Form 1120 Tax Year 2014 Filing Checklist
2014 Tax Year Context
Form 1120 for tax year 2014 operates under pre-Tax Cuts and Jobs Act provisions. No Economic Impact Payment reconciliation, TCJA rules, or American Rescue Plan Act expansions apply to this filing year. The Affordable Care Act imposed shared responsibility payment obligations on individuals only, not on corporations filing Form 1120.
For tax year 2014, sections 6055 and 6056 of the Internal Revenue Code required the reporting of health insurance information for applicable large employers and coverage providers. These employers were required to file Forms 1094-C and 1095-C for 2014, while coverage providers filed Forms 1094-B and 1095-B. Section 481(a) accounting method changes continue to require a four-year adjustment period for positive adjustments in 2014, consistent with prior-year rules.
Schedule M-3 Requirements for 2014
Corporations with total assets of 10 million dollars or more at the end of the tax year must file Schedule M-3 instead of Schedule M-1 to reconcile net income or loss per books with taxable income. For 2014, no filing relief exists for mid-sized corporations. All corporations meeting the $10 million threshold must complete Schedule M-3, Parts I, II, and III, in their entirety.
Corporations with total receipts less than 250,000 dollars and total assets less than 250,000 dollars at year-end are not required to complete Schedules L, M-1, and M-2. Both thresholds must be met to qualify for this exemption.
Ten-Step Filing Checklist
Step 1: Gather Required Documentation
Obtain the corporate employer identification number letter, date of incorporation, prior-year Form 1120 if previously filed, financial statements on both a book and a tax basis if different, Forms W-2 and W-3 for officer compensation, all Forms 1099 for non-employee payments, Forms K-1 from pass-through entities, and bank statements for reconciliation. This documentation is essential for accurately reporting lines 1 through 30 and Schedule L balance sheet entries.
Step 2: Determine Schedule M-3 Filing Requirement
Calculate total assets at the end of the tax year per Schedule L, line 17, column (d). If total assets equal or exceed $10 million, the corporation must file Schedule M-3, Parts I, II, and III, instead of Schedule M-1. No relief or alternative filing options exist for 2014, regardless of asset level above the threshold.
If total receipts are less than $250,000 and total assets are less than $250,000 at year-end, the corporation is not required to complete Schedules L, M-1, M-2, or M-3. Both conditions must be met.
Step 3: Complete Income Section
Report gross receipts or sales on line 1a. Report returns and allowances on line 1b. Calculate net sales on line 1c by subtracting line 1b from line 1a. Attach Form 1125-A and enter the cost of goods sold on line 2. Calculate gross profit on line 3.
Report dividends on line 4 and attach Schedule C. Report interest income on line 5, gross rents on line 6, gross royalties on line 7, and capital gains on line 8 with Schedule D attached. Report net gain or loss from Form 4797 on line 9. Report other incomes on line 10. Sum lines 3 through 10 to reach total income on line 11. Ensure that all income items are reported accurately, as omissions can trigger understatement penalties.
Step 4: Report Deductions and Attach Supporting Schedules
Complete lines 12 through 26 for deductions. Enter officer compensation on line 12, salaries and wages on line 13, repairs and maintenance on line 14, bad debts on line 15, rents on line 16, taxes and licenses on line 17, interest expense on line 18, and charitable contributions on line 19, subject to the 10 percent limitation.
Report depreciation on line 20 and attach Form 4562 if claiming any current-year depreciation, amortization, or section 179 expense deduction. Enter depletion on line 21, advertising on line 22, pension and profit-sharing plans on line 23, employee benefit programs on line 24, and domestic production activities deduction on line 25 with Form 8903 attached.
Report other deductions on line 26 with an attached statement detailing each item. Sum all deductions and enter the total on line 27.
Step 5: Calculate Taxable Income
Subtract total deductions on line 27 from total income on line 11 to reach line 28, which represents taxable income before net operating loss deduction and special deductions. Subtract the net operating loss deduction on line 29a and special deductions on line 29b from Schedule C, line 20, to calculate taxable income on line 30.
If the corporation has a 2014 net operating loss and elects to forego the carryback period under section 172(b)(3), check the box on Schedule K, line 11. Ensure any required consolidated return statement is attached if applicable.
Step 6: Complete Schedule C, Dividends and Special Deductions
Classify all dividends received by ownership percentage and type. Report dividends from less-than-20-percent-owned domestic corporations on lines 1 and 2. Report dividends from 20-percent-or-more-owned domestic corporations on line 3. Report dividends on debt-financed stock of domestic corporations on line 4.
Report dividends on certain preferred stock of public utilities on lines 5 and 6. Report dividends from foreign corporations on lines 7 and 8. Report dividends from wholly-owned foreign subsidiaries on line 9. Report dividends from affiliated group members on line 11. Report dividends from certain FSCs on line 12. Report other dividends on lines 13 through 17.
Apply the applicable percentage in column (b) to calculate the special deduction in column ©. Sum line 19 for total dividends and line 20 for total special deductions. Enter the line 20 amount on Form 1120, page 1, line 29b.
Step 7: Complete Schedule J Tax Computation
Enter taxable income from line 30 on Schedule J, line 1. Compute income tax using the 2014 corporate tax rate schedule on line 2. For 2014, graduated tax rates apply with brackets at 15 percent, 25 percent, 34 percent, and 35 percent depending on taxable income levels. Add the alternative minimum tax, if applicable, on line 3.
Report foreign tax credit on line 5a and attach Form 1118 if claiming credit for foreign taxes. Report credit from Form 8834 on line 5b. Report general business credit from Form 3800 on line 5c. Report prior-year minimum tax credit from Form 8827 on line 5d. Report bond credits from Form 8912 on line 5e.
Calculate total tax after credits on line 11. Report payments including estimated tax payments, tax deposited with Form 7004, and overpayment credited from prior year. Sum all payments and credits on line 21. Calculate the amount owed on line 34 or the overpayment on line 35.
Step 8: Complete Schedule K Other Information
Select the appropriate accounting method box, indicating whether it is cash, accrual, or another method. Enter the principal business activity code and provide a brief description of the principal business activity. Answer all yes or no questions regarding business operations and corporate structure.
Indicate whether the corporation is a subsidiary in an affiliated group. If yes, provide the parent corporation’s name and employer identification number. Answer whether the corporation is a member of a controlled group and attach Schedule O if applicable. At the end of the tax year, report if a foreign person owned 25 percent or more of the corporation, either directly or indirectly.
Report whether the corporation made any payments in 2014 that required Forms 1099. Indicate whether the corporation has an interest in or signature authority over a financial account in a foreign country. Enter any available net operating loss carryover from prior years on line 12.
Step 9: Prepare Balance Sheet and Reconciliation Schedules
Complete Schedule L showing assets and liabilities at the beginning and end of the tax year, lines 1 through 28. Report cash, trade notes, accounts receivable, inventories, investments, buildings, and other depreciable assets, land, intangible assets, and other assets. Report accounts payable, mortgages and notes payable, other current liabilities, capital stock, additional paid-in capital, retained earnings, and other liabilities and stockholders’ equity.
If not required to file Schedule M-3 or if exempt from Schedules L, M-1, and M-2, prepare Schedule M-1 to reconcile income per books with income per return. Reconcile differences, including federal income tax, excess capital losses, income subject to tax omitted from books, and expenses recorded on books but not deducted on the return.
Suppose you are required to file Schedule M-3, complete Parts I, II, and III showing a detailed reconciliation of net income or loss per books with taxable income. Prepare Schedule M-2 showing analysis of unappropriated retained earnings per books, lines 1 through 8, including balance at beginning of year, net income per books, other increases, distributions, and balance at end of year.
Step 10: Sign, Date, and Assemble Return
The return must be signed and dated by a corporate officer authorized to sign, including the president, vice president, treasurer, assistant treasurer, chief accounting officer, or other officer duly authorized. Include the signer’s title. An unsigned return is not considered a valid return.
If a paid preparer completes the return, the preparer must sign in the paid preparer section and include their tax identification number. Social security numbers are not permitted for paid preparers. The preparer must provide a copy of the completed return to the corporation.
Attach all schedules and forms in the prescribed order. Begin with Schedule N if reporting foreign operations, followed by Schedule D for capital gains and losses, Schedule O for controlled groups, Form 4626 for alternative minimum tax, then the remaining forms in numerical order, followed by supporting statements.
Suppose the corporation either failed to pay the required estimated tax installments in 2014 or underpaid them. Complete Form 2220 and attach it to calculate any penalty. Report the penalty on Form 1120, page 1, line 33. File the complete return by the 15th day of the third month after the end of the tax year. For calendar year 2014 corporations, the filing deadline is March 16, 2015, as March 15 falls on a Sunday.
Form 1120 Specific Limitations
Form 1120 is for domestic corporations only. Foreign corporations engaged in U.S. trade or business file Form 1120-F. S corporations file Form 1120-S, and partnerships file Form 1065. Corporations filing Form 1120 cannot claim the qualified business income deduction, which applies only to pass-through entities and their owners.
Consolidated return filers must attach Form 851 identifying all members of the affiliated group. A corporation's capital losses are deductible only to the extent of its capital gains in the current year. Excess capital losses are carried back three years and forward five years as short-term capital losses. Charitable contribution deductions are limited to 10 percent of taxable income, before the net operating loss deduction and special deductions, as per line 28.
Corporations subject to the alternative minimum tax must complete and attach Form 4626. The domestic production activities deduction is calculated on Form 8903 and claimed on line 25, subject to limitations based on taxable income and W-2 wages. Credits claimed on Schedule J require supporting forms to be attached, including Form 1118 for the foreign tax credit, Form 3800 for general business credits, and Form 8827 for prior-year minimum tax credits.
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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.
