipts (determined under section 448(c)) for the 3 tax years preceding the current tax year are more than $26 million and the corporation has business interest expense.
cThe corporation is a tax shelter and the corporation has business interest expense.
If “Yes,” complete and attach Form 8990.
11 Does the corporation satisfy both of the following conditions? . . . . . . . . . . . . . . . . . .
aThe corporation’s total receipts (see instructions) for the tax year were less than $250,000.
bThe corporation’s total assets at the end of the tax year were less than $250,000. If “Yes,” the corporation is not required to complete Schedules L and M-1.
Page 3
Other Information (see instructions) (continued)
12During the tax year, did the corporation have any non-shareholder debt that was canceled, was forgiven, or had the
terms modified so as to reduce the principal amount of the debt? . . . . . . . . . . . . . . . . .
If “Yes,” enter the amount of principal reduction . . . . . . . . . . . . . . ▶ $
13During the tax year, was a qualified subchapter S subsidiary election terminated or revoked? If “Yes,” see instructions .
14a Did the corporation make any payments in 2021 that would require it to file Form(s) 1099?
If “Yes,” did the corporation file or will it file required Form(s) 1099?
Is the corporation attaching Form 8996 to certify as a Qualified Opportunity Fund?
If “Yes,” enter the amount from Form 8996, line 15
. . . . ▶ $
Schedule K
Shareholders’ Pro Rata Share Items
Total amount
1
Ordinary business income (loss) (page 1, line 21)
. . . . . .
Net rental real estate income (loss) (attach Form 8825)
3a
Other gross rental income (loss)
Expenses from other rental activities (attach statement)
3b
Other net rental income (loss). Subtract line 3b from line 3a . . .
3c
(Loss)
Interest income
Dividends: a Ordinary dividends
5a
Income
b Qualified dividends
5b
Royalties
Net short-term capital gain (loss) (attach Schedule D (Form 1120-S))
8a
Net long-term capital gain (loss) (attach Schedule D (Form 1120-S)) .
Collectibles (28%) gain (loss)
8b
Unrecaptured section 1250 gain (attach statement)
8c
Net section 1231 gain (loss) (attach Form 4797)
Other income (loss) (see instructions) . . .
Type ▶
Deductions
Section 179 deduction (attach Form 4562)
12a
Charitable contributions
Investment interest expense
12b
Section 59(e)(2) expenditures
12c
Other deductions (see instructions) . . . .
12d
13a
Low-income housing credit (section 42(j)(5))
Low-income housing credit (other)
13b
Credits
Qualified rehabilitation expenditures (rental real estate) (attach Form 3468, if applicable)
13c
Other rental real estate credits (see instructions)
13d
e
Other rental credits (see instructions) . . .
13e
f
Biofuel producer credit (attach Form 6478)
13f
g
Other credits (see instructions)
13g
International Transactions
Attach Schedule K-2 (Form 1120-S), Shareholders’ Pro Rata Share Items—International, and
check this box to indicate you are reporting items of international tax relevance . . .
Alternative MinimumTax Items(AMT)
15a
Post-1986 depreciation adjustment
Adjusted gain or loss
15b
Depletion (other than oil and gas)
15c
Oil, gas, and geothermal properties—gross income
15d
Oil, gas, and geothermal properties—deductions
15e
Other AMT items (attach statement)
15f
ItemsAffecting ShareholderBasis
16a
Tax-exempt interest income
Foreign taxes paid or accrued
16f
Other tax-exempt income
16b
Nondeductible expenses
16c
Distributions (attach statement if required) (see instructions) . . .
16d
Repayment of loans from shareholders
16e
Page 4
Shareholders’ Pro Rata Share Items (continued)
Information
17a
Investment income
Other
Other items and amounts (attach statement)
Investment expenses
17b
Dividend distributions paid from accumulated earnings and profits
17c
Recon-
ciliation
Income (loss) reconciliation. Combine the amounts on lines 1 through 10 in the far right
column. From the result, subtract the sum of the amounts on lines 11 through 12d and 16f .
Schedule L
Balance Sheets per Books
Beginning of tax year
End of tax year
Assets
(a)
(b)
(c)
(d)
2a
Trade notes and accounts receivable . . .
Less allowance for bad debts
(
)
Inventories
U.S. government obligations
Tax-exempt securities (see instructions) . .
Other current assets (attach statement) . . .
Loans to shareholders
Mortgage and real estate loans
Other investments (attach statement) . . .
10a
Buildings and other depreciable assets . . .
Less accumulated depreciation
11a
Depletable assets
Less accumulated depletion
Land (net of any amortization)
Intangible assets (amortizable only) . . . .
