Fill Out a Valid IRS 1120 Form

Fill Out a Valid IRS 1120 Form

The IRS 1120 form is a document used by U.S. corporations to report their income, gains, losses, deductions, and credits, as well as to calculate their income tax liability. This form plays a critical role in ensuring businesses comply with U.S. tax laws. Completion and accurate submission of this form are essential for corporations operating within the United States.

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Imagine navigating the bustling streets of the corporate world, where understanding the language of taxes is akin to possessing a map to hidden treasure. In this realm, the IRS 1120 form is a critical document, a beacon for corporations big and small. This form, known more formally as the U.S. Corporation Income Tax Return, serves a pivotal role in the financial journey of every corporation that operates within the United States. It's where a corporation reports its income, gains, losses, deductions, and credits to the Internal Revenue Service (IRS), painting a comprehensive picture of its fiscal health over the past year. This information is crucial not just for the IRS to determine how much tax the corporation owes, but also for the company to reflect on its financial trajectory, plan future moves, and ensure compliance with U.S. tax laws. Additionally, the form is a treasure trove of information for stakeholders looking to understand the company's financial standing. Navigating its complexities can be daunting, but with the right knowledge, companies can leverage this form to not just meet legal obligations but also strategically plan for future growth.

Document Example

Form 1120

Department of the Treasury

Internal Revenue Service

A Check if:

1a Consolidated return (attach Form 851) .

b Life/nonlife consoli- dated return . . .

2Personal holding co. (attach Sch. PH) . .

3Personal service corp. (see instructions) . .

4 Schedule M-3 attached

 

 

U.S. Corporation Income Tax Return

 

 

OMB No. 1545-0123

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For calendar year 2021 or tax year beginning

 

, 2021, ending

, 20

 

2021

 

Go to www.irs.gov/Form1120 for instructions and the latest information.

 

 

Name

 

 

 

 

 

B Employer identification number

TYPE

 

 

 

 

 

 

 

 

 

Number, street, and room or suite no. If a P.O. box, see instructions.

 

C Date incorporated

OR

 

 

 

 

 

 

 

 

 

 

PRINT

 

 

 

 

 

 

 

 

 

City or town, state or province, country, and ZIP or foreign postal code

 

D Total assets (see instructions)

 

 

 

 

 

 

 

 

 

 

$

 

E Check if: (1)

Initial return

(2)

Final return

(3)

Name change

(4)

Address change

 

1a

 

Gross receipts or sales

 

. . .

.

 

1a

 

 

 

 

 

 

 

 

 

 

 

 

 

 

b

 

Returns and allowances

 

. . .

.

 

1b

 

 

 

 

 

 

 

 

 

 

 

 

 

 

c

 

Balance. Subtract line 1b from line 1a

 

. . . . . . . . . . . .

1c

 

 

 

2

 

 

Cost of goods sold (attach Form 1125-A)

 

. . . . . . . . . . . .

2

 

 

 

 

3

 

 

Gross profit. Subtract line 2 from line 1c

 

. . . . . . . . . . . .

3

 

 

 

Income

4

 

 

Dividends and inclusions (Schedule C, line 23)

 

. . . . . . . . . . . .

4

 

 

 

5

 

 

Interest

. . . . . . . . . . . . . . . . . .

 

. . . . . . . . . . . .

5

 

 

 

 

 

 

 

 

 

 

 

6

 

 

Gross rents

 

. . . . . . . . . . . .

6

 

 

 

 

7

 

 

Gross royalties

 

. . . . . . . . . . . .

7

 

 

 

 

8

 

 

Capital gain net income (attach Schedule D (Form 1120)) . . . .

 

. . . . . . . . . . . .

8

 

 

 

 

9

 

 

Net gain or (loss) from Form 4797, Part II, line 17 (attach Form 4797)

 

. . . . . . . . . . . .

9

 

 

 

 

10

 

 

Other income (see instructions—attach statement)

 

. . . . . . . . . . . .

10

 

 

 

 

11

 

 

Total income. Add lines 3 through 10

 

. . .

.

. .

. .

.

.

.

 

11

 

 

 

deductions.)

12

 

 

Compensation of officers (see instructions—attach Form 1125-E) .

 

. . .

.

. .

. .

.

.

.

 

12

 

 

 

13

 

 

Salaries and wages (less employment credits)

 

. . . . . . . . . . . .

13

 

 

 

 

 

 

 

 

 

 

 

14

 

 

Repairs and maintenance

 

. . . . . . . . . . . .

14

 

 

 

 

15

 

 

Bad debts

 

. . . . . . . . . . . .

15

 

 

 

on

16

 

 

Rents

 

. . . . . . . . . . . .

16

 

 

 

17

 

 

Taxes and licenses

 

. . . . . . . . . . . .

17

 

 

 

limitations

 

 

 

 

 

 

20

 

 

Depreciation from Form 4562 not claimed on Form 1125-A or elsewhere on return (attach Form 4562) . . .

20

 

 

 

 

18

 

 

Interest (see instructions)

 

. . . . . . . . . . . .

18

 

 

 

 

19

 

 

Charitable contributions

 

. . . . . . . . . . . .

