Instructions for IRS Form 1120s - U.S. Income Tax Return for an S Corporation 2018

January 1, 2018 "Instructions For Irs Form 1120s - U.s. Income Tax Return For An S Corporation" contain the updated filing procedures for the IRS-issued Form 1120S. Download your copy of the instructions by clicking the link below.

IRS Form 1120S is a tax form issued by the United States Internal Revenue Service.

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2018
Department of the Treasury
Internal Revenue Service
Instructions for Form 1120S
U.S. Income Tax Return for an S Corporation
Section references are to the Internal Revenue
Contents
Page
Inclusion of global intangible
Code unless otherwise noted.
low-taxed income (GILTI). Section
Schedule B . . . . . . . . . . . . . . . . .
21
Contents
Page
951A requires U.S. shareholders of
Schedules K and K-1 (General
controlled foreign corporations to
Instructions) . . . . . . . . . . . . . .
22
Future Developments . . . . . . . . . . . .
1
determine and include their GILTI in
Specific Instructions
What's New . . . . . . . . . . . . . . . . . .
1
(Schedule K-1 Only)
. . . . . . . .
22
taxable income every year. Section 951A
Photographs of Missing Children . . . .
2
is effective for tax years of foreign
Specific Instructions (Schedules K
The Taxpayer Advocate Service . . . . .
2
and K-1, Part III) . . . . . . . . . . .
24
corporations beginning after 2017, and tax
Direct Deposit of Refund . . . . . . . . . .
2
years of U.S. shareholders in which or with
Schedule L . . . . . . . . . . . . . . . . .
39
How To Get Forms and
which such tax years of foreign
Schedule M-1 . . . . . . . . . . . . . . . .
40
Publications . . . . . . . . . . . . . . .
2
corporations end. See section 951A for
Schedule M-2 . . . . . . . . . . . . . . . .
40
General Instructions . . . . . . . . . . . . .
2
more information.
Principal Business Activity Codes . . .
44
Purpose of Form . . . . . . . . . . . .
2
Index . . . . . . . . . . . . . . . . . . . . .
47
Qualified business income deduction.
How To Make the Election . . . . . .
2
For tax years beginning after 2017,
Who Must File . . . . . . . . . . . . .
2
Future Developments
individuals, estates, and trusts may be
Termination of Election . . . . . . . .
2
entitled to a deduction of up to 20% of
For the latest information about
Electronic Filing . . . . . . . . . . . .
3
their qualified business income from a
developments related to Form 1120S and
When To File . . . . . . . . . . . . . .
3
trade or business, including income from a
its instructions, such as legislation
Where To File . . . . . . . . . . . . . .
3
pass-through entity, but not from a C
enacted after they were published, go to
Who Must Sign . . . . . . . . . . . . .
3
corporation, plus 20% of qualified real
IRS.gov/Form1120S.
Paid Preparer Authorization . . . . .
4
estate investment trust (REIT) dividends
What's New
Assembling the Return . . . . . . . .
4
and qualified publicly traded partnership
Tax Payments . . . . . . . . . . . . .
4
(PTP) income. The deduction is subject to
Address change for filing returns. The
multiple limitations such as the type of
Electronic Deposit
filing address for corporations located in
Requirement . . . . . . . . . . . .
4
trade or business, the taxpayer's taxable
certain states has changed. See
Where
Estimated Tax Payments . . . . . .
4
income, the amount of W-2 wages paid
To
File, later.
with respect to the trade or business, and
Interest and Penalties . . . . . . . . .
5
the unadjusted basis immediately after
Accounting Methods . . . . . . . . .
5
Business interest expense limitation.
acquisition of qualified property held by
Accounting Period . . . . . . . . . . .
5
For tax years beginning in 2018, every
the trade or business. The deduction can
Rounding Off to Whole
taxpayer who deducts business interest is
be taken in addition to the standard or
Dollars . . . . . . . . . . . . . . . .
6
required to file Form 8990, Limitation on
itemized deductions. For more
Recordkeeping . . . . . . . . . . . . .
6
Business Interest Expense Under Section
information, see section 199A and Pub.
Amended Return . . . . . . . . . . . .
6
163(j), unless an exception for filing is
535, Business Expenses.
met. See the instructions for Schedule B,
Other Forms and
Statements That May Be
questions 9 and 10. For more information,
Small business taxpayers. Effective for
Required . . . . . . . . . . . . . . .
6
see Form 8990 and its instructions.
tax years beginning after 2017, P.L.
Passive Activity Limitations . . . . .
7
115-97 expanded the eligibility of small
Credit for paid family and medical
Net Investment Income Tax
business taxpayers to use the cash
leave. Eligible employers may qualify for
Reporting Requirements . . . .
