Transcription
2020Instructions for Form 1120-SDepartment of the TreasuryInternal Revenue ServiceU.S. Income Tax Return for an S CorporationSection references are to the Internal RevenueCode unless otherwise noted.ContentsFuture Developments . . . . . . .What’s New . . . . . . . . . . . . .Photographs of Missing ChildrenThe Taxpayer Advocate ServiceDirect Deposit of Refund . . . . .How To Get Forms andPublications . . . . . . . . . .General Instructions . . . . . . . .Purpose of Form . . . . . . .How To Make the Election .Who Must File . . . . . . . .Termination of Election . . .Electronic Filing . . . . . . .When To File . . . . . . . . .Where To File . . . . . . . . .Who Must Sign . . . . . . . .Paid Preparer AuthorizationAssembling the Return . . .Tax Payments . . . . . . . .Electronic DepositRequirement . . . . . . .Estimated Tax Payments .Interest and Penalties . . . .Accounting Methods . . . .Accounting Period . . . . . .Rounding Off to WholeDollars . . . . . . . . . . .Recordkeeping . . . . . . . .Amended Return . . . . . . .Other Forms andStatements That May BeRequired . . . . . . . . . .At-Risk Limitations . . . . . .Passive Activity LimitationsNet Investment Income TaxReporting RequirementsExtraterritorial IncomeExclusion . . . . . . . . .Specific Instructions . . . . . . . .Period Covered . . . . . . .Name and Address . . . . .Item B. Business Code . . .Item C. Schedule M-3Information . . . . . . . .Item D. EmployerIdentification Number(EIN) . . . . . . . . . . . .Item F. Total Assets . . . . .Item H. Final Return, NameChange, AddressChange, AmendedReturn, or S ElectionTermination orRevocation . . . . . . . .Feb 03, 2021Page. 1. 1. 1. 2. 2.2222222333344.44455. 5. 6. 6. 6. 7. 7. . . . 12.1212121213. . . . 13. . . . 13. . . . 13. . . . 13ContentsItem J. Aggregation orGrouping of CertainActivities . . . . . . . . . . . .Income . . . . . . . . . . . . . . .Deductions . . . . . . . . . . . .Tax and Payments . . . . . . . .Schedule B. Other Information . . .Schedules K and K-1 (GeneralInstructions) . . . . . . . . . . . .Specific Instructions(Schedule K-1 Only) . . . . . .Specific Instructions (Schedules Kand K-1, Part III) . . . . . . . . .Schedule L. Balance Sheets perBooks . . . . . . . . . . . . . . . .Schedule M-1. Reconciliation ofIncome (Loss) per Books WithIncome (Loss) per Return . . .Schedule M-2. Analysis of AAA,PTEP, Accumulated E&P, andOAA . . . . . . . . . . . . . . . .Principal Business Activity Codes .Index . . . . . . . . . . . . . . . . . . .Page.1313142021. . 22. . 23. . 24. . 44. . 44. . 45. . 48. . 51Future DevelopmentsFor the latest information aboutdevelopments related to Form 1120-S andits instructions, such as legislationenacted after they were published, go toIRS.gov/Form1120S.What’s NewNew payroll credit for paid sick leaveor family leave. Under the Families FirstCoronavirus Response Act (FFCRA), asamended, an eligible employer can take acredit against payroll taxes owed foramounts paid for qualified sick leave orfamily leave if incurred during the allowedperiod, which starts in 2020 and endsMarch 31, 2021. The requirement thatemployers provide the leave expired onDecember 31, 2020, but the credit is stillavailable through March 31, 2021. Thereis no double tax benefit allowed and theamounts claimed are reportable asincome on line 5. See Line 5. OtherIncome (Loss).Certain cash contributions made in2020 or 2021. Code G of Schedule K-1(Form 1120-S), box 12, is now used toreport certain cash contributions made incalendar year 2020 or 2021. SeeLine 12a. Charitable Contributions underSpecific Instructions for Schedules K andK-1.New employee retention credit. TheCoronavirus Aid, Relief, and EconomicCat. No. 11515KSecurity Act (CARES Act) allows a newemployee retention credit for qualifiedwages. Any qualified wages for which aneligible employer claims against payrolltaxes for the employee retention creditmay not be taken into account forpurposes of determining certain othercredits.New items G and H added to Schedule K-1. Item G is added for theshareholder's number of shares and itemH is added for loans from the shareholder.See Item G and Item H under SpecificInstructions (Schedule K-1 Only), later.Election for section 951A reporting.Notice 2020-69 provides an election to betreated as an entity for purposes of section951A. See Other Forms and StatementsThat May Be Required and Statementsand forms required of S corporationselecting to be treated as an entity underNotice 2020-69, later. Also see reportingcodes for Section 951A income (code E)under Line 10. Other Income (Loss),Section 951A category (code D) andSection 951A category foreign sourceincome (code K) under Line 14r. OtherForeign Tax Information.Temporary allowance of 100% forbusiness meals. A corporation isallowed a 100% deduction for certainbusiness meals paid or incurred in 2021and 2022. See Travel, meals, andentertainment.RemindersElection by a small business corporation. Don't file Form 1120-S unless thecorporation has filed or is attaching Form2553, Election by a Small BusinessCorporation. For details, see theInstructions for Form 2553.Photographs ofMissing ChildrenThe Internal Revenue Service is a proudpartner with the National Center forMissing & Exploited Children (NCMEC).Photographs of missing children selectedby the Center may appear in theseinstructions on pages that would otherwisebe blank. You can help bring thesechildren home by looking at thephotographs and calling 1-800-THE-LOST(1-800-843-5678) if you recognize a child.
The Taxpayer AdvocateServiceThe Taxpayer Advocate Service (TAS) isan independent organization within theIRS that helps taxpayers and protectstaxpayer rights. TAS's job is to ensure thatevery taxpayer is treated fairly and knowsand understands their rights under theTaxpayer Bill of Rights.As a taxpayer, the corporation hasrights that the IRS must abide by in itsdealings with the corporation. TAS canhelp the corporation if: A problem is causing financial difficultyfor the business; The business is facing an immediatethreat of adverse action; or The corporation has tried repeatedly tocontact the IRS but no one hasresponded, or the IRS hasn't respondedby the date promised.TAS has offices in every state, theDistrict of Columbia, and Puerto Rico.Local advocates' numbers are in theirlocal directories and atTaxpayerAdvocate.IRS.gov. Thecorporation can also call TAS at1-877-777-4778.TAS also works to resolve large-scaleor systemic problems that affect manytaxpayers. If the corporation knows of oneof these broad issues, please report it toTAS through the Systemic AdvocacyManagement System at IRS.gov/SAMS.For more information, go to IRS.gov/Advocate.Direct Deposit of RefundTo request a direct deposit of thecorporation's income tax refund into anaccount at a U.S. bank or other financialinstitution, attach Form 8050, DirectDeposit of Corporate Tax Refund. See theinstructions for line 27.How To Get Formsand PublicationsInternet. You can access the IRS website24 hours a day, 7 days a week, at IRS.govto: Download forms, instructions, andpublications; Order IRS products online; Research your tax questions online; Search publications online by topic orkeyword; View Internal Revenue Bulletins (IRBs)published in recent years; and Sign up to receive local and national taxnews by email.Tax forms and publications. Thecorporation can download or print all of theforms and publications it may need onIRS.gov/FormsPubs. Otherwise, thecorporation can go to IRS.gov/OrderForms to place an order and haveforms mailed to it. The corporation shouldreceive its order within 10 business days.General InstructionsPurpose of FormUse Form 1120-S to report the income,gains, losses, deductions, credits, andother information of a domesticcorporation or other entity for any tax yearcovered by an election to be an Scorporation.How To Make the ElectionFor details about the election, see Form2553, Election by a Small BusinessCorporation, and the Instructions for Form2553.Who Must FileA corporation or other entity must file Form1120-S if (a) it elected to be an Scorporation by filing Form 2553, (b) theIRS accepted the election, and (c) theelection remains in effect. After filing Form2553, you should have receivedconfirmation that Form 2553 wasaccepted. If you didn't receive notificationof acceptance or nonacceptance of theelection within 2 months of filing Form2553 (5 months if you checked box Q1 toask for a letter ruling), please follow up bycalling 1-800-829-4933. Don't file Form1120-S for any tax year before the yearthe election takes effect.Relief for late elections. If you haven'tfiled Form 2553, or didn't file Form 2553on time, you may be entitled to relief for alate-filed election to be an S corporation.See the Instructions for Form 2553 fordetails.Termination of ElectionOnce the election is made, it stays ineffect until it is terminated. If the election isterminated, the corporation (or asuccessor corporation) can make anotherelection on Form 2553 only with IRSconsent for any tax year before the fifth taxyear after the first tax year in which thetermination took effect. See Regulationssection 1.1362-5 for details.An election terminates automatically inany of the following cases.1. The corporation is no longer a smallbusiness corporation as defined in section1361(b). This kind of termination of anelection is effective as of the day thecorporation no longer meets the definitionof a small business corporation. Attach toForm 1120-S for the final year of the Scorporation a statement notifying the IRSof the termination and the date it occurred.2. For each of 3 consecutive taxyears, the corporation (a) hasaccumulated earnings and profits (AE&P),and (b) derives more than 25% of its gross-2-receipts from passive investment incomeas defined in