1120s

Form 1120S, U.S. Income Tax Return for an S Corporation, is the annual tax return filed with the Internal Revenue Service by eligible domestic corporations that have elected to be taxed under Subchapter S. An S corporation generally does not pay federal income tax at the corporate level. Instead, items of income, deductions, credits, and losses pass through to shareholders, who report them on their individual tax returns.

The corporation reports its income, deductions, gains, losses, and credits on Form 1120S, and the pass-through amounts are allocated to shareholders on Schedule K-1 (Form 1120-S). Each shareholder uses the information on the K-1 to prepare their own tax return and to determine the tax impact of their share of the corporation’s items.

Eligibility and election: To elect S status, the corporation must file Form 2553 with the IRS and meet certain requirements. Eligible shareholders typically include individuals, certain trusts, and estates; nonresident aliens and most other corporations are generally ineligible. An S corporation must have only one class of stock and generally must meet a limit on the number of shareholders.

Filing and payment: Form 1120S is due the 15th day of the third month after the end of the tax year (commonly March 15 for calendar-year filers); extensions are available. State tax treatment varies, with some states imposing their own taxes or franchise fees. In some cases, built-in gains from assets held before the S election can trigger additional tax considerations if disposed of within a certain period.