A Form 1120-S is also known as an U.S. Income Tax Return for an S Corporation. An S Corporation is a corporation that elects to pass corporate income, losses, deductions, and credits through to their shareholders. This will allow the corporation to avoid double taxation. To be considered an S Corporation, a corporation must be domestic, have no more than 100 shareholders, have only one stock class, and not be an ineligible form of corporation.
A company must already be considered an S Corporation before they use this tax return for its yearly tax filing. Like other types of tax returns, this form will require information about the corporation’s earnings, losses, deductions, and credits. This will ensure that the amount of taxes owed or refunded will be accurate. Other information may be required depending on the type of corporation and the number of employees at the company during the tax year.
S Corporations are a form of corporate structure that allows a business to pass its income, losses, deductions, and credits through to shareholders for federal tax purposes. This allows for limited liability and prevents double taxation.
To form an S Corporation, there cannot be 100 or more shareholders. If the corporation does not have significant inventory, then it is able to use the cash method of accounting under S corporation terms.
S corporations are subject to many of the same rules that C corporations must follow. Both S corporations and C corporations must file articles of incorporation and hold regular meetings for directors and shareholders. Both types of corporations are subject to high legal, accounting, and tax service fees.
The IRS Form 1120-S is the annual tax form that S corps and LLCs that are taxed as S corps must complete to report net earnings to the IRS.
The Form 1120-S contains the following components:
To complete a Form 1120-S, you need to provide the following information: