What is Form 1120-S?
Form 1120-S, US Income Tax Return for an S Corporation, is an Internal Revenue Service (IRS) form used to report the income, gains, losses, deductions, credits, and other relevant financial information of a domestic corporation or an S corporation. In effect, IRS Form 1120-S is the tax return of an S Corporation.
S Corporations are a type of corporation that meet specific Internal Revenue Code requirements, allowing them to pass income (along with other credits, deductions, and losses) directly to shareholders, without having to pay federal corporate taxes.
The IRS uses the ownership percentage detailed in the 1120-S IRS form to allocate how much profit and loss should be assigned to an individual shareholder.
Who needs to use Form 1120-S?
A corporation must file Form 1120-S IRS if it elected to be an S corporation by filing Form 2553, and the Internal Revenue Service (IRS) accepted the election.
How to fill out Form 1120-S?
Form 1120-S is a long, but simple form to fill out. Make sure to download it in PDF format so that its format and structure stay the same even after being opened in another application and printed. It will be beneficial to have the relevant documents prepared to make sure that all information entered is correct and updated.
Calendar or Tax Year
Enter the beginning and end of the calendar or tax year that this form is being filed for.
Enter the name of the corporation.
Number, Street, and Room or Suite Number
Enter the number, street, and room or suite number of the corporation. If the corporation has a P.O. box and the post office does not deliver mail to the street address of the corporation, enter the P.O. box number instead.
City or Town, State or Province, Country, and ZIP or Foreign Postal Code
Enter the corporation’s city or town, state or province, country, and ZIP or foreign postal code.
Enter the effective date of the corporation’s election as an S corporation.
Enter the corporation’s Business Activity Code number.
Check the box provided if Schedule M-3 is attached.
Enter your Employer Identification Number (EIN).
Enter the date that the corporation was registered.
Enter the total assets of the corporation.
Check “yes” if the corporation is electing to be an S corporation at the beginning of this tax year. Otherwise, check “no”.
Check only one of the following that best applies to the purpose of this form:
- Final Return
- Name Change
- Address Change
- Amended Return
- S Election Termination
Enter the number of shareholders that were shareholders during any part of the tax year the form is being filed for.
Check the appropriate box that applies best to the corporation. You may choose between:
- Aggregated Activities for Section 465 at-risk purposes
- Grouped Activities for Section 469 passive activity purposes
Make sure to only include trade or business income and expenses on Lines 1a through 21.
Enter the gross receipts and sales.
Enter the returns and allowances.
Subtract Line 1b from Line 1a and enter the difference.
Enter the cost of the goods sold.
Subtract Line 2 from Line 1c and enter the difference.
Enter the amount of net gain as indicated on Form 4797, Line 17. Attach Form 4797 to this form.
Enter any other income and attach the relevant statement(s).
Add Lines 3, 4, and 5 and enter the sum.
Enter the amount of compensation given to officers. Attach Form 1125-E to this form.
Enter the salaries and wages paid (less any employment credits).
Enter the cost of repairs and maintenance.
Enter the costs incurred as a result of bad debts.
Enter the cost of rent.
Enter the total cost of taxes and licenses.
Enter the amount of interest incurred in the activities of the business.
Enter any depreciation not claimed on Form 1125-A or elsewhere on the return. Attach Form 4562 to this form.
Enter the cost of depletion. Do not deduct oil and gas depletion.
Enter the cost of advertising.
Enter the costs of any pension, profit-sharing, and other similar plans.
Enter the cost of employee benefit programs.
Enter the total of any other deductions not listed above. Attach the relevant statement to this form.
Add Lines 7 through 19 and enter the sum.
Subtract Line 20 from Line 6 and enter the difference.
Tax and Payments
Enter the excess net passive income or LIFO recapture tax.
Enter the amount of tax as calculated on Schedule D.
Add Lines 22a and 22b and enter the sum.
Enter the estimated tax payments made in 2021 and the amount of 2020 overpayment credited to 2021.
Enter the amount of tax deposited with Form 7004.
Enter the amount of credit for federal tax paid on fuels. Attach Form 4136 to this form.
Add lines 23a, 23b, and 23c and enter the sum.
Enter the estimated tax penalty. Then check the box if Form 2220 is attached to this form.
If Line 23d is smaller than the total of Lines 22c and 24, enter the difference as the amount owed.
If Line 23d is larger than the total of Lines 22c and 24, enter the difference as the amount overpaid.
Enter the amounts from Line 26 that are credited to 2022 estimated tax and refunded in the spaces provided.
Have the representative of the corporation that this form is being filed for sign in the space provided and enter the date the form was signed.
Enter the title of the representative that signed this form.
Permission to Discuss Form with Preparer
Check “Yes” if you wish to allow the IRS to discuss this form with the preparer shown below. Otherwise, check “No”.
Paid Preparer Use Only
Enter the name of the preparer.
Have the preparer sign the form in the space provided.
Enter the date that the preparer signed the form.
Check the box provided if the preparer is self-employed.
Preparer Tax Identification Number
Enter the preparer’s Preparer Tax Identification Number (PTIN).
Enter the name of the firm that the preparer works for, if applicable.
Enter the firm’s EIN, if applicable.
Enter the firm’s number, street, city or town, county or state, country, and ZIP code, if applicable.
Enter the preparer’s primary phone number.
Schedule B - Other Information
Check the box that corresponds to the accounting method being used. You may choose between:
- Other (specify the method in the space provided)
Enter the appropriate codes corresponding to Business Activity (2a) and Product or Service (2b) in the spaces provided.
If at any time of the year, a shareholder of the corporation was a disregarded entity, a trust, an estate, or a nominee or similar person, check “Yes” and attach Schedule B-1. Otherwise, check “No”.
If the corporation directly owned 20% or more, or own, directly or indirectly, 50% or more of the total stock issued and outstanding of any foreign or domestic corporation at the end of the tax year, check “Yes” and enter the following information in columns (i) through (v) below:
- Name of Corporation
- EIN (If any)
- Country of Incorporation
- Percentage of Stock Owned
- If Percentage in (iv) Is 100%, Enter the Date (if applicable) a Qualified Subchapter S Subsidiary Election Was Made
Otherwise, check “No”.
If the corporation directly owned 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 at the end of the tax year, check “Yes” and enter the following information in columns (i) through (v) below:
- Name of Entity
- EIN (if any)
- Type of Entity
- Country of Organization
- Maximum Percentage Owned in Profit, Loss or Capital
Otherwise, check “No”.
If the corporation had any outstanding shares of restricted stock at the end of the tax year, check “Yes” and enter the following information in Lines 5a (i) and 5a (ii) below:
- Total Shares of Restricted Stock
- Total Shares of Non-restricted Stock
Otherwise, check “No”.
If the corporation had any outstanding stock options, warrants, or similar instruments at the end of the tax year, check “Yes” and enter the following information in Lines 5b (i) and 5b (ii) below:
- Total Shares of Stock Outstanding at the End of the Tax Year
- Total Shares of Stock Outstanding if all Instruments were Executed
Check “Yes” if the corporation has filed or must file Form 8918 to provide information on any reportable transaction. Otherwise, check “No”.
If the corporation has issued publicly offered debt instruments with original issue discount, check the box provided. If the box was checked, the corporation may need to file Form 8281.
If 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 the net recognized built-in gain from prior years.
If the corporation has an election under section 163(j) for any real property trade or business or any farming business in effect during the tax year, check “Yes”. Otherwise, check “No”.
If the corporation satisfies one or more of the following, check “Yes”:
- The corporation owns a pass-through entity with current, or prior year carryover, excess business interest expense.
- The 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 expenses.
- The corporation is a tax shelter and the corporation has business interest expenses.
Otherwise, check “No”.
If the corporation satisfies both of the conditions below, check “Yes”:
- Corporation’s total receipts for the tax year were less than $250,000
- Corporation’s total assets at the end of the tax year were less than $250,000.
If “Yes” was checked, the corporation is not required to complete Schedules L and M-1. Otherwise, check “No”.
If the corporation had any non-shareholder debt that was canceled, forgiven, or had the terms modified so as to reduce the principal amount of debt, check “Yes” and enter the amount of principal reduction. Otherwise, check “No”.
If a qualified subchapter S subsidiary election was terminated or revoked during the tax year, check “Yes”. Otherwise, check “No”.
If the corporation made any payments in 2021 that would require it to file Form 1099, check “Yes”. Otherwise, check “No”.
If “Yes” was checked in Line 14a, check “Yes” if the corporation has filed or will file Form 1099. Otherwise, check “No”.
If the corporation is attaching Form 8996 to certify as a qualified opportunity fund, check “Yes” and enter the amount from Form 8996, Line 15. Otherwise, check “No”.
Schedule K - Shareholders’ Pro Rata Share Items
Enter the amount of ordinary business income or loss.
Enter the amount of net rental estate income or loss. Attach Form 8825 to this form.
Enter the amount of other gross income or loss.
Enter the amount of expenses from other rental activities and attach any relevant statements.
Subtract Line 3b from Line 3a.
Enter the amount of income earned from interest.
Enter the amount of ordinary dividends.
Enter the amount of qualified dividends.
Enter the amount earned from royalties.
Enter the net short-term capital gain or loss, and attach Schedule D to this form.
Enter the net long-term capital gain or loss.
Enter the amount of gain or loss from collectibles.
Enter the unrecaptured section 1250 gain and attach the relevant statements.
Enter the net section 1231 gain or loss and attach Form 4797.
Enter any other income or loss not declared above.
Enter the amount of section 179 deduction.
Enter the total amount spent on charitable contributions.
Enter the total amount of investment interest expense.
Enter the expenditures according to Section 59(e)(2).
Enter any other deductions not declared above.
Enter the total amount of low-income housing credit according to section 42(j)(5).
Enter any other low-income housing credit.
Enter the qualified rehabilitation expenditures (for rental real estate). If applicable, attach Form 3468 to this form.
Enter any other real estate credits.
Enter any other rental credits.
Enter the amount of biofuel producer credit, and attach Form 6478 to this form.
Enter the amount of any other credits not declared above.
Attach the Schedule K-2 form and check the box provided to indicate that you are reporting items of international tax relevance.
Alternative Minimum Tax Items
Enter the post-1986 depreciation adjustment.
Enter the adjusted gain or loss.
Enter the amount of depletion (other than oil and gas).
Enter the gross income from oil, gas, and other geothermal properties.
Enter the deductions from oil, gas, and other geothermal properties.
Enter any other Alternative Minimum Tax (AMT) items and attach the relevant statements.
Items Affecting Shareholder Basis
Enter the amount of Tax-exempt interest income.
Enter any other tax-exempt income.
Enter the total of any nondeductible expenses.
Enter the total of any distributions made and attach the relevant statements to this form.
Enter the amount of repayments made for loans from shareholders
Enter the amount of foreign taxes paid for or accrued.
Enter the amount of investment income earned.
Enter the amount of investment expenses of the corporation.
Enter the amount of dividend distributions paid from accumulated earnings and profits.
Enter any other relevant items and amounts and attach the relevant statements to this form.
Add the amounts on the far right column from Lines 1 through 10. From that sum, subtract the sum of the amounts on Lines 11 through 12d and 16f and enter the difference.
Schedule L - Balance Sheets per Books
This section has four columns split into two groups: Columns (a) and (b) under “Beginning of Tax Year” and Columns (c) and (d) under “End of Tax Year”. Make sure to keep these in mind to avoid any confusion when entering information.
All information that is entered here should correspond to the information on the records of the corporation.
Line 1 - Cash
Enter the cash balances at the beginning and end of the tax year. For the rest of the items in this section, make sure to enter the appropriate balances of the given items at the beginning and end of the tax year.
Line 2a - Trade Notes and Accounts Receivable
Enter the balances of trade notes and accounts receivable.
Line 2b - Less Allowance for Bad Debts
Enter the balances of the amount of allowance reduced to account for bad debts.
Line 3 - Inventories
Enter the balances of inventories.
Line 4 - US Government Obligations
Enter the balances of any US Government Obligations.
Line 5 - Tax-exempt Securities
Enter the balances of tax-exempt securities.
Line 6 - Other Current Assets
Enter the balances of any other current assets and attach the relevant statements to this form.
Line 7 - Loans to Shareholders
Enter the balances of any loans given to shareholders.
Line 8 - Mortgage and Real Estate Loans
Enter the balances of any mortgage and real estate loans.
Line 9 - Other Investments
Enter the balances of any other investments made and attach the relevant statements to this form.
Line 10a - Buildings and Other Depreciable Assets
Enter the balances of buildings and other depreciable assets.
Line 10b - Less Accumulated Depreciation
Enter the balances of the amount of depreciation accumulated.
Line 11a - Depletable Assets
Enter the balances of any depletable assets.
Line 11b - Less Accumulated Depletion
Enter the balances of the amount of depletion accumulated.
Line 12 - Land
Enter the balances of any land owned by the corporation, net of any amortization.
Line 13a - Intangible Assets
Enter the balances of any amortizable intangible assets owned.
Line 13b - Less Accumulated Amortization
Enter the balances of the amount of amortization accumulated.
Line 14 - Other Assets
Enter the balances of any other assets owned, and attach the relevant statements to this form.
Line 15 - Total Assets
Enter the balances of the total of all assets owned.
Line 16 - Accounts Payable
Enter the balances of accounts payable.
Line 17 - Mortgages, Notes, and Bonds Payable in Less Than 1 Year
Enter the balances of any mortgages, notes, and bonds payable in less than 1 year.
Line 18 - Other Current Liabilities
Enter the balances of any other current liabilities and attach the relevant statements to this form.
Line 19 - Loans from Shareholders
Enter the balances of loans from shareholders.
Line 20 - Mortgages, Notes, and Bonds Payable in 1 Year or More.
Enter the balances of any mortgages, notes, and bonds payable in 1 year or more.
Line 21 - Other Liabilities
Enter the balances of any other liabilities and attach the relevant statements to this form.
Line 22 - Capital Stock
Enter the balances of capital stock.
Line 23 - Additional Paid-in Capital
Enter the balances of any additional paid-in capital.
Line 24 - Retained Earnings
Enter the balances of retained earnings.
Line 25 - Adjustments to Shareholders’ Equity
Enter the balances of the adjustments to shareholders’ equity and attach the relevant statements to this form.
Line 26 - Less Cost of Treasury Stock
Enter the balances of the cost of treasury stock.
Line 27 - Total Liabilities and Shareholders’ Equity
Enter the total balances of liabilities and shareholders’ equity.
Schedule M-1 - Reconciliation of Income (Loss) per Books with Income (Loss) per Return
Enter the amount of net income or loss.
Enter the income included on Schedule K, Lines 1, 2, 3c, 4, 5a, 6, 7, 8a, 9, and 10 that has not been recorded in the books this year. Make sure to itemize them.
Enter the expenses recorded this year that are not included in Schedule K, Lines 1 through 12 and 16f. Make sure to itemize them.
Enter the amount of depreciation.
Enter the amount of expenses on travel and entertainment.
Add Lines 1 through 3 and enter the sum.
Enter the income recorded on books this year that was not included on Schedule K, Lines 1 through 10. Make sure to itemize them.
Enter the amount of tax-exempt interest.
Enter the amount of deductions not included on Schedule K, Lines 1 through 12 and 16f, that were not charged against book income for this tax year. Make sure to itemize them.
Enter the amount of depreciation.
Add Lines 5 and 6 and enter the sum.
Subtract Line 7 from Line 4 and enter the difference.
Schedule M-2 - Analysis of Accumulated Adjustments Account, Shareholders’ Undistributed Taxable Income Previously Taxed, Accumulated Earnings and Profits, and Other Adjustments Account
Enter the balances or amounts for each item in this section for each of the columns relevant to that item. The columns are as follows:
Column (a) - Accumulated Adjustments Account
Column (b) - Shareholders’ Undistributed Taxable Income Previously Taxed
Column (c) - Accumulated Earnings and Profits
Column (d) - Other Adjustments Account
Make sure to enter the correct information in each column.
Enter the balance of each column at the beginning of the tax year.
Enter the ordinary income from page 1, Line 21 of this form in Column (a).
Enter any other additions to Column (a) and Column (d).
Enter the loss from page 1, Line 21 of this form in Column (a), if applicable.
Enter any other reductions to Column (a) and Column (d).
Add Lines 1 through 5 and enter the sum in each respective column.
Enter the distributions in each column.
Subtract Line 7 from Line 6 and enter the difference in each column.
Tips when filling out Form 1120-S
Considering the length of the 1120 S Form, it is very important to make sure that one is putting the correct and necessary information in each part to avoid any legal issues.
Keep the form in a safe and secure area. As Form 1120-S will likely need to be submitted alongside several other attached forms, it is very important that it is kept in a safe area and submitted through secure and trustworthy means to avoid sensitive information being leaked and important documents being lost.
Double-check the information entered. Make sure that you have entered the correct information in the appropriate fields. It may be beneficial to consult the instructions of Form 941-SS on the IRS website if you require more details on what must be entered in the form.
Practice Good Contract Management. Keep a copy of this form (filled out) in a safe place. This is to make sure that you have a copy of it ready when necessary, whether for legal purposes or simply to serve as a record or backup.