Form 1120 (US Corporation Income Tax Return)
The annual federal income tax return filed by C corporations to report income, deductions, and tax liability at the entity level.
Detailed Explanation
C corporations file Form 1120 and pay tax at the flat 21% federal corporate rate. Distributions to shareholders are then taxed again at the individual level, creating the so-called "double taxation." Returns are due the 15th day of the fourth month after year end (April 15 for calendar-year filers), with a six-month extension available via Form 7004. C-corps are required for businesses raising venture capital, going public, or seeking institutional investment.
Key Points
- Filed by C corporations, which pay tax at the entity level at the flat 21% federal rate.
- Profits distributed as dividends are taxed again at the shareholder level (double taxation).
- Due the 15th day of the 4th month after year end (April 15 for calendar-year filers); six-month extension via Form 7004.
- Often the right structure for venture-backed startups, companies seeking outside investment, or those retaining earnings.
- Eligible C corporation stock may qualify for the QSBS gain exclusion under IRC §1202.
Practical Example
A C-corp earns $500,000 of taxable income and pays $105,000 in federal corporate tax (21%). If it then distributes the remaining $395,000 as a dividend to its individual owner taxed at 20% plus 3.8% NIIT, the owner pays roughly $94,000 more, for a combined federal burden near $199,000. The same profit in an S-corp would generally be taxed once at the owner level.
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Form 1120-S (S Corporation Income Tax Return)
The annual federal income tax return filed by S corporations, which pass income, deductions, and credits through to shareholders via Schedule K-1.
Partnership
A business entity owned by two or more persons who share in profits and losses, taxed as a pass-through with each partner reporting their share on their individual return.
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