Basics on the Form 1120 Corporate Income Tax Return

The IRS Form 1120 (US Corporation Income Tax Return) is the official form that corporations in the United States use to report their income, gains, losses, deductions, and credits to the Internal Revenue Service (IRS).

This form is used to calculate the amount of federal income tax a corporation owes. A corporation will often need to file a state corporate income tax return, depending on where the corporation operates.

Schedule G Information on Persons Owning Stock

This article and video tutorial covers Schedule G (Information on Certain Persons Owning the Corporation’s Voting Stock), which is included with Form 1120 when a corporation has shareholders who own a substantial amount of the corporation’s voting stock.

If a corporation has a shareholder who owns directly 20% or more, or owns, directly or indirectly, 50% or more of the total voting power of all classes of stock entitled to vote, then the corporation must include Schedule G.

Schedule G comprises two parts. Part I discloses information on shareholders that are entities, while Part II discloses shareholders that are individuals or estates.

The information required in Part I includes the entity name, employer identification number (EIN), type of entity, country of organization, and the percentage owned in voting stock.

The information required in Part II includes the name of the individual or estate, taxpayer identification number (TIN), country of citizenship, and the percentage owned in voting stock.

Example Schedule G Filing Requirement

Company A Inc., a Delaware corporation, operates a consulting business in New York, NY. The corporation has four equal shareholders, who each own 25% of the corporation’s voting stock.

The following is a list of the shareholders:

  1. Jane Doe is a U.S. citizen and 25% owner.
  2. John Smith is a U.S. citizen and 25% owner.
  3. Partnership123 LP, a Delaware limited partnership (LP), 25% owner.
  4. XYZ Corporation Inc., a Wyoming corporation, 25% owner.

Each shareholder directly owns over 20% of the corporation’s voting stock; therefore, the corporation must list all of the shareholders on Schedule G. The corporation lists the two individual shareholders in Part II and the two entity shareholders in Part I.

What are the Basics of the Form 1120 Tax Filing?

Income & Expense Reporting. To report the corporation’s income, expenses, gains, losses, credits, estimated tax payments, and other transactions.

Tax Calculation. Corporations are generally subject to a 21% tax rate on its net taxable income. The tax rate is subject to change depending upon legislation passed by Congress.

A corporation’s net taxable income may differ from its net income per books. The corporation reports any book-to-tax adjustments on Schedule M-1 or Schedule M-3. For example, many corporations keep their internal accounting records using generally accepted accounting principles (GAAP), which often differ from U.S. federal tax rules.

Who Must File

C Corporations. Domestic corporations must file Form 1120 annually. Most domestic corporations are, by default, taxable as a C corporation. If a company forms a limited liability company (LLC) that elects to be taxed as a C corporation by filing Form 8832 (Entity Classification Election), the LLC must file Form 1120.

Due Date. Form 1120 must be filed annually and is due on or before the 15th day of the 4th month following the close of the corporation’s tax year. For a calendar year corporation, the due date is generally April 15. Extensions can be requested by filing Form 7004 (Application for Extension of Time to File).

Additional Schedules and Tutorials

YouTube Form 1120 Playlist

Please view our YouTube playlist here for a complete collection of Form 1120 related tutorials.

Additional Information

Corporations can find more information in the Form 1120 Instructions and IRS Publication 542 (Corporations).