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 N and Disclosure of Foreign Operations

This article and video tutorial covers Schedule N (Foreign Operations of U.S. Corporations), which is filed with Form 1120 when U.S. corporations have non-U.S. activities that require additional disclosures.

When is Schedule N Required?

Per the Schedule N instructions, Form 1120 should include Schedule N if, at any time during the tax year, the corporation had assets in or operated a business in a foreign country or a U.S. possession.

If the corporation answers “Yes” to any of the questions on page 1, attach Schedule N and the applicable forms and schedules to Form 1120.

Even if a corporation finds that it answers “No” to each of the questions on Schedule N, it is still required to include Schedule N if it has foreign assets or activities.

Example Schedule N Requirement

Company A Inc., a Delaware corporation, operates a marketing business in Miami, Florida. The corporation has mostly U.S.-based clients and has now entered the European markets.

The corporation opened a U.K. bank account in London and deposited 5,000 USD on December 1, 2023, which was converted to 3,938 GBP. In December 2023, the company received 12,000 GBP in consulting fees, which it deposited into the company’s U.K. bank account.

At the end of the year, the value of the U.K. bank account was 15,938 GBP ($20,303 USD). The corporation should include Schedule N with Form 1120 to disclose that it operates in a foreign country and that it has an FBAR filing requirement using Form 114 (Report of Foreign Bank Accounts).

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).