11
method. See
Accounting
Methods, later.
a credit for wages paid in tax years
Extraterritorial Income
beginning after 2017 to qualifying
Special rules for eligible gains inves-
Exclusion
. . . . . . . . . . . . .
12
employees on family and medical leave.
ted in Qualified Opportunity Funds.
Specific Instructions . . . . . . . . . . . .
12
See section 45S. Also see Form 8994 and
Effective December 22, 2017, section
Period Covered
. . . . . . . . . . .
12
its instructions.
1400Z-2 provides shareholders investing
Name and Address . . . . . . . . .
12
eligible gains in Qualified Opportunity
Deduction disallowed under section
Item B. Business Code . . . . . . .
12
Funds (QOF) tax-favored investments. If
267A. Deduction for certain interest or
Item C. Schedule M-3
the corporation is operating as a QOF, see
royalty paid or accrued to a related party
Information . . . . . . . . . . . .
12
Other Forms and Statements That May Be
pursuant to a hybrid transaction or by, or
Item D. Employer
Required, later. For additional information,
to, a hybrid entity may be disallowed to the
Identification Number
see
Opportunity Zones Frequently Asked
(EIN) . . . . . . . . . . . . . . . .
13
extent the related party doesn’t include the
Questions
on IRS.gov.
amount in income or is allowed a
Item F. Total Assets . . . . . . . . .
13
deduction with respect to the amount. See
Item H. Final Return, Name
Treatment of deferred foreign income
Change, Address
section 267A for more information.
upon transition to participation system
Change, Amended
of taxation. U.S. shareholders of certain
Domestic production activities deduc-
Return, or S Election
specified foreign corporations (as defined
tion (DPAD). The DPAD has been
Termination or
under section 965(e), as amended by P.L.
Revocation . . . . . . . . . . . .
13
repealed for tax years beginning after
115-97) may have an inclusion under
2017, with limited exceptions. See
Income . . . . . . . . . . . . . . . . .
13
section 965 based on the post-1986
Line 12d. Other
Deductions, later.
Deductions . . . . . . . . . . . . . .
14
deferred foreign income of the specified
Tax and Payments . . . . . . . . . .
19
Feb 13, 2019
Cat. No. 11515K
2018
Department of the Treasury
Internal Revenue Service
Instructions for Form 1120S
U.S. Income Tax Return for an S Corporation
Section references are to the Internal Revenue
Contents
Page
Inclusion of global intangible
Code unless otherwise noted.
low-taxed income (GILTI). Section
Schedule B . . . . . . . . . . . . . . . . .
21
Contents
Page
951A requires U.S. shareholders of
Schedules K and K-1 (General
controlled foreign corporations to
Instructions) . . . . . . . . . . . . . .
22
Future Developments . . . . . . . . . . . .
1
determine and include their GILTI in
Specific Instructions
What's New . . . . . . . . . . . . . . . . . .
1
(Schedule K-1 Only)
. . . . . . . .
22
taxable income every year. Section 951A
Photographs of Missing Children . . . .
2
is effective for tax years of foreign
Specific Instructions (Schedules K
The Taxpayer Advocate Service . . . . .
2
and K-1, Part III) . . . . . . . . . . .
24
corporations beginning after 2017, and tax
Direct Deposit of Refund . . . . . . . . . .
2
years of U.S. shareholders in which or with
Schedule L . . . . . . . . . . . . . . . . .
39
How To Get Forms and
which such tax years of foreign
Schedule M-1 . . . . . . . . . . . . . . . .
40
Publications . . . . . . . . . . . . . . .
2
corporations end. See section 951A for
Schedule M-2 . . . . . . . . . . . . . . . .
40
General Instructions . . . . . . . . . . . . .
2
more information.
Principal Business Activity Codes . . .
44
Purpose of Form . . . . . . . . . . . .
2
Index . . . . . . . . . . . . . . . . . . . . .
47
Qualified business income deduction.
How To Make the Election . . . . . .
2
For tax years beginning after 2017,
Who Must File . . . . . . . . . . . . .
2
Future Developments
individuals, estates, and trusts may be
Termination of Election . . . . . . . .
2
entitled to a deduction of up to 20% of
For the latest information about
Electronic Filing . . . . . . . . . . . .
3
their qualified business income from a
developments related to Form 1120S and
When To File . . . . . . . . . . . . . .
3
trade or business, including income from a
its instructions, such as legislation
Where To File . . . . . . . . . . . . . .
3
pass-through entity, but not from a C
enacted after they were published, go to
Who Must Sign . . . . . . . . . . . . .
3
corporation, plus 20% of qualified real
IRS.gov/Form1120S.
Paid Preparer Authorization . . . . .
4
estate investment trust (REIT) dividends
What's New
Assembling the Return . . . . . . . .
4
and qualified publicly traded partnership
Tax Payments . . . . . . . . . . . . .
4
(PTP) income. The deduction is subject to
Address change for filing returns. The
multiple limitations such as the type of
Electronic Deposit
filing address for corporations located in
Requirement . . . . . . . . . . . .
4
trade or business, the taxpayer's taxable
certain states has changed. See
Where
Estimated Tax Payments . . . . . .
4
income, the amount of W-2 wages paid
To
File, later.
with respect to the trade or business, and
Interest and Penalties . . . . . . . . .
5
the unadjusted basis immediately after
Accounting Methods . . . . . . . . .
5
Business interest expense limitation.
acquisition of qualified property held by
Accounting Period . . . . . . . . . . .
5
For tax years beginning in 2018, every
the trade or business. The deduction can
Rounding Off to Whole
taxpayer who deducts business interest is
be taken in addition to the standard or
Dollars . . . . . . . . . . . . . . . .
6
required to file Form 8990, Limitation on
itemized deductions. For more
Recordkeeping . . . . . . . . . . . . .
6
Business Interest Expense Under Section
information, see section 199A and Pub.
Amended Return . . . . . . . . . . . .
6
163(j), unless an exception for filing is
535, Business Expenses.
met. See the instructions for Schedule B,
Other Forms and
Statements That May Be
questions 9 and 10. For more information,
Small business taxpayers. Effective for
Required . . . . . . . . . . . . . . .
6
see Form 8990 and its instructions.
tax years beginning after 2017, P.L.
Passive Activity Limitations . . . . .
7
115-97 expanded the eligibility of small
Credit for paid family and medical
Net Investment Income Tax
business taxpayers to use the cash
leave. Eligible employers may qualify for
Reporting Requirements . . . .
11
method. See
Accounting
Methods, later.
a credit for wages paid in tax years
Extraterritorial Income
beginning after 2017 to qualifying
Special rules for eligible gains inves-
Exclusion
. . . . . . . . . . . . .
12
employees on family and medical leave.
ted in Qualified Opportunity Funds.
Specific Instructions . . . . . . . . . . . .
12
See section 45S. Also see Form 8994 and
Effective December 22, 2017, section
Period Covered
. . . . . . . . . . .
12
its instructions.
1400Z-2 provides shareholders investing
Name and Address . . . . . . . . .
12
eligible gains in Qualified Opportunity
Deduction disallowed under section
Item B. Business Code . . . . . . .
12
Funds (QOF) tax-favored investments. If
267A. Deduction for certain interest or
Item C. Schedule M-3
the corporation is operating as a QOF, see
royalty paid or accrued to a related party
Information . . . . . . . . . . . .
12
Other Forms and Statements That May Be
pursuant to a hybrid transaction or by, or
Item D. Employer
Required, later. For additional information,
to, a hybrid entity may be disallowed to the
Identification Number
see
Opportunity Zones Frequently Asked
(EIN) . . . . . . . . . . . . . . . .
13
extent the related party doesn’t include the
Questions
on IRS.gov.
amount in income or is allowed a
Item F. Total Assets . . . . . . . . .
13
deduction with respect to the amount. See
Item H. Final Return, Name
Treatment of deferred foreign income
Change, Address
section 267A for more information.
upon transition to participation system
Change, Amended
of taxation. U.S. shareholders of certain
Domestic production activities deduc-
Return, or S Election
specified foreign corporations (as defined
tion (DPAD). The DPAD has been
Termination or
under section 965(e), as amended by P.L.
Revocation . . . . . . . . . . . .
13
repealed for tax years beginning after
115-97) may have an inclusion under
2017, with limited exceptions. See
Income . . . . . . . . . . . . . . . . .
13
section 965 based on the post-1986
Line 12d. Other
Deductions, later.
Deductions . . . . . . . . . . . . . .
14
deferred foreign income of the specified
Tax and Payments . . . . . . . . . .
19
Feb 13, 2019
Cat. No. 11515K
foreign corporations determined as of
and understands their rights under the
General Instructions
November 2, 2017, or December 31,
Taxpayer Bill of
Rights.
