Form 1120S (2013) S Corporation Filing Guide

Instructions for Form 1120S 2013 Checklist

Overview of Form 1120S for Tax Year 2013

S corporations use Form 1120S for tax year 2013 to report income, deductions, credits, and losses that pass through to shareholders. The corporation generally does not pay federal income tax at the entity level because shareholders report their share of income on their own returns. The filing includes Schedule K as part of the return and a Schedule K-1 prepared for each shareholder.

The 2013 filing year predates the Tax Cuts and Jobs Act, ARPA, and later stimulus programs.

Specific Affordable Care Act provisions affected individual taxpayers beginning in 2013, including the Net Investment Income Tax, but Form 1120S itself does not compute that tax.

Employer shared responsibility provisions are tied to later years and do not require reporting on the 2013 Form 1120S.

Eligibility and S Corporation Status Requirements

An S corporation must meet all eligibility requirements for the entire tax year to file Form 1120S.

The corporation must be domestic, must have no more than 100 shareholders, must have only one class of stock, and must have only eligible shareholders. Eligible shareholders generally include U.S. citizens or residents, certain trusts, and estates.

If the corporation ceases to qualify as a small business corporation during the year, the S election terminates automatically as of the date the requirements are no longer met. This termination occurs by operation of law rather than by voluntary revocation. Relief for an inadvertent termination may be available if the corporation satisfies the applicable requirements.

Core Reporting Concepts for 2013 Filers

S corporations compute income and deductions at the corporate level using standard tax accounting rules. Certain items must be reported separately because they affect shareholders differently, while other items combine into ordinary business income or loss. Shareholders apply limitations, including basis, at-risk, and passive activity rules, on their own returns using the information provided.

Schedule K reports the corporation’s total amounts for each required item. Schedule K-1 provides each shareholder with their specific pro rata share. Accurate reporting depends on tracking ownership throughout the year and following the 2013 form structure rather than relying on later-year formats.

Shareholder Allocations and Schedule K-1 Timing

Allocations of income, loss, deductions, and credits generally follow a per-share, per-day method for the period each shareholder owned stock during the year. This rule applies unless a permitted method applies due to ownership changes. Allocations based only on year-end ownership can misstate shareholder reporting.

A Schedule K-1 must be prepared for every shareholder who owned stock during any part of the year. Each shareholder must be furnished a Schedule K-1 when due, which is generally the due date of the Form 1120S return, including any extensions filed.

Records Required to Support the Return

Preparing Form 1120S requires maintaining records that support income, deductions, payroll, and shareholder activity. These records must align with the corporation’s books and with tax definitions applicable to 2013. Differences between book income and taxable income require reconciliation using the appropriate schedules.

Employment tax records support wage deductions and officer compensation. For 2013, nonemployee compensation was generally reported on Form 1099-MISC. Shareholder distributions are reflected through Schedule K-1 and shareholder basis tracking rather than through dividend reporting forms.

Ten-Step Filing Checklist for Form 1120S 2013

1. Step 1: Gather Required Source Documents

   Collect Forms W-2 issued to employees and officers, Forms 1099-MISC for nonemployee compensation, Forms 1099-INT and 1099-DIV for interest and dividend income, and documentation for property sales. Retain depreciation schedules, estimated tax payment records, bank statements, and accounting records supporting income, deductions, and charitable contributions.

2. Step 2: Verify S Election and Shareholder Consent

   Confirm that the corporation made a valid S election under the applicable rules and that shareholder consent requirements were satisfied. Review Form 2553 and related records to ensure the election was timely and properly filed. Verify that all shareholders during the year were eligible shareholders.

3. Step 3: Determine Built-In Gains Tax Applicability

   Evaluate whether the corporation is subject to built-in gains tax as a former C corporation or due to certain transferred-basis acquisitions. If applicable, compute the tax on Schedule D (Form

   1120S), Part III, following the 2013 instructions. Carry the resulting tax to Form 1120S on the line designated for tax from Schedule D.

4. Step 4: Complete Schedule K as a Corporate Summary

   Report the corporation’s total income, losses, deductions, credits, and other required items on

   Schedule K. Ensure amounts reported on Schedule K reconcile with the totals shown on Form

   1120S. Schedule K reports corporate totals rather than shareholder-specific amounts.

5. Step 5: Prepare Schedule K-1 for Each Shareholder

   Complete a Schedule K-1 for each shareholder who owned stock during the year. Report each shareholder’s pro rata share of all items reported on Schedule K. Include required details such as Section 1231 gains or losses, tax-exempt income, and other separately stated items.

6. Step 6: Identify Passive Activity Items

   Identify income, losses, and credits subject to passive activity rules. Report these items separately on Schedule K and Schedule K-1 without applying shareholder-level limitations.

   Shareholders apply the passive activity rules on their own returns using the information provided.

7. Step 7: Attach Applicable Schedules and Forms

   Attach only the schedules and forms that apply to the corporation’s activities. These may include

   Schedule A for cost of goods sold, Schedule D for capital gains and losses, Schedule L for the balance sheet, Schedule M-1 or M-2 for reconciliation, and Forms 4797 or 4562 when applicable. Some transactions may be reported directly on Schedule D without Form 8949 when permitted.

8. Step 8: Report Credits Through Schedule K and K-1

   Report credits on Schedule K using the categories and codes provided in the 2013 instructions.

   Credits generally pass through to shareholders and are claimed at the shareholder level, subject to applicable limitations. The instructions include multiple credit categories rather than limiting reporting to a small subset.

9. Step 9: Assemble the Return Following IRS Instructions

   Complete Form 1120S and any required schedules. For paper filing, attach schedules and forms after page 5 of Form 1120S in the order specified in the 2013 instructions. The ordering begins

   with specific schedules and forms, followed by additional schedules alphabetically and additional forms numerically.

10. Step 10: Sign, Date, and File the Return

    Ensure an authorized corporate officer signs and dates the return and prints their name and title.

    A paid preparer must sign in the preparer section when applicable. For calendar-year 2013 S corporations, the due date was March 17, 2014, because March 15 fell on a Saturday. Use the

    2013 Where To File table to determine the correct mailing address.

    Form-Specific Limitations and Shareholder

    Considerations

    S corporations cannot deduct losses that exceed a shareholder’s adjusted basis in stock and debt. Excess losses are suspended and carried forward until the shareholder has sufficient basis. These limitations apply at the shareholder level rather than on the corporate return.

    The Net Investment Income Tax became effective for individuals, estates, and trusts in 2013.

    While the tax does not apply to the S corporation itself, Schedule K-1 may include information relevant to a shareholder’s NIIT computation. Shareholders determine the tax on their own returns.

    Year-Specific Updates for the 2013 Filing Year

    The 2013 filing year included several updates that affected how certain Federal Tax Forms were