Less accumulated amortization
Other assets (attach statement)
Total assets
Liabilities and Shareholders’ Equity
Accounts payable
Mortgages, notes, bonds payable in less than 1 year
Other current liabilities (attach statement) . .
Loans from shareholders
Mortgages, notes, bonds payable in 1 year or more
Other liabilities (attach statement) . . . .
22
Capital stock
23
Additional paid-in capital
Retained earnings
Adjustments to shareholders’ equity (attach statement)
Less cost of treasury stock
Total liabilities and shareholders’ equity . .
Page 5
Schedule M-1
Reconciliation of Income (Loss) per Books With Income (Loss) per Return
Note: The corporation may be required to file Schedule M-3. See instructions.
Net income (loss) per books . . . .
Income recorded on books this year
Income included on Schedule K, lines 1, 2,
not included on Schedule K, lines 1
through 10 (itemize):
3c, 4, 5a, 6, 7, 8a, 9, and 10, not recorded
on books this year (itemize)
a
Tax-exempt interest $
Expenses recorded on books this year
Deductions included on Schedule K,
lines 1 through 12 and 16f, not charged
through 12 and 16f (itemize):
against book income this year (itemize):
Depreciation $
Travel and entertainment $
Add lines 5 and 6
8 Income (loss) (Schedule K, line 18).
Add lines 1 through 3
Subtract line 7 from line 4 . . . .
Schedule M-2
Analysis of Accumulated Adjustments Account, Shareholders’ Undistributed Taxable Income
Previously Taxed, Accumulated Earnings and Profits, and Other Adjustments Account
(see instructions)
(a) Accumulated
(b) Shareholders’
(c) Accumulated
(d) Other adjustments
adjustments account
undistributed taxable
earnings and profits
account
income previously taxed
Balance at beginning of tax year
Ordinary income from page 1, line 21 . . .
Other additions
Loss from page 1, line 21
Other reductions
Combine lines 1 through 5
Distributions
Balance at end of tax year. Subtract line 7 from
line 6
After completing the Form 1120-S, U.S. Income Tax Return for an S Corporation, the next steps involve thorough review and verification processes to ensure all provided information is accurate and complies with the Internal Revenue Code requirements. It's crucial to attach any required schedules or documents, such as Form 2553 for the S Corporation election, and any other relevant forms that substantiate deductions, credits, or income reported. Following submission, await confirmation from the IRS, and prepare for any potential queries or requests for additional information. Keep a copy of the submitted form and attachments for records.
Upon successful submission, maintain a copy of the form and all supportive documents for the corporation's records. This will be essential for future reference or if any IRS follow-up is required.
Form 1120-S is the U.S. Income Tax Return for an S Corporation. It is designed for S corporations to report their income, gains, losses, deductions, credits, and other information necessary for the Internal Revenue Service (IRS) to assess their federal income tax liability. An S corporation must file this form if it has elected to be treated as such by filing Form 2553 and has received IRS approval for its S corporation status. This election allows the corporation's income, deductions, and other financial activities to be passed through to its shareholders, who then report this activity on their own personal income tax returns.
The deadline for filing Form 1120-S is the 15th day of the 3rd month following the end of the corporation's tax year. For most S corporations operating on a calendar year, this date falls on March 15th of the following year. If the due date falls on a weekend or legal holiday, the deadline is extended to the next business day. It is important for S corporations to file by the due date to avoid potential penalties and interest for late filing. Extensions are available, but they must be filed by the original due date using Form 7004.
Form 1120-S includes several sections, each serving a specific purpose in the reporting process:
Additionally, other schedules and forms may need to be attached, depending on the corporation's specific income and deductions.
An S corporation is considered a pass-through entity for tax purposes. This means the corporation itself does not pay federal income taxes. Instead, the corporation's income, losses, deductions, and credits are passed through to its shareholders. Shareholders then report this flow-through of income and losses on their personal tax returns, paying tax at their individual income tax rates. This setup aims to avoid the double taxation commonly faced by C corporations, which pay tax at the corporate level, with dividends taxed again at the individual shareholder level. Making an S corporation election can provide significant tax benefits, especially for smaller businesses looking to minimize their overall tax liability.
Filling out the Form 1120-S, U.S. Income Tax Return for an S Corporation, is a crucial process for S corporations in the United States to comply with tax obligations. However, mistakes can be made during this process. Here are ten common errors:
These mistakes can lead to errors in the tax return, which might result in penalties, audits, or additional scrutiny from the IRS. Therefore, it is imperative for S corporations to thoroughly review their Form 1120-S before submission, ensuring all information is complete, accurate, and compliant with the IRS requirements.