2017. The U.S. shareholders may elect to
As a taxpayer, the corporation has
Purpose of Form
pay the liability under section 965 in eight
rights that the IRS must abide by in its
installments. See section 965, as
Use Form 1120S to report the income,
dealings with the corporation. TAS can
amended.
gains, losses, deductions, credits, and
help the corporation if:
other information of a domestic
At the time these instructions went
A problem is causing financial difficulty
corporation or other entity for any tax year
to print, several credits and
for the business;
!
covered by an election to be an S
deductions available to S
The business is facing an immediate
CAUTION
corporation.
corporations expired December 31, 2017.
threat of adverse action; or
To find out if legislation extended the
The corporation has tried repeatedly to
How To Make the Election
credits and deductions and made them
contact the IRS but no one has
available for 2018, go to
IRS.gov/
responded, or the IRS hasn't responded
For details about the election, see Form
Extenders.
by the date promised.
2553, Election by a Small Business
Corporation, and the Instructions for Form
The TAS tax toolkit at
Reminders
2553.
TaxpayerAdvocate.IRS.gov
can help the
corporation understand these rights.
Who Must File
Election by a small business corpora-
tion. Don't file Form 1120S unless the
TAS has offices in every state, the
A corporation or other entity must file Form
corporation has filed or is attaching Form
District of Columbia, and Puerto Rico.
1120S if (a) it elected to be an S
2553, Election by a Small Business
Local advocates' numbers are in their
corporation by filing Form 2553, (b) the
Corporation. For details, see the
local directories and at
IRS accepted the election, and (c) the
Instructions for Form 2553.
TaxpayerAdvocate.IRS.gov. The
election remains in effect. After filing Form
corporation can also call TAS at
2553, you should have received
Disaster relief. Code G of Schedule K-1
1-877-777-4778.
confirmation that Form 2553 was
(Form 1120S), box 12 is now used to
accepted. If you didn't receive notification
report qualified cash contributions for relief
TAS also works to resolve large-scale
efforts in certain disaster areas. See
of acceptance or nonacceptance of the
or systemic problems that affect many
election within 2 months of filing Form
Line 12a. Charitable Contributions
under
taxpayers. If the corporation knows of one
2553 (5 months if you checked box Q1 to
the Specific Instructions for Schedules K
of these broad issues, please report it to
ask for a letter ruling), take follow-up
and K-1.
TAS through the Systemic Advocacy
action by calling 1-800-829-4933. Don't
Management System at IRS.gov/SAMS.
Eligible employers in certain disaster
file Form 1120S for any tax year before the
areas can use Form 5884-A, Credits for
For more information, go to
IRS.gov/
year the election takes effect.
Affected Disaster Area Employers, to
Advocate.
report the employee retention credit.
Relief for late elections. If you haven't
Direct Deposit of Refund
filed Form 2553, or didn't file Form 2553
For more information on these and
on time, you may be entitled to relief for a
other disaster relief provisions, see Pub.
To ask for a direct deposit of the
late filed election to be an S corporation.
976, Disaster Relief.
corporation's income tax refund into an
See the Instructions for Form 2553 for
account at a U.S. bank or other financial
Entertainment expenses, membership
details.
institution, attach Form 8050, Direct
dues, and facilities. No deduction is
Deposit of Corporate Tax Refund. See the
allowed for entertainment expenses,
Termination of Election
instructions for line
27.
membership dues, and facilities used in
Once the election is made, it stays in
connection with these activities for
How To Get Forms
effect until it is terminated. If the election is
amounts incurred or paid after 2017. See
terminated, the corporation (or a
Travel, meals, and
entertainment, later.
and Publications
successor corporation) can make another
Photographs of
election on Form 2553 only with IRS
Internet. You can access the IRS website
consent for any tax year before the fifth tax
24 hours a day, 7 days a week, at IRS.gov
Missing Children
year after the first tax year in which the
to:
The Internal Revenue Service is a proud
termination took effect. See Regulations
Download forms, instructions, and
partner with the
National Center for
section 1.1362-5 for details.
publications;
Missing & Exploited Children®
(NCMEC).
Order IRS products online;
An election terminates automatically in
Photographs of missing children selected
Research your tax questions online;
any of the following cases.
by the Center may appear in these
Search publications online by topic or
1. The corporation is no longer a small
instructions on pages that would otherwise
keyword;
business corporation as defined in section
be blank. You can help bring these
View Internal Revenue Bulletins (IRBs)
1361(b). This kind of termination of an
children home by looking at the
published in recent years; and
election is effective as of the day the
photographs and calling 1-800-THE-LOST
Sign up to receive local and national tax
corporation no longer meets the definition
(1-800-843-5678) if you recognize a child.
news by email.
of a small business corporation. Attach to
The Taxpayer Advocate
Tax forms and publications. The
Form 1120S for the final year of the S
corporation can download or print all of the
corporation a statement notifying the IRS
Service
forms and publications it may need on
of the termination and the date it occurred.
The Taxpayer Advocate Service (TAS) is
IRS.gov/FormsPubs. Otherwise, the
2. The corporation, for each of 3
an independent organization within the
corporation can go to
IRS.gov/
consecutive tax years (a) has
IRS that helps taxpayers and protects
OrderForms
to place an order and have
accumulated earnings and profits, and (b)
taxpayer rights. TAS's job is to ensure that
forms mailed to it.
derives more than 25% of its gross
every taxpayer is treated fairly and knows
The corporation should receive its
receipts from passive investment income
order within 10 business days.
as defined in section 1362(d)(3)(C). The
Instructions for Form 1120S (2018)
-2-
electronically filed. The option to e-file
Where To File
doesn't, however, apply to certain returns.
File the corporation's return at the applicable IRS address listed below.
Certain corporations with total assets of
$10 million or more that file at least 250
And the total assets at
returns a year are required to e-file Form
If the corporation's
the end of the tax year
1120S. See Regulations section
principal business, office,
(Form 1120S, page 1,
301.6037-2. However, these corporations
or agency is located in:
item F) are:
Use the following address:
can ask for a waiver of the electronic filing
requirements. See Notice 2010-13,
Connecticut, Delaware,
Department of the Treasury
Less than $10 million and
2010-4 I.R.B. 327.
District of Columbia, Georgia,
Internal Revenue Service Center
Schedule M-3 isn't filed
Illinois, Indiana, Kentucky,
Kansas City, MO 64999-0013
For more information, visit
IRS.gov/
Maine, Maryland,
Businesses.
Massachusetts, Michigan,
New Hampshire, New Jersey,
When To File
$10 million or more, or
Department of the Treasury
New York, North Carolina,
less than $10 million and
Internal Revenue Service Center
Generally, an S corporation must file Form
Ohio, Pennsylvania, Rhode
Schedule M-3 is filed
Ogden, UT 84201-0013
1120S by the 15th day of the 3rd month
Island, South Carolina,
after the end of its tax year. For calendar
Tennessee, Vermont, Virginia,
year corporations, the due date is March
West Virginia, Wisconsin
15, 2019. A corporation that has dissolved
Alabama, Alaska, Arizona,
must generally file by the 15th day of the
Arkansas, California,
3rd month after the date it dissolved.
Colorado, Florida, Hawaii,
Idaho, Iowa, Kansas,
If the due date falls on a Saturday,
Louisiana, Minnesota,
Department of the Treasury
Sunday, or legal holiday, the corporation
Mississippi, Missouri,
Any amount
Internal Revenue Service Center
can file on the next day that is not a
Montana, Nebraska, Nevada,
Ogden, UT 84201-0013
Saturday, Sunday, or legal holiday.
New Mexico, North Dakota,
Oklahoma, Oregon, South
If the S corporation election was
Dakota, Texas, Utah,
terminated during the tax year and the
Washington, Wyoming
corporation reverts to a C corporation, file
Form 1120S for the S corporation's short
A foreign country or U.S.
Internal Revenue Service Center
year by the due date (including
possession
Any amount
P.O. Box 409101
extensions) of the C corporation's short
Ogden, UT 84409
year return.
Private Delivery Services
election terminates on the first day of the
to the revocation and contain the
Corporations can use certain private
first tax year beginning after the third
information required by Regulations
delivery services (PDS) designated by the
consecutive tax year. The corporation
section 1.1362-6(a)(3).
IRS to meet the “timely mailing as timely
must pay a tax for each year it has excess
filing” rule for tax returns. Go to
IRS.gov/
A revocation can be rescinded before it
net passive income. See the line 22a
PDS
for the current list of designated
takes effect. See Regulations section
instructions for details on how to figure the
services.
1.1362-6(a)(4) for details.
tax.
3. The election is revoked. An election
The PDS can tell you how to get written
For rules on allocating income and
can be revoked only with the consent of
proof of the mailing date.
deductions between an S corporation's
shareholders who, at the time the
short year and a C corporation's short year
For the IRS mailing address to use if
revocation is made, hold more than 50%
and other special rules that apply when an
you're using PDS, go to
IRS.gov/
of the number of issued and outstanding
election is terminated, see section 1362(e)
PDSstreetAddresses.
shares of stock (including nonvoting
and Regulations section 1.1362-3.
stock). The revocation can specify an
Private delivery services can't
effective revocation date that is on or after
If an election was terminated under (1)
deliver items to P.O. boxes. You
!
the day the revocation is filed. If no date is
or (2) above, and the corporation believes
must use the U.S. Postal Service
specified, the revocation is effective at the
CAUTION
the termination was inadvertent, the
to mail any item to an IRS P.O. box
start of the tax year if the revocation is
corporation can ask for permission from
address.
made on or before the 15th day of the 3rd
the IRS to continue to be treated as an S
month of that tax year. If no date is
Extension of Time To File
corporation. See Regulations section
specified and the revocation is made after
1.1362-4 for the specific requirements that
File Form 7004, Application for Automatic
the 15th day of the 3rd month of the tax
must be met to qualify for inadvertent
Extension of Time To File Certain
year, the revocation is effective at the start
termination relief.
