What Form 1120 Is For

Form 1120 is the standard federal income tax return that domestic corporations use to report their income, gains, losses, deductions, and credits to the Internal Revenue Service. Think of it as the corporate equivalent of the individual Form 1040. All domestic corporations—including those in bankruptcy—must file Form 1120 unless they qualify for a special return (such as S corporations filing Form 1120-S or nonprofits filing Form 990-T). The form calculates the corporation's tax liability for the year and determines whether the company owes additional taxes or is due a refund.

For the 2011 tax year, corporations used Form 1120 to report financial activity for calendar year 2011 or fiscal years beginning in 2011 and ending in 2012. Whether your corporation operates a small business or a large multinational enterprise, Form 1120 serves as the official record of your company's taxable income and federal tax obligation. IRS.gov

When You’d Use Form 1120 (Late/Amended Filings)

Regular Filing Deadline: Corporations must file Form 1120 by the 15th day of the third month after the end of their tax year. For calendar-year corporations, this meant March 15, 2012. If this date fell on a weekend or holiday, the deadline moved to the next business day. Newly formed corporations filing short-period returns and dissolved corporations follow the same three-month rule from their short period end date or dissolution date.

Extensions: Companies needing more time could request an automatic six-month extension by filing Form 7004 by the original due date. This extension gave corporations until September 15, 2012 (for calendar-year filers), but it only extended the filing deadline—not the payment deadline. Any taxes owed were still due by the original March 15 date to avoid interest charges.

Late Returns: If a corporation missed its deadline and didn't file an extension, late-filing penalties applied—5% of unpaid taxes per month (or partial month), capped at 25%. For returns more than 60 days late, a minimum penalty of $135 or the full tax due (whichever was smaller) was imposed.

Amended Returns: If a corporation discovered errors after filing, it could correct them using Form 1120-X (Amended U.S. Corporation Income Tax Return). Generally, amended returns had to be filed within three years of the original filing date or within two years of paying the tax, whichever came later. IRS.gov

Key Rules or Details for 2011

Several important requirements governed Form 1120 filing in 2011:

• Electronic Payment Mandate: Beginning January 1, 2011, corporations were required to make all federal tax deposits electronically using the Electronic Federal Tax Payment System (EFTPS) or through their financial institution. Paper deposit coupons (Forms 8109 and 8109-B) were no longer accepted.
• New Supplementary Forms: The 2011 tax year introduced two new mandatory schedules. Form 1125-A (Cost of Goods Sold) became required for corporations reporting cost of goods sold deductions. Form 1125-E (Compensation of Officers) became mandatory for corporations with total receipts of $500,000 or more that deducted officer compensation expenses.
• Tax Rate Structure: Corporate tax rates for 2011 followed a graduated structure: 15% on the first $50,000 of taxable income; 25% on income from $50,000 to $75,000; 34% on income from $75,000 to $100,000; and rates ranging up to 35% for the highest income brackets. However, qualified personal service corporations faced a flat 35% rate regardless of income level.
• Estimated Tax Payments: Corporations expecting tax liability of $500 or more had to make quarterly estimated tax payments by the 15th day of the fourth, sixth, ninth, and twelfth months of their tax year. Failure to make adequate estimated payments triggered underpayment penalties calculated on Form 2220. IRS.gov

Step-by-Step (High Level)

Step 1: Gather Financial Records

Collect all income statements, balance sheets, and supporting documentation for the tax year. You'll need records of gross receipts, cost of goods sold, deductions, and payments already made.

Step 2: Complete Income Section (Lines 1-11)

Report gross receipts or sales, cost of goods sold (using Form 1125-A), dividends, interest, capital gains, and other income sources. The IRS deferred merchant card payment reporting for 2011, so corporations reported total gross receipts without separately breaking out payment types.

Step 3: Calculate Deductions (Lines 12-29)

Itemize business expenses including officer compensation (Form 1125-E for larger corporations), salaries, repairs, bad debts, rent, taxes, interest, depreciation, advertising, and other ordinary business expenses. Each deduction must be legitimate and properly documented.

Step 4: Complete Schedules

Fill out Schedule C (Dividends and Special Deductions), Schedule J (Tax Computation and Payments), Schedule K (Other Information), Schedule L (Balance Sheets), and Schedule M-1 (Reconciliation of Income per Books with Income per Return). These schedules provide essential details about the corporation's financial position and tax calculations.

Step 5: Calculate Tax Liability

Apply the appropriate tax rate to taxable income, subtract any credits, and add any alternative minimum tax or other special taxes owed.

Step 6: Determine Payment or Refund

Compare total tax liability against payments already made through estimated tax deposits and withholding. Calculate whether additional payment is needed or if the corporation is due a refund.

Step 7: Sign, Assemble, and File

An authorized officer (president, vice president, treasurer, or other designated officer) must sign and date the return. Attach all schedules and supporting forms in the prescribed order. Mail to the appropriate IRS service center based on location and asset size, or file electronically. IRS.gov

Common Mistakes and How to Avoid Them

Even experienced tax preparers make errors on Form 1120. Here are the most frequent pitfalls and prevention strategies:

