Form 1120: US Corporation Income Tax Return

Who Files Form 1120

C corporations (and certain LLCs that elected C-Corp tax treatment via Form 8832) file Form 1120 every year, regardless of whether they had income or activity. C corporations are common for venture-backed startups, businesses preparing to go public, and entities with foreign owners or institutional investors.

What Form 1120 Reports

Form 1120 reports gross income, deductions, taxable income, and federal tax (currently a flat 21%). Distributions to shareholders are then taxed again at the individual level (the so-called "double taxation"). Schedule C (Dividends), Schedule J (tax computation), and Schedule M-1 / M-2 (book-to-tax reconciliation and retained earnings) are typical attachments.

Key Deadlines

• April 15: calendar-year C-Corp filing deadline (15th day of the 4th month after year end)
• Six-month extension available via Form 7004
• October 15: extended C-Corp filing deadline (calendar year)

Common Mistakes

• Missing the Form 1120 filing requirement for an LLC that elected C-Corp tax treatment
• Incorrectly treating distributions as deductible (they are not: only reasonable wages are)
• Missing the Section 199A QBI exclusion that does NOT apply to C-Corps
• Not coordinating C-Corp tax with shareholder personal returns when dividends are paid

Best Practices

• Reconcile book income to taxable income on Schedule M-1 (or M-3 for larger corporations) every year, with explanations for permanent and timing differences.
• Track shareholder loans, accrued bonuses, and intercompany transactions carefully. They are routine IRS examination focus areas.
• Make timely Section 263A inventory cost capitalization adjustments if you produce or buy inventory.
• Plan for double taxation early: model whether converting to S-Corp status (Form 2553) or paying out reasonable salary versus dividends would reduce the combined entity-and-shareholder tax.
• Keep board minutes and corporate resolutions for any compensation, dividend, or major transaction. The IRS treats undocumented compensation skeptically.

Source: Official Form 1120 information at IRS.gov