Form 1120 is the U.S. Corporation Income Tax Return, and it's used by C corporations to report their income, gains, losses, deductions, and credits and to figure their income tax liability. Below is a general overview of the steps involved in completing Form 1120 for a C corporation:
Report the corporation's gross receipts or sales. Deduct returns and allowances to arrive at total income.
If applicable, deduct the cost of goods sold to determine gross profit.
Report other income not from the corporation's regular business activities.
Report all wages, salaries, and other compensation paid to employees.
Deduct costs associated with the ordinary and necessary business property repairs and maintenance.
Report bad debts that became partially or wholly worthless during the tax year.
Deduct rent paid for business property.
Report state and local income taxes, real estate, and other business-related taxes.
Deduct interest paid on business loans or credit.
If applicable, report contributions made to qualified charitable organizations.
Calculate the corporation's income before income tax.
Calculate the income tax based on the taxable income.
Report any estimated tax payments made during the tax year.
Report any refundable credits that the corporation may be eligible for.
Report any additional taxes owed by the corporation.
Sum the income tax, payments, refundable credits, and other taxes to determine the total tax.
If applicable, provide information about any consent plan or revocation of a plan.
Detail the corporation's income, deductions, and credits.
The return must be signed and dated by an authorized officer.
Mail the completed Form 1120 to the appropriate IRS address.
Remember that tax laws are subject to change, and IRS guidelines may vary. Consult a tax professional for specific advice related to your corporation's situation. Additionally, corporations may be required to attach various supporting documents, depending on their activities and transactions.