• Missing or Incorrect EIN: Every corporation must include its Employer Identification Number on the return. Double-check that the EIN matches IRS records exactly. A mismatched or missing EIN delays processing significantly.
• Incomplete Entry Spaces: The IRS instructions explicitly prohibit writing "See Attached" or "Available Upon Request" in data fields. Complete every applicable space on the form itself, even if you're attaching supporting statements. Show totals on the printed forms and provide details in attachments.
• Improper Signature: Only authorized corporate officers can sign Form 1120—typically the president, vice president, treasurer, assistant treasurer, or chief accounting officer. Signatures from employees without proper authorization invalidate the return.
• Missing Schedules and Forms: Attach all required schedules in the specified order after page 5: Schedule N, Schedule O, Form 4626, Form 8050, Form 1125-A, and other forms in numeric and alphabetic order. Forgetting mandatory attachments like Form 1125-A or Form 1125-E (when applicable) triggers IRS inquiries.
• Calculation Errors: Mathematical mistakes are surprisingly common. Use tax software when possible, and manually verify all calculations. Pay special attention to the tax rate computation and the reconciliation schedules.
• Inadequate Record Retention: Many corporations dispose of supporting documents too soon. Keep all records supporting income, deductions, and credits for at least three years from the filing date or due date (whichever is later). Property basis records should be retained indefinitely.
• Late Estimated Payments: Missing quarterly estimated tax deadlines creates underpayment penalties. Set calendar reminders for the 15th day of the 4th, 6th, 9th, and 12th months of your tax year, and make electronic payments through EFTPS several days early to ensure timely processing. IRS.gov

What Happens After You File

Once your Form 1120 reaches the IRS, several things occur:

• Processing: The IRS processes the return, checking for mathematical accuracy, missing information, and consistency between reported figures and third-party information returns (like Forms 1099). Processing typically takes several weeks for paper returns and less time for e-filed returns.
• Refunds: If your corporation overpaid taxes, you can request a refund or apply the overpayment to next year's estimated tax by making the appropriate election on the return. For direct deposit refunds, attach Form 8050. Note that once you elect to apply an overpayment to next year's estimated tax, that decision is irrevocable—you cannot later request a refund instead. Corporations with substantial overpayments may qualify for a quick refund by filing Form 4466.
• Notices and Correspondence: The IRS may send notices requesting clarification, reporting math errors they corrected, or proposing adjustments. If you receive such a notice, respond promptly. You can explain reasonable cause for any penalties, and the IRS will review your explanation to determine if penalty relief is appropriate.
• Record Retention Requirements: After filing, maintain copies of the return and all supporting documentation for at least three years. These records are essential if the IRS has questions, if you need to file an amended return, or for calculating future tax items like depreciation and basis adjustments.
• Audit Selection: The IRS selects some returns for examination (audit) based on various factors including random selection, computer screening, and comparison with similar corporations. Most returns are not audited, but maintaining thorough documentation protects you if your return is selected.
• Future Tax Year Planning: Use the completed return to assess your corporation's tax position and plan for the following year's estimated payments and tax strategies. IRS.gov

FAQs

1. Do all corporations have to file Form 1120?

Most domestic corporations must file Form 1120, but there are exceptions. S corporations file Form 1120-S, tax-exempt organizations file Form 990-T if they have unrelated business income, and specialized entities like REITs, insurance companies, and cooperatives use specific forms (1120-REIT, 1120-L, 1120-C, etc.). Additionally, single-member LLCs that haven't elected corporate taxation generally report income on their owner's return rather than filing Form 1120.

2. Can I file Form 1120 electronically for the 2011 tax year?

Yes, e-filing was available for Form 1120 in 2011, though not all corporations were required to use it. Beginning in 2011, corporations with $10 million or more in assets that filed at least 250 returns annually were required to e-file. However, certain returns couldn't be e-filed, including those with precomputed penalties or reasonable cause statements for late filing. Most corporations could voluntarily e-file through approved software providers or tax professionals.

3. What if my corporation had no income or operated at a loss?

You must still file Form 1120 even if the corporation had no taxable income or operated at a loss. The IRS requires all domestic corporations (except those specifically exempt under section 501) to file an annual return regardless of financial results. Operating losses can often be carried back or forward to offset income in other years, making the return important for future tax benefits.

4. How do I correct a mistake after filing my 2011 Form 1120?

Use Form 1120-X to amend your return. You generally have three years from the original filing date or two years from the date you paid the tax (whichever is later) to file an amended return. On Form 1120-X, explain the changes you're making and provide corrected figures. Attach any additional schedules or forms affected by the changes. If the amendment results in additional tax owed, pay it promptly to minimize interest charges.

5. What penalties apply if I file or pay late?

Late filing incurs a penalty of 5% of unpaid taxes per month (or partial month), up to 25%. For returns over 60 days late, a minimum penalty of $135 or the full tax due (whichever is smaller) applies. Late payment penalties are generally 0.5% of unpaid taxes per month, also capped at 25%. Interest accrues on unpaid taxes from the due date until paid, at rates determined under section 6621. Filing for an extension eliminates late-filing penalties if you file by the extended deadline, but doesn't prevent late-payment penalties or interest on unpaid taxes.

6. Can I get a refund if my corporation overpaid estimated taxes?

Yes. On Form 1120, you can request a refund of overpaid taxes or elect to apply the overpayment to your next year's estimated tax. To receive a refund by direct deposit, attach Form 8050. If your overpayment exceeds $500 and you need the money quickly (before your return is processed), you may qualify to file Form 4466 for a quick refund. However, once you elect to apply an overpayment to next year's estimated tax on your filed return, you cannot change that decision later.

7. Where do I send my completed Form 1120 for the 2011 tax year?

The mailing address depends on your corporation's location and total assets. For corporations located in the eastern United States with less than $10 million in assets (and not filing Schedule M-3), the address was: Internal Revenue Service Center, Cincinnati, OH 45999-0012. For larger corporations or those filing Schedule M-3, and for all western U.S. corporations, the address was: Internal Revenue Service Center, Ogden, UT 84201-0012. Corporations with locations in foreign countries or U.S. possessions used the Ogden address. Always verify the current address before mailing, as IRS processing locations occasionally change. IRS.gov

Sources

Sources: All information in this guide is derived from official IRS publications, specifically the 2011 Instructions for Form 1120 and related IRS guidance available at IRS.gov.