Business Income Tax, Information, and
of the next tax year.
Other Returns, to ask for an extension of
Electronic Filing
To revoke the election, the corporation
time to file. Generally, the corporation
must file a statement with the appropriate
Corporations can generally electronically
must file Form 7004 by the regular due
service center listed under Where To File
file (e-file) Form 1120S, related forms,
date of the return. See the Instructions for
in the Instructions for Form 2553. In the
schedules, statements, and attachments,
Form 7004.
statement, the corporation must notify the
Form 7004 (automatic extension of time to
IRS that it is revoking its election to be an
file), and Forms 940, 941, and 944
Who Must Sign
S corporation. The statement must be
(employment tax returns). Form 1099 and
signed by each shareholder who consents
other information returns can also be
The return must be signed and dated by:
Instructions for Form 1120S (2018)
-3-
The president, vice president, treasurer,
extensions) for filing the corporation's
other trusted third party to make deposits
assistant treasurer, chief accounting
2019 tax return. If the corporation wants to
on its behalf. Also, it may arrange for its
officer; or
expand the paid preparer's authorization
financial institution to submit a same-day
Any other corporate officer (such as tax
or revoke the authorization before it ends,
wire payment (discussed below) on its
officer) authorized to sign.
see Pub. 947, Practice Before the IRS and
behalf. EFTPS is a free service provided
Power of Attorney.
by the Department of the Treasury.
If a return is filed on behalf of a
Services provided by a tax professional,
corporation by a receiver, trustee, or
Assembling the Return
financial institution, payroll service, or
assignee, the fiduciary must sign the
other third party may have a fee.
To ensure that the corporation's tax return
return, instead of the corporate officer.
is correctly processed, attach all
Returns and forms signed by a receiver or
To get more information about EFTPS
schedules and other forms after page 5 of
trustee in bankruptcy on behalf of a
or to enroll in EFTPS, visit
Form 1120S in the following order.
corporation must be accompanied by a
www.EFTPS.gov
or call 1-800-555-4477
copy of the order or instructions of the
(TTY/TDD 1-800-733-4829).
1. Schedule N (Form 1120), Foreign
court authorizing signing of the return or
Operations of U.S. Corporations.
Depositing on time. For any deposit
form.
2. Form 8825, Rental Real Estate
made by EFTPS to be on time, the
If an employee of the corporation
Income and Expenses of a Partnership or
corporation must submit the deposit by 8
completes Form 1120S, the paid preparer
an S Corporation.
p.m. Eastern time the day before the date
space should remain blank. Anyone who
the deposit is due. If the corporation uses
3. Form 8050, Direct Deposit of
prepares Form 1120S but doesn't charge
a third party to make deposits on its
Corporate Tax Refund.
the corporation shouldn't complete that
behalf, they may have different cutoff
4. Form 1125-A, Cost of Goods Sold.
section. Generally, anyone who is paid to
times.
prepare the return must sign it and fill in
5. Form 4136, Credit for Federal Tax
Same-day wire payment option. If the
the “Paid Preparer Use Only” area.
Paid on Fuels.
corporation fails to submit a deposit
6. Form 8941, Credit for Small
The paid preparer must complete the
transaction on EFTPS by 8 p.m. Eastern
Employer Health Insurance Premiums.
required preparer information and:
time the day before the date a deposit is
Sign the return in the space provided
7. Additional schedules in
due, it can still make its deposit on time by
for the preparer's signature, and
alphabetical order.
using the Federal Tax Collection Service
Give a copy of the return to the
(FTCS). To use the same-day wire
8. Additional forms in numerical order.
taxpayer.
payment method, the corporation will need
Complete every applicable entry space
to make arrangements with its financial
A paid preparer may sign original
on Form 1120S and Schedule K-1. Don't
institution ahead of time regarding
or amended returns by rubber
TIP
enter “See Attached” or “Available Upon
availability, deadlines, and costs.
stamp, mechanical device, or
Request” instead of completing the entry
Financial institutions may charge a fee for
computer software program.
spaces. If more space is needed on the
payment made this way. To learn more
forms or schedules, attach separate
about the information the corporation will
Paid Preparer
sheets using the same size and format as
need to provide to its financial institution to
Authorization
the printed forms.
make a same-day wire payment, go to
IRS.gov/SameDayWire.
