Form 1120 (2020) Checklist for Tax Year 2020
Why 2020 Form 1120 Is Unique
The 2020 Form 1120 incorporates CARES Act provisions, allowing five-year net operating loss carrybacks, enhanced charitable contribution deductions of up to 25% of taxable income for qualified cash contributions, and continued section 965 transition tax reporting for corporations with specified foreign income, marking substantive changes from prior-year corporate filings.
Year-Specific Programs Applicable to 2020 Form 1120
Corporations may claim CARES Act benefits, including net operating loss carryback for 2020 losses to the five preceding tax years and enhanced charitable contribution deductions up to 25% of taxable income for qualified cash contributions made in 2020 or 2021. Eligible corporations may also claim the Employee Retention Credit (ERC) via adjusted employment tax returns, requiring coordination with Form 1120 wage deductions to avoid double benefit. Section 965 transition tax payment reporting continues for corporations with specified foreign income; installment elections remain available under section 965(h).
Ten-Step Form 1120 (2020) Filing Checklist
Step 1: Confirm Filing Requirement and Corporate Status
Unless exempt under section 501, all domestic corporations (including those in bankruptcy) must file Form 1120, whether or not they have taxable income. Verify the entity is a domestic corporation and not required to file a special return (e.g., Form 1120-S, 1120-F).
Step 2: Gather Required Documentation
Collect W-2 statements for all employees, Forms 1099 (dividends, interest, miscellaneous income), capital asset purchase and disposition records, depreciation schedules, charitable contribution receipts and substantiation, and prior-year Form 1120 returns.
Step 3: Determine Tax Year and Accounting Method
Enter the accounting period on Schedule K, line 1: Cash, Accrual, or Other (specify). Ensure the corporation can use the cash method (corporations generally cannot use the cash method unless they are small business taxpayers). Document the business activity code.
Step 4: Calculate Gross Income (Page 1, Lines 1–11)
Report line 1a (gross receipts/sales), and subtract line 1b (returns/allowances) to determine line 1c. Attach Form 1125-A and enter the cost of goods sold on line 2. Calculate gross profit on line 3. Report dividend income on line 4 (from Schedule C), interest on line 5, gross rents on line 6, royalties on line 7, capital gain net income on line 8 (attach Schedule D), net gain or loss from Form 4797 on line 9, and other income on line 10—total gross income on line 11.
Step 5: Report Deductions (Lines 12–26) Including CARES Act Enhancements
Report compensation of officers, salaries, wages, repairs, depreciation (Form 4562), business interest expense, taxes and licenses, and charitable contributions. Charitable contributions are limited to 10% of taxable income, unless the corporation qualifies for the CARES Act temporary suspension, which allows qualified cash contributions in 2020 or 2021 of up to 25% of taxable income (or 25% of the excess of taxable income over other allowed charitable contributions).
Note: The enhanced charitable contribution deduction applies specifically to qualified cash contributions made during calendar year 2020 or 2021, subject to the 25% limitation. Attach Form 1125-A and supporting schedules for all claimed deductions.
Step 6: Apply Net Operating Loss Deduction and Section 965 Adjustments (Lines 28–30)
On line 29a, enter any NOL deduction. The CARES Act allows carryback of 2020 NOLs to any of five preceding tax years (election to waive or exclude section 965 years must be made by the return due date). NOL deductions are generally limited to 80% of taxable income for losses arising in tax years beginning after December 31, 2017. Still, the CARES Act temporarily suspended this limitation for tax years beginning before January 1, 2021. On line 29b, enter special deductions from Schedule C, line 24. Calculate taxable income on line 30.
Step 7: Determine Schedule Requirements Based on Asset and Income Thresholds
If total receipts (page 1, line 1a plus lines 4–10) and total assets at year-end are both less than $250,000, and “Yes” is checked on Schedule K, line 13, the corporation is exempt from Schedules L, M-1, and M-2 (enter only cash and property distributions instead). If total assets are $10 million or more, file Schedule M-3 instead of M-1.
If you are a controlled group member, please attach Schedule O. If any individual or estate owns directly 20% or more of voting stock or indirectly 50% or more of it, complete Schedule G, Part II. If 25% foreign-owned, file Form 5472. If a qualified opportunity fund, attach Form 8996.
Step 8: Complete Schedule K (Other Information, Lines 1–26)
Answer all applicable questions, including business activity code, accounting method, ownership interests, foreign operations, and section 965 transition tax items. If a corporation held a qualified opportunity fund investment during the year, file Form 8997. Report tax-exempt interest on line 9. Identify if the corporation is required to file Schedule UTP (corporations with $10 million or more in assets and included in audited financial statements). Question 25 requires an indication of whether to file Form 8996 for QOF certification; if “Yes,” Form 8996 must be attached even if no income is reported.
Step 9: Calculate Total Tax and Credits via Schedule J (Tax Computation and Payment)
Complete Schedule J, Part I: Calculate income tax on line 2. Add applicable credits (lines 20a–20d): alternative fuel credit (Form 4136 if applicable), health insurance premium credit for small employers (Form 8941), and other eligible credits—total credits on line 21, total tax on line 11. If Section 965's net tax liability applies, report it on Schedule J, Part II, line 12 from Form 965-B, Part II, column (k), line 4. Do not double-claim wages for ERC and other wage-based credits; wage deduction on Form 1120 must be reduced by the ERC amount claimed on employment tax returns. Complete Schedule J, Part III for payments and refunds.
Step 10: Sign, Attach Schedules, and File
Sign and date the return. Enter the corporation name and EIN on all supporting statements. Attach all schedules in the required order: Schedule N, Schedule D, Form 8949, Form 8996, Form 8050, Form 1125-A, Form 4136, Form 8978, Form 965-B, Form 8941, Form 3800, and Form 6252, followed by additional schedules arranged alphabetically and extra forms arranged numerically.
Corporations can generally file electronically using approved software and the assistance of tax professionals. Corporations with assets of $10 million or more that file at least 250 returns annually are required to e-file their returns. Electronic filing is the recommended method; paper filing is optional for most corporations. Due date: April 15, 2021, or the next business day if it falls on a weekend/holiday. If filing a paper return, file at the IRS address designated for the corporation’s principal business location, as per the IRS “Where to File” page for Form 1120 (2020).
Form-Specific Limitations
Foreign persons and nonresident aliens do not file Form 1120 for US-source income; use Form 1120-F if applicable. Disregarded entities wholly owned by foreign persons must file a Pro Form 1120 with Form 5472. If the Employee Retention Credit is claimed on the employment tax return, the wage deduction on Form 1120 must be reduced by the ERC amount to prevent a double benefit. The enhanced 25% charitable contribution limitation applies only to qualified cash contributions made during calendar years 2020 and 2021; other contributions remain subject to the standard 10% limitation.
Line Changes for 2020
Schedule J, Part II (Section 965 Payments)
Prior wording: Section 965 payments reported across Part I and Part III.
The current wording, Part II, line 12, now explicitly requires the entry of the 2020 net tax liability paid from Form 965-B, Part II, column (k), line 4, in a separate section for clarity.
Change type: Clarified.
Schedule K, Question 25 (Qualified Opportunity Fund)
Prior wording: Not present in earlier versions.
Current wording: Question 25 has been added, requiring the corporation to indicate whether it is filing Form 8996 for QOF certification. If the answer is “Yes,” Form 8996 must be attached, even if no income is reported.
Change type: Added.
Key Compliance Notes
Corporations must maintain complete documentation supporting all CARES Act benefit claims, including NOL carryback calculations, enhanced charitable contribution substantiation, and Employee Retention Credit reconciliation. For NOL carrybacks, corporations should file Form 1139 (Corporation Application for a Tentative Refund) to expedite refund processing.
The five-year carryback period applies to NOLs arising in tax years beginning in 2018, 2019, and 2020. Corporations claiming enhanced charitable contribution deductions must distinguish between qualified cash contributions (eligible for a 25% limitation) and other contributions (subject to a 10% limitation). All supporting schedules and forms must be attached in the specified order to ensure proper IRS processing. Corporations should retain all records for at least three years from the date the return was filed or two years from the date the tax was paid, whichever is later.
Need Help With Your Tax Filing?
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
We offer:
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Call now before filing: (888) 260-9441
Fast transcript pull available
This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