section 1362(d)(3)(C). Theelection terminates on the first day of thefirst tax year beginning after the thirdconsecutive tax year. The corporationmust pay a tax for each year it has excessnet passive income. See the line 22ainstructions for details on how to figure thetax.3. The election is revoked. An electioncan be revoked only with the consent ofshareholders who, at the time therevocation is made, hold more than 50%of the number of issued and outstandingshares of stock (including nonvotingstock). The revocation can specify aneffective revocation date that is on or afterthe day the revocation is filed. If no date isspecified, the revocation is effective at thestart of the tax year if the revocation ismade on or before the 15th day of the 3rdmonth of that tax year. If no date isspecified and the revocation is made afterthe 15th day of the 3rd month of the taxyear, the revocation is effective at the startof the next tax year.To revoke the election, the corporationmust file a statement with the appropriateservice center listed under Where To Filein the Instructions for Form 2553. In thestatement, the corporation must notify theIRS that it is revoking its election to be anS corporation. The statement must besigned by each shareholder who consentsto the revocation and contain theinformation required by Regulationssection 1.1362-6(a)(3).A revocation can be rescinded before ittakes effect. See Regulations section1.1362-6(a)(4) for details.For rules on allocating income anddeductions between an S corporation'sshort year and a C corporation's short yearand other special rules that apply when anelection is terminated, see section 1362(e)and Regulations section 1.1362-3.If an election was terminated under (1)or (2) above and the corporation believesthe termination was inadvertent, thecorporation can ask for permission fromthe IRS to continue to be treated as an Scorporation. See Regulations section1.1362-4 for the specific requirements thatmust be met to qualify for inadvertenttermination relief.Electronic FilingS Corporations can generallyelectronically file (e-file) Form 1120-S,related forms, schedules, statements, andattachments; Form 7004 (automaticextension of time to file); and Forms 940,941, and 944 (employment tax returns).Form 1099 and other information returnscan also be electronically filed. The optionto e-file doesn't, however, apply to certainreturns.Certain corporations with total assets of 10 million or more that file at least 250Instructions for Form 1120-S (2020)
Any other corporate officer (such as taxofficer) authorized to sign.Where To FileFile the corporation's return at the applicable IRS address listed below.If the corporation'sprincipal business, office,or agency is located in:Connecticut, Delaware,District of Columbia, Georgia,Illinois, Indiana, Kentucky,Maine, Maryland,Massachusetts, Michigan,New Hampshire, New Jersey,New York, North Carolina,Ohio, Pennsylvania, RhodeIsland, South Carolina,Tennessee, Vermont, Virginia,West Virginia, WisconsinAnd the total assets atthe end of the tax year(Form 1120-S, page 1,item F) are:Less than 10 million andSchedule M-3 isn't filed 10 million or more, orless than 10 million andSchedule M-3 is filedAlabama, Alaska, Arizona,Arkansas, California,Colorado, Florida, Hawaii,Idaho, Iowa, Kansas,Louisiana, Minnesota,Mississippi, Missouri,Montana, Nebraska, Nevada,New Mexico, North Dakota,Oklahoma, Oregon, SouthDakota, Texas, Utah,Washington, WyomingA foreign country or U.S.possessionUse the following address:Department of the TreasuryInternal Revenue Service CenterKansas City, MO 64999-0013Department of the TreasuryInternal Revenue Service CenterOgden, UT 84201-0013Department of the TreasuryInternal Revenue Service CenterOgden, UT 84201-0013Any amountIf a return is filed on behalf of acorporation by a receiver, trustee, orassignee, the fiduciary must sign thereturn, instead of the corporate officer.Returns and forms signed by a receiver ortrustee in bankruptcy on behalf of acorporation must be accompanied by acopy of the
Specific Instructions .12 Period Covered .12 Name and Address .12 Item B. Business Code .13 Item C. Schedule M-3 Information .13 Item D. Employer Identification Number (EIN) .13 Item F. Total Assets .13 Item H. Final Return, Name Change,