19

 

 

 

for

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21

 

 

Depletion

 

. . . . . . . . . . . .

21

 

 

 

instructions

25

 

 

Reserved for future use

 

. . . . . . . . . . . .

25

 

 

 

 

22

 

 

Advertising

 

. . . . . . . . . . . .

22

 

 

 

 

23

 

 

Pension, profit-sharing, etc., plans

. . . . . . . . . .

 

. . . . . . . . . . . .

23

 

 

 

 

24

 

 

Employee benefit programs

. . . . . . . . . . . .

 

. . . . . . . . . . . .

24

 

 

 

(See

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

26

 

 

Other deductions (attach statement)

 

. . . . . . . . . . . .

26

 

 

 

 

 

 

 

 

 

 

Deductions

27

 

 

Total deductions. Add lines 12 through 26

 

. . .

.

. .

. .

.

.

.

 

27

 

 

 

28

 

 

Taxable income before net operating loss deduction and special deductions. Subtract line 27 from line 11. .

28

 

 

 

 

 

 

 

 

 

 

29a

 

Net operating loss deduction (see instructions)

 

. . .

.

 

29a

 

 

 

 

 

 

 

 

 

 

 

 

 

 

b

 

Special deductions (Schedule C, line 24)

 

. . .

.

 

29b

 

 

 

 

 

 

 

 

 

 

 

 

 

 

c

 

Add lines 29a and 29b

 

. . . . . . . . . . . .

29c

 

 

and

30

 

 

Taxable income. Subtract line 29c from line 28. See instructions .

 

. . . . . . . . . . . .

30

 

 

 

31

 

 

Total tax

(Schedule J, Part I, line 11)

 

. . . . . . . . . . . .

31

 

 

 

Credits,Refundable Payments

 

 

 

 

 

 

32

 

 

Reserved for future use

 

. . . . . . . . . . . .

32

 

 

 

 

33

 

 

Total payments and credits (Schedule J, Part III, line 23) . . . .

 

. . . . . . . . . . . .

33

 

 

 

 

34

 

 

Estimated tax penalty. See instructions. Check if Form 2220 is attached

. .

.

. .

. .

.

.

 

 

 

34

 

 

 

 

35

 

 

Amount owed. If line 33 is smaller than the total of lines 31 and 34, enter amount owed

. . . . . .

35

 

 

 

Tax,

36

 

 

Overpayment. If line 33 is larger than the total of lines 31 and 34, enter amount overpaid

36

 

 

 

37

 

 

Enter amount from line 36 you want: Credited to 2022 estimated tax

 

 

 

 

 

 

 

Refunded

37

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sign

 

 

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

 

Here

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

with the preparer shown below?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See instructions.

Yes

No

 

 

 

Signature of officer

 

 

 

Date

 

Title

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paid

 

 

Print/Type preparer’s name

 

 

Preparer’s signature

 

 

 

 

 

Date

 

 

 

 

 

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. 11450Q

 

 

 

 

 

 

 

Form 1120 (2021)

Form 1120 (2021)

 

 

Page 2

Schedule C

Dividends, Inclusions, and Special Deductions (see

(a) Dividends and

(b) %

(c) Special deductions

 

instructions)

inclusions

(a) × (b)

 

 

1Dividends from less-than-20%-owned domestic corporations (other than debt-financed

stock)

50

2Dividends from 20%-or-more-owned domestic corporations (other than debt-financed

 

stock)

65

 

 

See

3

Dividends on certain debt-financed stock of domestic and foreign corporations . .

instructions

4

Dividends on certain preferred stock of less-than-20%-owned public utilities . . .

23.3

5

Dividends on certain preferred stock of 20%-or-more-owned public utilities . . . .

26.7

6

Dividends from less-than-20%-owned foreign corporations and certain FSCs . . .

50

7

Dividends from 20%-or-more-owned foreign corporations and certain FSCs . . .

65

8

Dividends from wholly owned foreign subsidiaries

100

 

 

See

9

Subtotal. Add lines 1 through 8. See instructions for limitations

instructions

10Dividends from domestic corporations received by a small business investment

 

company operating under the Small Business Investment Act of 1958

100

11

Dividends from affiliated group members

100

12

Dividends from certain FSCs

100

13Foreign-source portion of dividends received from a specified 10%-owned foreign

 

corporation (excluding hybrid dividends) (see instructions)

 

100

 

14

Dividends from foreign corporations not included on line 3, 6, 7, 8, 11, 12, or 13

 

 

 

(including any hybrid dividends)

 

 

 

15

Reserved for future use

 

 

 

 

16a

Subpart F inclusions derived from the sale by a controlled foreign corporation (CFC) of

 

 

 

the stock of a lower-tier foreign corporation treated as a dividend (attach Form(s) 5471)

100

 

 

(see instructions)

 

 

b

Subpart F inclusions derived from hybrid dividends of tiered corporations (attach Form(s)

 

 

 

5471) (see instructions)

 

 

 

c

Other inclusions from CFCs under subpart F not included on line 16a, 16b, or 17 (attach

 

 

 

Form(s) 5471) (see instructions)

 

 

17

Global Intangible Low-Taxed Income (GILTI) (attach Form(s) 5471 and Form 8992) . .