If the corporation wants to allow the IRS to
If there are supporting statements and
discuss its 2018 tax return with the paid
attachments, arrange them in the same
Estimated Tax Payments
preparer who signed it, check the “Yes”
order as the schedules or forms they
box in the signature area of the return.
Generally, the corporation must make
support and attach them last. Show the
This authorization applies only to the
installment payments of estimated tax for
totals on the printed forms. Enter the
individual whose signature appears in the
the following taxes if the total of these
corporation's name and EIN on each
“Paid Preparer Use Only” section of the
taxes is $500 or more: (a) the tax on
supporting statement or attachment.
return. It doesn't apply to the firm, if any,
built-in gains, (b) the excess net passive
Tax Payments
shown in that section.
income tax, and (c) the investment credit
recapture tax.
If the “Yes” box is checked, the
Generally, the corporation must pay any
corporation is authorizing the IRS to call
tax due in full no later than the due date for
The amount of estimated tax required
the paid preparer to answer any questions
filing its tax return (not including
to be paid annually is the smaller of: (a)
that may arise during the processing of its
extensions). See the
instructions for
the total of the above taxes shown on the
return. The corporation is also authorizing
line
25. If the due date falls on a Saturday,
return for the tax year (or if no return is
the paid preparer to:
Sunday, or legal holiday, the payment is
filed, the total of these taxes for the year),
Give the IRS any information that is
due on the next day that isn't a Saturday,
or (b) the sum of (i) the investment credit
missing from the return;
Sunday, or legal holiday.
recapture tax and the built-in gains tax
Call the IRS for information about the
shown on the return for the tax year (or if
Electronic Deposit
processing of the return or the status of
no return is filed, the total of these taxes
any related refund or payment(s); and
Requirement
for the tax year), and (ii) any excess net
Respond to certain IRS notices about
passive income tax shown on the
Corporations must use electronic funds
math errors, offsets, and return
corporation's return for the preceding tax
transfers to make all federal tax deposits
preparation.
year. If the preceding tax year was less
(such as deposits of employment, excise,
than 12 months, the estimated tax must be
The corporation isn't authorizing the
and corporate income tax). Generally,
determined under (a).
paid preparer to receive any refund check,
electronic funds transfers are made using
bind the corporation to anything (including
the Electronic Federal Tax Payment
The estimated tax is generally payable
any additional tax liability), or otherwise
System (EFTPS). However, if the
in four equal installments. However, the
represent the corporation before the IRS.
corporation doesn't want to use EFTPS, it
corporation may be able to lower the
The authorization will automatically end
can arrange for its tax professional,
amount of one or more installments by
no later than the due date (excluding
financial institution, payroll service, or
using the annualized income installment
Instructions for Form 1120S (2018)
-4-
method or adjusted seasonal installment
imposed if the corporation can show that
Generally, an S corporation can't use
method under section 6655(e).
the failure to pay on time was due to
the cash method of accounting if it’s a tax
reasonable cause. See Caution, earlier.
shelter (as defined in section 448(d)(3)).
For a calendar year corporation, the
See section 448 for details.
payments are due for 2019 by April 15,
Failure to furnish information timely.
A corporation must use an accrual
June 17, September 16, and December
For each failure to furnish Schedule K-1 to
method for sales and purchases of
16. For a fiscal year corporation, they are
a shareholder when due and each failure
inventory items unless it is a small
due by the 15th day of the 4th, 6th, 9th,
to include on Schedule K-1 all the
business taxpayer (defined later). See the
and 12th months of the year. If any date
information required to be shown (or the
Form 1125-A instructions. For tax years
falls on a Saturday, Sunday, or legal
inclusion of incorrect information), a $270
beginning after 2017, if you are a small
holiday, the installment is due on the next
penalty may be imposed with respect to
business taxpayer, you can adopt or
day that isn't a Saturday, Sunday, or legal
each Schedule K-1 for which a failure
change your accounting method to
holiday.
occurs. If the requirement to report correct
account for inventories (i) in the same
information is intentionally disregarded,
The corporation must make the
manner as materials and supplies that are
each $270 penalty is increased to $540 or,
payments using electronic funds transfers
non-incidental, or (ii) to conform to the
if greater, 10% of the aggregate amount of
as described earlier.
taxpayer’s treatment of inventories in an
items required to be reported. See
applicable financial statement (as defined
For information on penalties that may
sections 6722 and 6724 for more
in section 451(b)(3)), or if the taxpayer
apply if the corporation fails to make
information.
does not have an applicable financial
required payments, see the Instructions
The penalty won't be imposed if the
statement, the method of accounting used
for Form 2220.
corporation can show that not furnishing
in the taxpayer’s books and records
information timely was due to reasonable
prepared in accordance with the
Interest and Penalties
cause. See Caution, earlier.
taxpayer’s accounting procedures.
