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Instrukcijos forma 1120, JAV Corporation pajamų mokesčio grąžinimo
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Department of the Treasury
Internal Revenue Service
2023
Instructions for Form 1120
U.S. Corporation Income Tax Return
Section references are to the Internal Revenue Code unless
Future Developments
otherwise noted.
For the latest information about developments related to Form
1120 and its instructions, such as legislation enacted after they
Contents
Page
What’s New
Increase in penalty for failure to file. For tax returns required
to be filed in 2024, the minimum penalty for failure to file a return
that is more than 60 days late has increased to the smaller of the
How To Make a Contribution To Reduce Debt Held
Electronically filed returns. The electronic-filing threshold for
corporate returns required to be filed on or after January 1, 2024,
Deduction for certain energy efficient commercial building
property. For tax years beginning in 2023, corporations filing
Form 1120 and claiming the energy efficient commercial
buildings deduction should report the deduction on line 25. See
Expiration of 100% business meal expense deduction. The
temporary 100% business meal expenses deduction for food
and beverages provided by a restaurant does not apply to
amounts paid or incurred after 2022.
Corporate alternative minimum tax (CAMT). For tax years
beginning after 2022, certain corporations must determine
whether they are subject to the new CAMT and calculate CAMT
Elective payment election. Applicable entities and electing
taxpayers can elect to treat certain credits as elective payments.
Resulting overpayment may result in refunds. See the
Instructions for Form 3800.
Other Forms and Statements That May Be
Relief from additions to tax for underpayments applicable
to the new corporate alternative minimum tax. For tax year
2023, the IRS will waive the penalty for failure to make estimated
tax payments for taxes attributable to a CAMT liability. Affected
corporations must still file the 2023 Form 2220, even if they owe
no estimated tax penalty. However, affected corporations may
exclude the CAMT tax liability when calculating the required
annual payment on Form 2220. Affected corporations must also
include an amount of estimated tax penalty on line 34 of Form
1120 (or other appropriate line of the corporation's income tax
return), even if that amount is zero. Failure to follow these
instructions could result in affected corporations receiving a
penalty notice that will require an abatement request to apply the
relief provided by Notice 2023-42. See Notice 2023-42, 2023-26
I.R.B. 1085, available at IRS.gov/irb/
Initial Return, Final Return, Name Change, or
Schedule C. Dividends, Inclusions, and Special
Schedule M-1. Reconciliation of Income (Loss) per
Photographs of
Missing Children
Schedule M-2. Analysis of Unappropriated
The Internal Revenue Service is a proud partner with the
Photographs of missing children selected by the Center may
Jan 17, 2024
Cat. No. 11455T
appear in instructions on pages that would otherwise be blank.
You can help bring these children home by looking at the
photographs and calling 1-800-THE-LOST (1-800-843-5678) if
you recognize a child.
Search publications online by topic or keyword;
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•
View Internal Revenue Bulletins (IRBs) published in recent
years; and
Sign up to receive local and national tax news by email.
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Tax forms and publications. The corporation can view, print,
or download all of the forms and publications it may need on
IRS.gov/FormsPubs. Otherwise, the corporation can go to
IRS.gov/OrderForms to place an order and have forms mailed to
it.
The Taxpayer Advocate Service
The Taxpayer Advocate Service (TAS) is an independent
organization within the IRS that helps taxpayers and protects
taxpayer rights. TAS's job is to ensure that every taxpayer is
treated fairly and knows and understands their rights under the
General Instructions
As a taxpayer, the corporation has rights that the IRS must
abide by in its dealings with the corporation. TAS can help the
corporation if:
Purpose of Form
Use Form 1120, U.S. Corporation Income Tax Return, to report
the income, gains, losses, deductions, credits, and to figure the
income tax liability of a corporation.
A problem is causing financial difficulty for the business;
The business is facing an immediate threat of adverse action;
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or
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The corporation has tried repeatedly to contact the IRS but no
Who Must File
one has responded, or the IRS hasn't responded by the date
promised.
Unless exempt under section 501, all domestic corporations
(including corporations in bankruptcy) must file an income tax
return whether or not they have taxable income. Domestic
corporations must file Form 1120, unless they are required, or
elect to file a special return. See Special Returns for Certain
Organizations, later.
