What the Form 1120-S (2011) Is For
Form 1120-S (2011) is the income tax return used by an S Corporation to report its corporation’s income, deductions, and credits to the Internal Revenue Service. A domestic corporation that has made an S Corporation election files this form annually to maintain its corporation status. Unlike a C Corporation, an S Corp is a pass-through entity, meaning profits and losses flow to shareholders’ personal tax returns. Even if the business had no income during the tax year, it must still file Form 1120-S to meet IRS filing requirements.
When You’d Use Form 1120-S (2011)
Corporations use Form 1120-S for the tax year when they have elected S Corporation status under qualified subchapter S rules. The due date for calendar year corporations was March 15, 2012, the fifteenth day of the third month after the tax year ended. If the date falls on a weekend or legal holiday, the due date moves to the next business day. Corporations can file Form 7004 for an automatic extension of six months.
Key Rules or Details for 2011
- S Corporation Eligibility: A domestic corporation could elect S Corporation status if it had one hundred or fewer shareholders, one class of stock, and only individuals or similar persons as shareholders.
- Built-in Gains: Corporations that converted from a C Corporation to an S Corporation had to pay tax on built-in gains when selling appreciated assets within ten years of conversion.
- Excess Passive Income: If an S Corporation earned more than twenty-five percent of its total income from passive sources, it may owe additional business taxes at the corporate level.
- E-File Requirement: A corporation with total assets of ten million dollars or more and filing at least two hundred fifty returns annually was required to e-file its income tax return.
- Schedules and Attachments: The form includes several parts, including Schedule K for reporting a corporation’s income and deductions, and Schedule D for capital gains and losses.
Browse more tax form instructions and filing guides in our Forms Hub.
Step-by-Step (High Level)
Step 1: Provide Basic Information
The corporation files its name, employer identification number, address, and incorporation date. It should also include total assets and the number of shareholders and indicate whether it is an amended return or a final filing.
Step 2: Report Income
List all business income on the income statement, including gross receipts, capital gains, and other sources. Total income must include any built-in gains or excess passive income.
Step 3: Record Deductions
Enter business expenses such as salaries, rent, taxes, interest, depreciation, and contributions. Subtract total deductions from total income to calculate the corporation’s net income or loss.
Step 4: Calculate Taxes and Credits
Report any corporate-level business taxes, such as built-in gains tax or excess passive income tax. Include all available tax credits to reduce the total tax liability for the fiscal year.
Step 5: Complete Schedule K and Schedule K-1
Schedule K reports items that flow to shareholders, including income, deductions, and credits. Each shareholder receives a Schedule K-1 to include their portion on personal tax returns.
Step 6: Finalize Schedules L, M-1, and M-2
These schedules summarize the corporation’s balance sheet, reconcile book and taxable income, and track changes in retained earnings for the business.
Learn more about federal tax filing through our IRS Form Help Center.
Common Mistakes and How to Avoid Them
- Mixing Personal and Business Expenses: Corporations must separate personal and business expenses to prevent IRS penalties. Maintain detailed records and only deduct qualified business costs.
- Incorrect Compensation Reporting: Shareholder-employees must receive reasonable pay subject to payroll taxes. Avoid listing all profit as distributions instead of salary, which may increase tax liability.
- Late Filing or Missing Forms: File Form 1120-S and distribute all Schedule K-1s by the due date. Late filings can trigger an estimated tax penalty for each shareholder.
- Incomplete Records: Document all income, deductions, and credits for at least three years. Proper records protect against audits and ensure compliance with IRS form requirements.
- Overlooking Built-in Gains: Corporations that converted from C Corporation status must track capital assets carefully. Selling them too soon can cause unexpected business taxes under the built-in gains rules.
Learn more about how to avoid business tax problems in our guide on How to File and Avoid Penalties.
What Happens After You File
After you file Form 1120-S, the Internal Revenue Service processes the income tax return within several weeks. Shareholders use the Schedule K-1 data to complete their personal income tax filings. Corporations should retain copies of all forms, income statements, and receipts to verify corporate elections and business activity. Respond promptly if the IRS requests additional information or identifies discrepancies. For state-level business taxes, check whether your state recognizes S Corporation status or requires a separate filing for state-level business taxes.
FAQs
What is IRS Form 1120-S (2011) used for?
IRS Form 1120-S (2011) reports an S Corporation’s income, deductions, and credits. The form ensures that the corporation’s income and expenses are correctly passed to shareholders’ personal returns for tax purposes.
When is the due date to file Form 1120-S (2011)?
The due date for calendar-year filers was March 15, 2012, or the next business day if the date falls on a weekend or legal holiday. Fiscal-year corporations follow similar timing rules.
How do I file Form 1120-S for a late or amended return?
File Form 1120-S as soon as possible if you missed the deadline. To amend, check the box for “Amended Return,” correct errors, and include any revised Schedule K-1 forms for shareholders.
How does the built-in gains tax apply to S Corporations?
A built-in gains tax applies when an S Corporation sells appreciated assets it owns while classified as a C Corporation. The tax prevents corporations from avoiding business taxes on prior unrealized gains.
What are the filing requirements for S Corporations?
All corporations that have elected S Corporation status must file annually, even without income. A domestic corporation must meet specific ownership and stock structure rules to qualify under a valid corporation election.
How are capital gains reported on Form 1120-S (2011)?
Capital gains from the sale of capital assets appear on Schedule D of the income tax return. Each shareholder reports their share of those gains on personal income tax filings.
What happens if the IRS finds errors in my income tax return?
The Internal Revenue Service may assess additional business taxes or penalties. Correct any issues promptly and keep documentation for all income and deductions to support your filing.
For more resources on filing or understanding prior-year IRS forms, visit our guide on Business Income Tax Forms.