Generally, IRS consent is required for
If the corporation receives a notice
Trust fund recovery penalty. This
changes in accounting methods. See Rev.
about penalties after it files its
penalty may apply if certain excise,
!
Proc. 2018-40 for the procedures by which
return, send the IRS an
income, social security, and Medicare
CAUTION
a small business taxpayer may obtain
explanation and we will determine if the
taxes that must be collected or withheld
automatic consent to change its method of
corporation meets reasonable-cause
aren't collected or withheld, or these taxes
accounting to reflect the statutory changes
criteria. Don't attach an explanation when
aren't paid. These taxes are generally
made in this area. Also, see Change in
the corporation's return is filed.
reported on:
accounting method, later.
Form 720, Quarterly Federal Excise
Special rules apply to long-term
Interest. Interest is charged on taxes
Tax Return;
contracts. See section 460.
paid late even if an extension of time to file
Form 941, Employer's QUARTERLY
Generally, dealers in securities must
is granted. Interest is also charged on
Federal Tax Return;
use the mark-to-market accounting
penalties imposed for failure to file,
Form 943, Employer's Annual Federal
method. Dealers in commodities and
negligence, fraud, substantial valuation
Tax Return for Agricultural Employees;
traders in securities and commodities can
misstatements, substantial
Form 944, Employer's ANNUAL
elect to use the mark-to-market
understatements of tax, and reportable
Federal Tax Return; or
accounting method. See section 475.
transaction understatements from the due
Form 945, Annual Return of Withheld
date (including extensions) to the date of
Federal Income Tax.
Small business taxpayer. A small
payment. The interest charge is figured at
business taxpayer is a taxpayer that (a)
The trust fund recovery penalty may be
a rate determined under section 6621.
has average annual gross receipts of $25
imposed on all persons who are
million or less for the 3 prior tax years and
Late filing of return. A penalty may be
determined by the IRS to have been
(b) is not a tax shelter (as defined in
assessed if the return is filed after the due
responsible for collecting, accounting for,
section 448(d)(3)).
or paying over these taxes, and who acted
date (including extensions) or the return
willfully in not doing so. The penalty is
doesn't show all the information required,
Change in accounting method.
equal to the full amount of the unpaid trust
unless each failure is due to reasonable
Generally, the corporation must get IRS
cause. See Caution, earlier. For returns on
fund tax. See the Instructions for Form
consent to change either an overall
which no tax is due, the penalty is $200 for
720, Pub. 15 (Circular E), Employer's Tax
method of accounting or the accounting
Guide, or Pub. 51 (Circular A), Agricultural
each month or part of a month (up to 12
treatment of any material item. To do so,
Employer's Tax Guide, for details,
months) the return is late or doesn't
the corporation generally must file Form
including the definition of responsible
include the required information, multiplied
3115, Application for Change in
by the total number of persons who were
persons.
Accounting Method. See the Instructions
shareholders in the corporation during any
for Form 3115 for more information and
Other penalties. Other penalties can be
part of the corporation's tax year for which
exceptions. Also see Rev. Proc. 2018-31,
imposed for negligence, substantial
the return is due. If tax is due, the penalty
2018-22 I.R.B. 637 (or any successor),
understatement of tax, reportable
is the amount stated above plus 5% of the
and Pub. 538, Accounting Periods and
transaction understatements, and fraud.
unpaid tax for each month or part of a
Methods.
See sections 6662, 6662A, and 6663.
month the return is late, up to a maximum
of 25% of the unpaid tax. The minimum
Accounting Period
Accounting Methods
penalty for a return that is more than 60
A corporation must figure its income on
Figure income using the method of
days late is the smaller of the tax due or
the basis of a tax year. A tax year is the
accounting regularly used in keeping the
$210.
annual accounting period a corporation
corporation's books and records. The
Late payment of tax. A corporation that
uses to keep its records and report its
method used must clearly reflect income.
doesn't pay the tax when due generally
income and expenses.
Permissible methods include cash,
may be penalized
/
of 1% of the unpaid
1
2
accrual, or any other method authorized
tax for each month or part of a month the
An S corporation must use one of the
by the Internal Revenue Code.
tax isn't paid, up to a maximum of 25% of
following tax years.
the unpaid tax. The penalty won't be
The following rules apply.
A tax year ending December 31.
Instructions for Form 1120S (2018)
-5-

Download Instructions for IRS Form 1120s - U.S. Income Tax Return for an S Corporation 2018

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