TAS has offices in every state, the District of Columbia, and
Puerto Rico. Local advocates' numbers are in their local
can also call TAS at 877-777-4778.
TAS also works to resolve large-scale or systemic problems
that affect many taxpayers. If the corporation knows of one of
these broad issues, please report it to TAS through the Systemic
Entities electing to be taxed as corporations. A domestic
entity electing to be classified as an association taxable as a
corporation must file Form 1120, unless it is required to or elects
to file a special return listed under Special Returns for Certain
Organizations. The entity must also file Form 8832, Entity
Classification Election, and attach a copy of Form 8832 to Form
1120 (or the applicable return) for the year of the election. For
more information, see Form 8832 and its instructions.
Direct Deposit of Refund
To request a direct deposit of the corporation's income tax refund
into an account at a U.S. bank or other financial institution, attach
Form 8050, Direct Deposit of Corporate Tax Refund. See the
Limited liability companies (LLC). If an entity with more than
one owner was formed as an LLC under state law, it is generally
treated as a partnership for federal income tax purposes and
files Form 1065, U.S. Return of Partnership Income. Generally, a
single-member LLC is disregarded as an entity separate from its
owner and reports its income and deductions on its owner's
federal income tax return. The LLC can file a Form 1120 only if it
has filed Form 8832 to elect to be treated as an association
taxable as a corporation. For more information about LLCs, see
Pub. 3402, Taxation of Limited Liability Companies.
How To Make a Contribution To
Reduce Debt Held by the Public
To help reduce debt held by the public, make a check payable to
“Bureau of the Fiscal Service.” Send it to:
Bureau of the Fiscal Service
Attn: Dept G
Corporations engaged in farming. A corporation (other than
a corporation that is a subchapter T cooperative) that engages in
farming should use Form 1120 to report the income (loss) from
such activities. Enter the income and deductions of the
corporation according to the instructions for lines 1 through 10
and 12 through 29.
P.O. Box 2188
Parkersburg, WV 26106-2188
Or, enclose the check with the corporation's income tax return. In
the memo section of the check, make a note that it is a gift to
reduce the debt held by the public. For information on how to
make this type of contribution online, go to
Ownership interest in a Financial Asset Securitization In-
vestment Trust (FASIT). Special rules apply to a FASIT in
existence on October 22, 2004, to the extent that regular
interests issued by the FASIT before October 22, 2004, continue
to remain outstanding in accordance with their original terms.
If a corporation holds an ownership interest in a FASIT to
which these special rules apply, it must report all items of
income, gain, deductions, losses, and credits on the
corporation's income tax return (except as provided in section
860H). Show a breakdown of the items on an attached
statement. For more information, see sections 860H and 860L
(repealed with certain exceptions).
www.treasurydirect.gov and click on “How to Make a
Contribution to Reduce the Debt.”
Do not add the contributions to any tax the corporation may
tax the corporation owes. Contributions to reduce debt held by
the public are deductible subject to the rules and limitations for
charitable contributions.
How To Get Forms
and Publications
Foreign-owned domestic disregarded entities. If a foreign
person, including a foreign corporation, wholly owns a domestic
disregarded entity (DE), the domestic DE is treated as a
domestic corporation separate from its owner (the foreign
corporation) for the limited purposes of the requirements under
Internet. You can access the IRS website 24 hours a day, 7
days a week, at IRS.gov to:
Download forms, instructions, and publications;
Order IRS products online;
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Research your tax questions online;
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Instructions for Form 1120
section 6038A that apply to 25% foreign-owned domestic
corporations. While a DE is not required to file a U.S. income tax
return, a DE covered by these rules is required to file a pro forma
Form 1120 with Form 5472 attached by the due date (including
extensions) of the return. See the Instructions for Form 5472 for
additional information and coordination with Form 5472 reporting
by the domestic DE.
Regulated investment company
(section 851)
1120-RIC
1120-S
S corporation (section 1361)
Settlement fund
(section 468B)
1120-SF
Qualified opportunity fund. To certify as a qualified
opportunity fund (QOF), the corporation must file Form 1120 and
attach Form 8996, even if the corporation had no income or
see the Instructions for Form 8996.
Electronic Filing
Corporations can generally electronically file (e-file) Form 1120,
related forms, schedules, and attachments; Form 7004
(automatic extension of time to file); and Forms 940, 941, and
944 (employment tax returns). If there is a balance due, the
corporation can authorize an electronic funds withdrawal while
e-filing. Form 1099 and other information returns can also be
electronically filed. The option to e-file does not, however, apply
to certain returns.
Qualified opportunity investment. If the corporation held a
qualified investment in a QOF at any time during the year, the
corporation must file its return with Form 8997 attached. See the
instructions for Form 8997.
Special Returns for
Certain Organizations
For returns filed on or after January 1, 2024, corporations that
file 10 or more returns are required to e-file Form 1120. See
Regulations section 301.6011-5. However, these corporations
can request a waiver of the electronic filing requirements.
Instead of filing Form 1120, certain organizations, as shown below, file special
returns.
If the organization is a:
▼
File Form
▼
For more information on e-filing, see E-file for Business and
Exempt organization with unrelated
trade or business income
Exclusions From Electronic Filing
990-T
1065
Waivers. The IRS may waive the electronic filing rules if the
corporation demonstrates that a hardship would result if it were
required to file its return electronically. A corporation interested in
requesting a waiver of the mandatory electronic filing
requirement must file a written request, and request one in the
manner prescribed by the IRS. All written requests for waivers
should be mailed to:
Religious or apostolic organization
exempt under section 501(d)
Entity formed as a limited liability
company under state law and treated
as a partnership for federal income tax
purposes
1065
Internal Revenue Service
Ogden Submission Processing Center
Attn: Form 1120 e-file Waiver Request
Mail Stop 1057
Subchapter T cooperative association
(including a farmers' cooperative)
1120-C
1066
Entity that elects to be treated as a real
estate mortgage investment conduit
(REMIC) under section 860D
Ogden, UT 84201
If using a delivery service, requests for waivers should be mailed
to:
Interest charge domestic international
sales corporation (section 992)
1120-IC-DISC
Foreign corporation (other than life or
property and casualty insurance
company filing Form 1120-L or Form
1120-PC)
Internal Revenue Service
Ogden Submission Processing Center
Attn: Form 1120 e-file Waiver Request
Mail Stop 1057
1120-F
1973 N. Rulon White Blvd.
Ogden, UT 84404
Foreign sales corporation (section 922)
1120-FSC
Condominium management,
residential real estate management, or
timeshare association that elects to be
treated as a homeowners association
under section 528
Waiver requests can also be faxed to 877-477-0575. Contact the
e-Help Desk at 866-255-0654 for questions regarding the waiver
procedures or process.
1120-H
Exemptions. The IRS may provide exemptions from the
requirements to electronically file. If using the technology
required to electronically file conflicts with religious beliefs, the
corporation is exempt from the requirement. Clearly indicate the
exemption on the corporation’s return. Write "Religious
Exemption" at the top of Form 1120. File the corporation's return
Life insurance company
(section 801)
1120-L
Fund set up to pay for nuclear
decommissioning costs (section 468A)
1120-ND
Property and casualty insurance
company
(section 831)
1120-PC
When To File
Political organization
(section 527)
1120-POL
1120-REIT
Generally, a corporation must file its income tax return by the
15th day of the 4th month after the end of its tax year. A new
corporation filing a short-period return must generally file by the
15th day of the 4th month after the short period ends. A
Real estate investment trust (section
856)
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Instructions for Form 1120
Where To File
File the corporation's return at the applicable IRS address listed below.
If the corporation's principal business,
office, or agency is located in:
And the total assets at the end of
the tax year are:
Use the following address:
Connecticut, Delaware, District of Columbia,
Georgia, Illinois, Indiana, Kentucky, Maine,
Maryland, Massachusetts, Michigan, New
Hampshire, New Jersey, New York, North
Carolina, Ohio, Pennsylvania, Rhode Island,
South Carolina, Tennessee, Vermont, Virginia,
West Virginia, Wisconsin
Less than $10 million and
Schedule M-3 is not filed
Department of the Treasury
Internal Revenue Service Center
Kansas City, MO 64999-0012
$10 million or more, or
less than $10 million and
Schedule M-3 is filed
Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201-0012
Alabama, Alaska, Arizona, Arkansas, California,
Colorado, