Form 1120s Tax Year 2014 Checklist
2014 Uniqueness Summary
2014 modifies the requirement for filing Schedule M-3 for S corporations with assets ranging from $10 million to $50 million, allowing for either a full Schedule M-3 or Schedule M-1 filing. The built-in gains recognition period is extended to five years for tax years beginning after 2013. The Form 2553 election remains a mandatory attachment or prior filing requirement for all S corporations.
Year-Specific Programs Applicable to 2014 Form 1120S
The Affordable Care Act reporting requirement, under sections 6055 and 6056, applies to calendar years after December 31, 2014. However, employers and organizations providing minimum essential health coverage may voluntarily file for 2014. Employers of S corporations, whether they offer or fail to provide health benefits, must prepare to report this information in subsequent years. No other major TCJA, EIP, or ARPA programs apply to the 2014 Form 1120S.
Ten-Step 2014 Filing Checklist
Step 1: Verify S Election Requirement
Confirm Form 2553 was filed timely or is attached to this return. Form 1120S cannot be filed for 2014 without evidence of a valid S corporation election; if filing late, follow Rev. Proc. 2013-30 requirements with a reasonable-cause statement attached.
Step 2: Gather Required Documents
Collect all 1099 forms, Schedule K-1 forms from partnerships or other S corporations in which the corporation holds interest, business income and expense records, depreciation schedules, loan documentation, and Form 1095-A if applicable (though full ACA compliance begins in 2015).
Step 3: Complete Income Lines 1-6
Report gross receipts on line 1a, returns and allowances on line 1b; attach Form 1125-A for cost of goods sold on line 2; add net gain/loss from Form 4797 on line 4; report total income on line 6 by combining lines 3, 4, and 5.
Step 4: Document Deductions Lines 7-20
Report officer compensation on line 7 and attach Form 1125-E if 2014 total receipts equal or exceed $500,000; claim ordinary salaries and wages, repairs, bad debts, rents, taxes, interest, and depreciation (excluding oil and gas) on respective lines; attach Form 4562 for depreciation claimed; report all deductions summing to line 20.
Step 5: Calculate Ordinary Business Income Line 21
Subtract line 20 total deductions from line 6 total income to determine ordinary business income (loss); this amount passes through to each shareholder proportionally and is reported on individual Schedule K-1 forms in box 1.
Step 6: Assess Schedule Requirements
Determine if corporation total assets at year-end equal or exceed $10 million; if yes and less than $50 million, the corporation may either complete all of Schedule M-3 or complete Schedule M-1 instead of Schedule M-3 Parts II and III; if $50 million or more, full Schedule M-3 is required; if less than $10 million in total assets, check if total receipts and total assets are both less than $250,000; if both are below $250,000, Schedules L and M-1 are not required; otherwise, complete Schedule M-1 only unless voluntarily filing Schedule M-3.
Step 7: Complete Schedule B (Other Information)
Answer all questions, including accounting method used (cash, accrual, or other), shareholder composition, presence of disregarded entities or ineligible shareholders, foreign ownership, restricted stock, stock options, nonrecourse indebtedness, and other specified corporate details; omission of required Schedule B answers may result in return processing delay.
Step 8: Calculate Tax Liability Lines 22-27
Determine if the corporation is subject to excess net passive income tax on line 22a (applicable if the corporation has accumulated earnings and profits and derives more than 25% of gross receipts from passive investment income); include estimated tax payments, the Form 7004 extension deposit, and fuel tax credits (Form 4136), and calculate total tax; and report the amount owed on line 25 or overpayment on line 26.
Step 9: Prepare Schedule K and Individual Schedule K-1 Forms
On Schedule K, report consolidated totals of ordinary business income (line 1), net rental real estate income (line 2), capital gains and losses (lines 5-8), charitable contributions (line 12a), Section 179 deduction (line 11), and all credits with applicable codes; prepare an individual Schedule K-1 for each shareholder showing the pro-rata share of all Schedule K items, noting that shareholder’s adjusted basis limits loss deductions claimed by the shareholder, at-risk rules under Section 465, and passive activity loss limitations under Section 469.
Step 10: Sign, Assemble, and File
An authorized corporate officer must sign and date the return. If a paid preparer completed the return, the preparer must sign it, provide their PTIN, and complete the “Paid Preparer Use Only” section. Assemble all pages in order, placing supporting schedules at the end: Schedule B, Schedule K, a separate Schedule K-1 for each shareholder, Schedule D (if applicable), Schedule M-3 or M-1 (as required), and Forms 1125-A, 1125-E, 4562, 4797, and 8916-A (if applicable).
File the return by the 15th day of the third month after the close of the tax year (March 16, 2015, for calendar year 2014). Refer to the IRS “Where to File” page for Form 1120-S (2014) to identify the correct mailing address based on the corporation’s location.
Form-Specific Limitations for S Corporations
S corporations cannot directly deduct certain credits; instead, these credits are passed through to shareholders via Schedule K-1, subjecting each shareholder's use to individual income, passive activity, and cumulative credit limitations on their personal tax returns.
If the corporation’s total receipts for 2014 fall below $250,000 AND total assets at year-end fall below $250,000, Schedules L (Balance Sheet) and M-1 (Reconciliation) are not required; however, if total assets equal or exceed $10 million, Schedule M-3 must be filed regardless of the receipts threshold.
Key Line Modification for 2014 Form 1120S
The Schedule M-3 filing requirement was clarified in the 2014 instructions. Prior instructions required all corporations with assets of $10 million or more to complete Schedule M-3 in full. The 2014 instruction modification allows corporations with assets between $10 million and $50 million to choose either to complete the full Schedule M-3 or to file Schedule M-1 instead of Parts II and III of Schedule M-3, provided that Form 8916-A is not submitted.
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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.