18

Gross-up for foreign taxes deemed paid

19

IC-DISC and former DISC dividends not included on line 1, 2, or 3

20

Other dividends

21

Deduction for dividends paid on certain preferred stock of public utilities . . . .

22

Section 250 deduction (attach Form 8993)

23Total dividends and inclusions. Add column (a), lines 9 through 20. Enter here and on page 1, line 4 . . . . . . . . . . . . . . . . . . . . . .

24

Total special deductions. Add column (c), lines 9 through 22. Enter here and on page 1, line 29b

Form 1120 (2021)

Form 1120 (2021)

 

 

 

 

 

Page 3

Schedule J

Tax Computation and Payment (see instructions)

 

 

 

 

 

Part I—Tax Computation

 

 

 

 

 

1

Check if the corporation is a member of a controlled group (attach Schedule O (Form 1120)). See instructions

 

 

2

Income tax. See instructions

. . . .

. . .

2

 

3

Base erosion minimum tax amount (attach Form 8991)

. . . .

. . .

3

 

4

Add lines 2 and 3

. . . .

. . .

4

 

5a

Foreign tax credit (attach Form 1118)

5a

 

 

 

 

b

Credit from Form 8834 (see instructions)

5b

 

 

 

 

c

General business credit (attach Form 3800)

5c

 

 

 

 

d

Credit for prior year minimum tax (attach Form 8827)

5d

 

 

 

 

e

Bond credits from Form 8912

5e

 

 

 

 

6

Total credits. Add lines 5a through 5e

. . . .

. . .

6

 

7

Subtract line 6 from line 4

. . . .

. . .

7

 

8

Personal holding company tax (attach Schedule PH (Form 1120))

. . . .

. . .

8

 

9a

Recapture of investment credit (attach Form 4255)

9a

 

 

 

 

b

Recapture of low-income housing credit (attach Form 8611)

9b

 

 

 

 

c

Interest due under the look-back method—completed long-term contracts (attach

 

 

 

 

 

 

Form 8697)

9c

 

 

 

 

d

Interest due under the look-back method—income forecast method (attach Form 8866)

9d

 

 

 

 

e

Alternative tax on qualifying shipping activities (attach Form 8902)

9e

 

 

 

 

f

Interest/tax due under section 453A(c) and/or section 453(l)

9f

 

 

 

 

g

Other (see instructions—attach statement)

9g

 

 

 

 

10

Total. Add lines 9a through 9g

. . . .

. . .

10

 

11

Total tax. Add lines 7, 8, and 10. Enter here and on page 1, line 31

. . . .

. . .

11

 

Part II—Reserved For Future Use

12 Reserved for future use . . . . . . . . . . . . . . . . . . . . . . . . . . .

12

Part III—Payments and Refundable Credits

13

2020 overpayment credited to 2021

. . . . . . . .

13

 

 

14

2021 estimated tax payments

. . . . . . . .

14

 

 

15

2021 refund applied for on Form 4466

. . . . . . . .

15

(

)

16

Combine lines 13, 14, and 15

. . . . . . . .

16

 

 

17

Tax deposited with Form 7004

. . . . . . . .

17

 

 

18

Withholding (see instructions)

. . . . . . . .

18

 

 

19

Total payments. Add lines 16, 17, and 18

. . . . . . . .

19

 

 

20

Refundable credits from:

 

 

 

 

 

 

a

Form 2439

 

20a

 

 

 

 

b

Form 4136

 

20b

 

 

 

 

c

Reserved for future use

 

20c

 

 

 

 

d

Other (attach statement—see instructions)

 

20d

 

 

 

 

21

Total credits. Add lines 20a through 20d

. . . . . . . .

21

 

 

22

Reserved for future use

. . . . . . . .

22

 

 

23

Total payments and credits. Add lines 19 and 21. Enter here and on page 1, line 33 .

. . . . . . . .

23

 

 

 

 

 

 

 

 

 

Form 1120 (2021)

Form 1120 (2021)

Page 4

Schedule K Other Information (see instructions)

1

Check accounting method: a

Cash

b

Accrual

c

Other (specify)

2See the instructions and enter the: a Business activity code no.

b Business activity c Product or service

3 Is the corporation a subsidiary in an affiliated group or a parent–subsidiary controlled group? . . . . . . . . . .

If “Yes,” enter name and EIN of the parent corporation

4At the end of the tax year:

aDid any foreign or domestic corporation, partnership (including any entity treated as a partnership), trust, or tax-exempt organization own directly 20% or more, or own, directly or indirectly, 50% or more of the total voting power of all classes of the

corporation’s stock entitled to vote? If “Yes,” complete Part I of Schedule G (Form 1120) (attach Schedule G) . . . . . .

bDid any individual or estate own directly 20% or more, or own, directly or indirectly, 50% or more of the total voting power of all

classes of the corporation’s stock entitled to vote? If “Yes,” complete Part II of Schedule G (Form 1120) (attach Schedule G) .

5At 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 voting power of all classes of stock entitled to vote of any foreign or domestic corporation not included on Form 851, Affiliations Schedule? For rules of constructive ownership, see instructions. If “Yes,” complete (i) through (iv) below.

Yes No

(i)Name of Corporation

(ii)Employer

Identification Number

(if any)

(iii)Country of Incorporation

(iv)Percentage Owned in Voting

Stock

bOwn directly an interest of 20% or more, or own, directly or indirectly, an interest of 50% or more 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 (iv) below.

(i)Name of Entity

(ii)Employer

Identification Number

(if any)

(iii)Country of Organization

(iv)Maximum

Percentage Owned in Profit, Loss, or Capital

6During this tax year, did the corporation pay dividends (other than stock dividends and distributions in exchange for stock) in

excess of the corporation’s current and accumulated earnings and profits? See sections 301 and 316 . . . . . . . .

If “Yes,” file Form 5452, Corporate Report of Nondividend Distributions. See the instructions for Form 5452. If this is a consolidated return, answer here for the parent corporation and on Form 851 for each subsidiary.

7At any time during the tax year, did one foreign person own, directly or indirectly, at least 25% of the total voting power of all classes of the corporation’s stock entitled to vote or at least 25% of the total value of all classes of the corporation’s stock? .

For rules of attribution, see section 318. If “Yes,” enter:

(a) Percentage owned

and (b) Owner’s country

(c)The corporation may have to file Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business. Enter the number of Forms 5472 attached

8 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.

9Enter the amount of tax-exempt interest received or accrued during the tax year $

10Enter the number of shareholders at the end of the tax year (if 100 or fewer)

11If the corporation has an NOL for the tax year and is electing to forego the carryback period, check here (see instructions)

If the corporation is filing a consolidated return, the statement required by Regulations section 1.1502-21(b)(3) must be attached or the election will not be valid.

12Enter the available NOL carryover from prior tax years (do not reduce it by any deduction reported on

page 1, line 29a.) . . . . . . . . . . . . . . . . . . . . . . . . . $

Form 1120 (2021)

Form 1120 (2021)

Page 5

Schedule K Other Information (continued from page 4)

13

Are the corporation’s total receipts (page 1, line 1a, plus lines 4 through 10) for the tax year and its total assets at the end of the

Yes No

 

 

tax year less than $250,000?

 

 

If “Yes,” the corporation is not required to complete Schedules L, M-1, and M-2. Instead, enter the total amount of cash

 

 

distributions and the book value of property distributions (other than cash) made during the tax year $

 

14

Is the corporation required to file Schedule UTP (Form 1120), Uncertain Tax Position Statement? See instructions . . . .

 

 

If “Yes,” complete and attach Schedule UTP.

 

15a

Did the corporation make any payments in 2021 that would require it to file Form(s) 1099?

 

b

If “Yes,” did or will the corporation file required Form(s) 1099?

 

16During this tax year, did the corporation have an 80%-or-more change in ownership, including a change due to redemption of its

own stock? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17During or subsequent to this tax year, but before the filing of this return, did the corporation dispose of more than 65% (by value)

of its assets in a taxable, non-taxable, or tax deferred transaction? . . . . . . . . . . . . . . . . . .

18Did the corporation receive assets in a section 351 transfer in which any of the transferred assets had a fair market basis or fair

market value of more than $1 million? . . . . . . . . . . . . . . . . . . . . . . . . . . .

19During the corporation’s tax year, did the corporation make any payments that would require it to file Forms 1042 and 1042-S under chapter 3 (sections 1441 through 1464) or chapter 4 (sections 1471 through 1474) of the Code? . . . . . . . .

20 Is the corporation operating on a cooperative basis?. . . . . . . . . . . . . . . . . . . . . . .

21During the tax year, did the corporation pay or accrue any interest or royalty for which the deduction is not allowed under section

267A? See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

If “Yes,” enter the total amount of the disallowed deductions $

22Does the corporation have gross receipts of at least $500 million in any of the 3 preceding tax years? (See sections 59A(e)(2)

and (3)) .

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

If “Yes,” complete and attach Form 8991.

23Did 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

24

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.

25

Is the corporation attaching Form 8996 to certify as a Qualified Opportunity Fund?

 

If “Yes,” enter amount from Form 8996, line 15 . . . . $

26Since December 22, 2017, did a foreign corporation directly or indirectly acquire substantially all of the properties held directly or indirectly by the corporation, and was the ownership percentage (by vote or value) for purposes of section 7874 greater than 50% (for example, the shareholders held more than 50% of the stock of the foreign corporation)? If “Yes,” list the ownership

percentage by vote and by value. See instructions . . . . . . . . . . . . . . . . . . . . . . .

Percentage: By Vote

By Value

Form 1120 (2021)

Form 1120 (2021)

 

 

 

 

 

 

 

 

 

 

 

 

Page 6

Schedule L

 

Balance Sheets per Books

 

 

Beginning of tax year

 

 

End of tax year

 

 

 

 

Assets

 

 

 

 

(a)

 

(b)

 

(c)

 

 

(d)

1

Cash

 

 

 

 

 

 

 

 

 

 

2a

Trade notes and accounts receivable . . .

 

 

 

 

 

 

 

 

 

b

Less allowance for bad debts . .

. . .

 

(

 

)

 

(

)

 

 

3

Inventories

 

 

 

 

 

 

 

 

 

4

U.S. government obligations

. . . . .

 

 

 

 

 

 

 

 

 

 

5

Tax-exempt securities (see instructions) . .

 

 

 

 

 

 

 

 

 

 

6

Other current assets (attach statement) . .

 

 

 

 

 

 

 

 

 

 

7

Loans to shareholders

 

 

 

 

 

 

 

 

 

 

8

Mortgage and real estate loans

 

 

 

 

 

 

 

 

 

 

9

Other investments (attach statement) . . .

 

 

 

 

 

 

 

 

 

 

10a

Buildings and other depreciable assets . .

 

 

 

 

 

 

 

 

 

b

Less accumulated depreciation . .

. . .

 

(

 

)

 

(

)

 

 

11a

Depletable assets

 

 

 

 

 

 

 

 

 

b

Less accumulated depletion . . .

. . .

 

(

 

)

 

(

)

 

 

12

Land (net of any amortization)

 

 

 

 

 

 

 

 

 

13a

Intangible assets (amortizable only)

. . .

 

 

 

 

 

 

 

 

 

 

b

Less accumulated amortization . .

. . .

 

(

 

)

 

(

)

 

 

14

Other assets (attach statement)

 

 

 

 

 

 

 

 

 

 

15

Total assets

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

16

Accounts payable

 

 

 

 

 

 

 

 

 

 

17

Mortgages, notes, bonds payable in less than 1 year

 

 

 

 

 

 

 

 

 

 

18

Other current liabilities (attach statement) . .

 

 

 

 

 

 

 

 

 

 

19

Loans from shareholders

 

 

 

 

 

 

 

 

 

 

20

Mortgages, notes, bonds payable in 1 year or more

 

 

 

 

 

 

 

 

 

 

21

Other liabilities (attach statement) . . . .

 

 

 

 

 

 

 

 

 

 

22

Capital stock:

a Preferred stock . . . .

 

 

 

 

 

 

 

 

 

 

 

 

 

b Common stock . . . .

 

 

 

 

 

 

 

 

 

 

23

Additional paid-in capital

 

 

 

 

 

 

 

 

 

 

24

Retained earnings—Appropriated (attach statement)

 

 

 

 

 

 

 

 

 

 

25

Retained earnings—Unappropriated . . .

 

 

 

 

 

 

 

 

 

 

26

Adjustments to shareholders’ equity (attach statement)

 

 

 

 

 

 

 

 

 

 

27

Less cost of treasury stock

 

 

 

 

(

)

 

 

(

)

28

Total liabilities and shareholders’ equity . .

 

 

 

 

 

 

 

 

 

Schedule M-1 Reconciliation of Income (Loss) per Books With Income per Return

Note: The corporation may be required to file Schedule M-3. See instructions.

1

Net income (loss) per books

7

Income recorded on books this year

2

Federal income tax per books

 

 

not included on this return (itemize):

3

Excess of capital losses over capital gains .

 

 

Tax-exempt interest $

4Income subject to tax not recorded on books this year (itemize):

 

 

 

8

 

Deductions on this return not charged

5

Expenses recorded on books this year not

 

against book income this year (itemize):

 

deducted on this return (itemize):

a

Depreciation . . $

a

Depreciation . . . . $

b

Charitable contributions $

bCharitable contributions . $

cTravel and entertainment . $

 

 

 

9

Add lines 7 and 8

6

Add lines 1 through 5

10

Income (page 1, line 28)—line 6 less line 9

Schedule M-2 Analysis of Unappropriated Retained Earnings per Books (Schedule L, Line 25)

1

Balance at beginning of year

5

Distributions: a Cash

2

Net income (loss) per books

 

 

 

b Stock . . . .

3

Other increases (itemize):

 

 

 

c Property . . . .

 

 

 

6

Other decreases (itemize):

 

 

 

7

Add lines 5 and 6

4

Add lines 1, 2, and 3

8

Balance at end of year (line 4 less line 7)

Form 1120 (2021)

Form Breakdown

Fact Name Description
Form Purpose The IRS Form 1120 is used by corporations to report their income, gains, losses, deductions, credits, and to figure out their income tax liability.
Who Must File All domestic corporations (including corporations in bankruptcy) must file Form 1120, unless they are exempt under section 501.
Filing Deadline Form 1120 must be filed by the 15th day of the 4th month following the end of the corporation's tax year. For corporations operating on a calendar year, this date is April 15.
Extensions A corporation can apply for a six-month extension to file Form 1120 by submitting Form 7004 by the original due date of the 1120 form.

IRS 1120 - Usage Guide

Embarking on the task of filling out the IRS 1120 form, which is used by corporations to report their income, gains, losses, deductions, and credits to the Internal Revenue Service (IRS), can seem daunting at first. However, by breaking down the process into step-by-step instructions, the task becomes more manageable. It's crucial for corporations to accurately complete this form as it determines the income tax they owe to the federal government. Let's guide you through each necessary step to ensure you fill out the form correctly and comprehensively.

  1. Gather all required information including the corporation's EIN (Employer Identification Number), income statement, balance sheet, and records of deductions and credits.
  2. Download the latest IRS Form 1120 from the official IRS website to ensure you have the most current version.
  3. Start with page 1 of the form, entering the corporation’s name, address, and EIN in the spaces provided at the top.
  4. Fill in the applicable boxes on lines 1 through 11 with income and dividends as they apply to your corporation. This includes gross receipts or sales, returns and allowances, cost of goods sold, and dividends on certain investments.
  5. Calculate the corporation’s gross income (line 11) by adding lines 1 through 10 and enter the result.
  6. Report all deductions including salaries, wages, repairs, maintenance, rents, taxes, and interest on lines 12 through 27. These reduce the total income to determine taxable income.
  7. Compute the corporation’s taxable income by subtracting the total deductions from gross income and enter this on line 30.
  8. Follow the instructions on the form to calculate the corporation's tax liability using the IRS’s tax rate schedule and enter the amount on line 31.
  9. If applicable, complete the schedules on pages 2 through 5 of the form. This includes detailing the corporation's dividend and special deductions (Schedule C), computing the tax on certain built-in gains and investment income (Schedule J), and providing information about officers (Schedule E).
  10. Sign and date the form. The company's treasurer or any other authorized officer should sign the form. If a paid preparer was used, their information should be included as well.
  11. Mail the completed form to the appropriate IRS address for your corporation’s location or electronically file (e-file) it through an IRS-approved software if you prefer an electronic submission.

After submitting the IRS Form 1120, the corporation has officially reported its annual earnings and expenses. It's important to keep a copy of the filed form and all relevant documents used in its preparation for at least three years, as these records may be requested by the IRS for verification purposes. Staying organized and ensuring the accuracy of the information reported helps smoothen the process and can mitigate potential issues with the IRS down the line.

More About IRS 1120

What is the IRS 1120 form used for?

The IRS 1120 form is a tax document used by corporations in the United States to report their income, gains, losses, deductions, and credits to the Internal Revenue Service (IRS). This form helps determine the income tax liability of a corporation for the year. It's an essential document for any corporation that does not elect to be treated as an S corporation.

Who is required to file the IRS 1120 form?

All corporations that are incorporated in the United States or conduct business within the United States are required to file the IRS 1120 form. This includes corporations in all 50 states and the District of Columbia. Foreign corporations with income in the U.S. may also need to file this form or a version of it. However, corporations elected to be treated as S corporations should file Form 1120S instead.

When is the IRS 1120 form due?

The due date for the IRS 1120 form generally falls on the 15th day of the fourth month following the end of the corporation's tax year. For corporations that follow a calendar year, the due date is April 15th of the following year. If the due date falls on a weekend or legal holiday, the form is due on the next business day. Corporations can request a six-month extension to file the form by using Form 7004.

What are the penalties for filing the IRS 1120 form late?

Filing the IRS 1120 form late can lead to penalties, which are generally based on the amount of tax owed and how late the form is filed. The penalty is usually 5% of the unpaid taxes for each month or part of a month that the return is late, up to a maximum of 25%. If the return is filed more than 60 days after the due date, the minimum penalty could be $435 or the balance of the tax due on the return, whichever is smaller. There could also be additional penalties for failing to pay the taxes owed on time.

Common mistakes

When it comes to filling out the IRS 1120 form, otherwise known as the U.S. Corporation Income Tax Return, even the most diligent of taxpayers can stumble. This form, crucial for corporations, is a thorough document requiring exacting detail. One common mistake lies in incorrect income reporting. Businesses often either overstate or understate their income due to misinterpretation of what constitutes taxable income, leading to significant discrepancies.

Another area frequently fraught with errors is the improper deduction of expenses. Not every business expense qualifies for a deduction. Taxpayers may inadvertently claim deductions not allowed or fail to claim deductions they're entitled to, affecting their taxable income. Amidst the myriad of potential deductions, knowing the rules is key.

Calculation errors stand as a testament to the complexity of tax preparation. Simple arithmetic mistakes or misapplication of tax rates can skew the tax liability considerably. These errors are often due to oversight or misunderstanding of how certain calculations should be performed, underscoring the importance of double-checking all figures.

The categorization of income can also trip up many businesses. Different types of income may be taxed differently, and failing to properly categorize these can lead to incorrect tax amounts being reported. Whether it's capital gains, dividends, or interest income, each category needs to be reported in its respective section on the 1120 form.

Failing to properly report shareholders' dividends is a mistake that can have consequences for both the corporation and its shareholders. Dividends distributed to shareholders are not deductible by the corporation, yet they must be reported. Incorrect handling of this information can lead to audits or penalties.

Many corporations overlook the significance of accurate balance sheet reporting. The IRS 1120 form requires a detailed balance sheet that reflects the company's financial position at the beginning and end of the tax year. Inaccuracies here can raise red flags with the IRS, leading to further scrutiny.

Another critical area often mishandled is the carrying over of net operating losses (NOLs). NOLs can reduce future taxable income, but they must be documented accurately. Failure to properly carry over or document these losses can result in lost tax benefits.

Last but not least, the omission of necessary schedules and attachments can derail the entire filing process. The IRS 1120 form often requires additional documents to support the numbers reported. Forgetting to include these can cause delays in processing and potentially trigger an audit.

In conclusion, filling out the IRS 1120 form is a task that demands attention to detail and a deep understanding of tax regulations. By steering clear of the mistakes outlined above, corporations can ensure a smoother filing process and potentially avoid unnecessary interactions with the IRS.

Documents used along the form

When businesses prepare their tax returns using the IRS Form 1120, which is the U.S. Corporation Income Tax Return, they often need to include additional forms and documents. These documents are essential for providing a complete and accurate picture of a company's financial activities throughout the tax year. The following list includes some of these key forms and documents.

  • Schedule K-1 (Form 1065): This document is used by partnerships and S corporations. It reports each partner's or shareholder's share of the corporation's income, deductions, credits, etc. Even though corporations filing Form 1120 do not use Schedule K-1 for reporting their income, shareholders of S corporations need this form to report their share of the corporation's income on their personal tax returns.
  • Form 4562: This form is used for reporting depreciation and amortization. Companies use it to claim their deductions for the depreciation of property and amortization of costs such as patents or leasehold improvements. It's crucial for corporations looking to reduce their taxable income by accounting for the wear, tear, and obsolescence of their assets.
  • Form 4797: This form reports the sales of business property. Corporations use it to report gains or losses from the sale or exchange of property used in a trade or business. It's essential for accurately reporting both the revenue received from the sale of assets and any resulting gains or losses.
  • Form 8825: This form is used by real estate rental activities. While primarily related to partnerships and S corporations (which report income on Form 1120-S), corporations owning rental real estate as part of their business operations may also need to include relevant income and expenses from Form 8825 in their tax calculations.
  • Form 1125-A: This form details the cost of goods sold. Corporations that manufacture products or purchase them for resale must use this form to report the costs associated with producing or acquiring their goods. It is an essential component of calculating gross profit.
  • Form 5472: This form is required for reporting transactions between a U.S. corporation and foreign shareholders or other related foreign entities. It's crucial for corporations with international dealings to comply with U.S. tax laws regarding transactions with foreign related parties.

All these forms and documents complement the IRS Form 1120 to provide a comprehensive view of a corporation's financial and tax situation. Preparing a corporate tax return can be complex, and ensuring that all necessary information is accurately reported is crucial for compliance with tax regulations and for minimizing legal risks. Businesses often consult with tax professionals to navigate these complexities and to facilitate the compliance process effectively.

Similar forms

The IRS 1120 form, known as the U.S. Corporation Income Tax Return, is a critical document for corporations in the United States. It bears resemblance to several other tax documents, each serving unique purposes but sharing commonalities with the 1120 form in terms of structure, function, or the information required. Understanding these similarities helps demystify the complex landscape of tax reporting for businesses and individuals alike.

The IRS 1065 form, or U.S. Return of Partnership Income, shares significant similarities with the 1120 form, primarily in its purpose to report the income, gains, losses, deductions, and credits of business entities. However, the 1065 form is specifically used by partnerships, not corporations. Both forms require detailed financial information about the business's operations over the tax year, emphasizing the importance of accurate record-keeping for businesses irrespective of their structure.

The IRS 1120S form is specially designed for S corporations, businesses that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. Like the standard 1120 form, the 1120S requires detailed income and expense information. However, it also includes schedules to report income and losses allocated to shareholders, highlighting the different tax implications for S corporations due to their unique structure.

Form 1040, the U.S. Individual Income Tax Return, while primarily for individual filers, intersects with the 1120 in the context of dividends received from corporations. Owners or shareholders of corporations may need to report dividends from the corporation on their 1040 forms, showcasing the interconnectedness of corporate and individual tax reporting.

The Schedule K-1 (Form 1065) document, essential for partners in a partnership, relates to the IRS 1120 form in how it delineates the distribution of income and losses to each partner. Even though it's used within the partnership context and not for corporations, the principle of allocating the entity’s financial activities to individuals for tax purposes closely echoes the spirit of the 1120’s reporting requirements.

Form 990, the Return of Organization Exempt From Income Tax, bears a functional similarity to the IRS 1120 form in its objective to report income and expenses. Used by tax-exempt organizations, Form 990 ensures transparency and accountability of non-profits, much like the 1120 form does for corporations, ensuring they meet their tax obligations based on their financial activities.

The Employment Tax Forms, including the 940, 941, and W-2, while not directly related to corporate income tax, are part of the broader tax reporting ecosystem that corporations must navigate. These forms deal with reporting wages paid, employment taxes withheld, and unemployment taxes, underscoring the multifaceted nature of tax responsibilities for businesses, a theme central to the IRS 1120 form's purpose.

Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business, shares a target audience with the IRS 1120 form in some cases. Required for certain foreign-owned corporations and foreign corporations operating in the U.S., it complements the IRS 1120 by focusing on international transactions and ownership, thus expanding the scope of reporting required for corporations engaged in global business activities.

Lastly, the IRS Form 1099-MISC, Miscellaneous Income, although primarily for freelancers and independent contractors, intersects with corporate tax matters when corporations pay for services exceeding $600 in a tax year to non-employees. These payments must be reported both to the IRS and the service provider, connecting it back to the broader theme of financial transparency and accountability in the corporate tax reporting process, much like the transparency sought through the IRS 1120 form.

Dos and Don'ts

Filing the IRS Form 1120, which is the U.S. Corporation Income Tax Return, is essential for corporations to report their income, gains, losses, deductions, and credits. This process can be complex, so it's crucial to approach it carefully to ensure accuracy and compliance with tax laws. Here are some key dos and don'ts.

Do:

  • Ensure that all the information is accurate and complete. Double-check figures and calculations to prevent any errors that could delay processing or trigger audits.
  • Use the IRS’s instructions for Form 1120 to guide you through each part of the form. These instructions are regularly updated and provide crucial information for each line of the form.
  • Maintain a clear record of all documents and worksheets used in preparing your return. Proper documentation is essential in case the IRS has questions or you need to amend your return later.
  • Consider electronic filing (e-filing) as it's faster, more secure, and typically provides immediate confirmation that your return has been received.
  • Seek advice from a tax professional if you encounter any uncertainties. The complexity of tax laws and regulations makes it beneficial to consult someone with expertise.

Don't:

  1. Leave any fields blank. If a particular line does not apply to your corporation, fill in a “0” instead of leaving it empty. This shows that you did not overlook the line.
  2. Misclassify salaries and dividends. Ensure you properly report compensation to officers and dividend distributions to avoid penalties.
  3. Forget to sign and date the form. An unsigned tax return is like an unsigned check – it's not valid.
  4. Ignore filing deadlines. Late filing can result in penalties and interest on any taxes owed. Keep track of important deadlines to avoid unnecessary costs.
  5. Overlook state and local tax requirements. In addition to federal taxes, your corporation might be subject to state and local taxes. Be sure to comply with these requirements to avoid issues.

Misconceptions

The IRS 1120 form, often a topic of confusion for many, is a crucial document for corporations in the United States, detailing their income, gains, losses, deductions, and credits to the Internal Revenue Service (IRS). However, surrounding this form, numerous misconceptions may lead to misunderstandings or errors in filing. Here are eight common misconceptions about the IRS 1120 form:

  • Only Large Corporations Need to File It: Many people wrongly assume that the IRS 1120 form is exclusively for large or multinational corporations. In reality, most corporations operating in the United States must file this form, regardless of their size.
  • It's the Same as the 1120S Form: Although they might sound similar, the 1120 and 1120S forms serve different purposes. The 1120S form is specifically for S corporations, which have a special tax status, allowing income to pass through to shareholders to avoid double taxation. In contrast, the 1120 form is for C corporations.
  • The Deadline is Fixed: The belief that the filing deadline for the 1120 form is set in stone every year is not accurate. While April 15th is a commonly cited date, deadlines can shift due to weekends, holidays, or extensions granted by the IRS.
  • Filing Electronically is Optional: Some might think that electronic filing is a matter of preference. However, the IRS requires corporations above a certain size to file their 1120 forms electronically, aiming to increase efficiency and reduce errors.
  • Amendments Are Not Allowed: It's a misconception that once the 1120 form has been filed, it cannot be adjusted. If errors are discovered or financial situations change, corporations can file an amended return using form 1120X.
  • Penalties Are Rare: Some believe penalties are infrequently applied, but the truth is that failing to file on time, not paying owed taxes, or making errors on the form can result in significant financial penalties.
  • Personal and Business Taxes Are Filed Together: For owners of C corporations, it's crucial to understand that personal and business taxes are separate entities. The 1120 form covers only the corporation's taxes, while personal income is reported on individual tax returns.
  • All Profits Must Be Distributed to Shareholders: A common misunderstanding is that all profits shown on the 1120 form must be handed out to shareholders in the form of dividends. Corporations often reinvest profits into the business or retain earnings for future use without an immediate obligation to distribute them.

Understanding these misconceptions about the IRS 1120 form can lead to more informed decisions and smoother interactions with tax obligations. When in doubt, consulting with a tax professional is always a wise course of action to ensure compliance and optimize financial outcomes.

Key takeaways

Filling out and using the IRS 1120 form, a critical requirement for corporations, demands attention to detail and an understanding of tax obligations. To navigate this efficiently, certain key takeaways can make the process more accessible and ensure compliance with tax laws. Below are several points to consider.

  • Understanding the Form’s Purpose: The IRS form 1120 is designed for corporations to report their income, gains, losses, deductions, credits, and to calculate their federal income tax liability. Being familiar with the form’s objectives can help in gathering the necessary information before beginning the filling process.

  • Gathering Required Information: Before starting to fill out the form, it's crucial to collect all required documentation, including records of income, deductions, and credits. This preparation can streamline the process, reducing errors and saving time.

  • Deadline Awareness: Corporations must file the IRS 1120 form by the 15th day of the fourth month following the end of the company's fiscal year. For those operating on a calendar year, the deadline is April 15. Marking this date on the calendar can prevent late submissions and potential penalties.

  • Seeking Professional Help: Given the complexities involved in tax reporting and the potential for costly mistakes, consulting with a tax professional or an accountant can be invaluable. They can provide guidance, ensure the form is filled out accurately, and offer advice on tax planning strategies.

By keeping these key takeaways in mind, corporations can approach the IRS 1120 form with confidence, ensure that they meet their tax obligations, and maintain a stance of good standing with the IRS.

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