When preparing to file Form 1120-S, U.S. Income Tax Return for an S Corporation, several other forms and documents are commonly used in conjunction to ensure accurate and compliant tax filing. These additional forms play vital roles in providing detailed information, claiming specific deductions or credits, and complying with reporting requirements.
Together, these forms contribute to a thorough reporting and compliance process for S corporations and their shareholders, addressing various aspects of the business's financial activities, tax deductions, and shareholder distributions. Properly completing and attaching these complementary documents to Form 1120-S ensures compliance with IRS requirements and helps maximize potential tax benefits.
The Form 1065 U.S. Return of Partnership Income closely mirrors the Federal Supporting Form in purpose and structure as both are designed for entities that pass income through to their owners (partners in the case of 1065 and shareholders for the S corporation). Like the 1120-S, the Form 1065 requires reporting of income, deductions, and credits, and it provides a schedule (Schedule K-1) to report each partner's share of these items.
Form 1120 U.S. Corporation Income Tax Return is similar because it also covers reporting of income, gains, losses, deductions, and credits to determine the entity’s federal income tax liability. While it is for C corporations, which are taxed separately from their owners, the form parallels the structure of Form 1120-S by requiring detailed financial information and supporting documents.
The Form 1041 U.S. Income Tax Return for Estates and Trusts exhibits similarities in that it is used by fiduciaries to report the income, deductions, gains, losses, etc., of estates and trusts. Like the 1120-S, it allocates income to beneficiaries (similar to shareholders) through schedules.
Form 990 Return of Organization Exempt from Income Tax serves a similar role for tax-exempt organizations, requiring them to report their income, expenses, and activities. This form parallels the financial reporting and transparency aspects of the 1120-S, even though it is designed for a different type of entity.
The Schedule K-1 (Form 1120-S) Shareholder’s Share of Income, Deductions, Credits, etc. is an integral part of Form 1120-S, similar in purpose to the individual statements provided in other tax return packages (like the K-1 for Form 1065 partners) to report each owner's share of the entity's income and deductions, indicating its interconnectedness with the core form.
When preparing the Federal Supporting Form 1120-S for an S Corporation, there are precise steps you should follow to ensure compliance and accuracy in your filing. Adhering to these guidelines can facilitate a smoother processing of your tax return and help in avoiding common mistakes.
Things You Should Do:
Ensure that Form 2553 for the S corporation election has been previously filed or is attached. The transition to an S Corporation status is significant, requiring specific documentation to be recognized officially by the IRS.
Accurately report all income and expenses relevant to the business's operation on lines 1a through 21. This clear delineation of income and expenses directly impacts the business's taxable income and must reflect true figures for proper tax assessment.
Attach all necessary forms such as Form 1125-A for cost of goods sold, Form 1125-E for compensation of officers, Form 4797 for gains or losses, and Schedule K for shareholder income distributions. These accompanying documents provide detailed insights into the financial components of the corporation.
Check the appropriate boxes on the form to indicate significant events such as a change in the corporation's name, address, or the termination of the S corporation election. These events can have legal and tax implications requiring notification to the IRS.
Things You Shouldn't Do:
Avoid leaving any fields blank that are applicable to your corporation. Incomplete forms can lead to processing delays or the IRS requesting additional information, potentially delaying tax refunds or assessments.
Do not include income or expenses not related to the corporation's trade or business on lines 1a through 21. Keeping personal and business finances separate is crucial for an accurate tax return.
Resist the temptation to estimate or guess financial figures. Ensure that all numbers reported on the tax return are accurate and can be substantiated with financial documents or receipts if required by the IRS.
Never sign the form before it is completely filled out and all necessary documents are attached. The signature certifies that all information is accurate to the best of your knowledge. Submitting incomplete or inaccurate information knowingly can result in penalties.
Adhering to these dos and don'ts can considerably reduce the likelihood of errors while ensuring that your S Corporation's tax return is compliant with IRS requirements. This care in preparation underscores the responsibility of accurately reporting your corporation's financial activities to the federal government.
There are several common misconceptions about the Federal Supporting Form 1120-S, U.S. Income Tax Return for an S Corporation. It's important to clear these up for accurate filing and compliance:
Understanding these facts ensures that S corporations comply with IRS requirements, thereby avoiding penalties and fostering transparency in tax reporting.
When completing the Federal Supporting Form 1120-S for S corporations, it is crucial to understand and adhere to the specific requirements and instructions provided by the IRS to ensure accurate and compliant filing. Below are key takeaways to consider:
By following these key points and consulting the IRS instructions for Form 1120-S, preparers can accurately complete and submit the tax return for an S corporation, ensuring compliance with federal tax regulations.
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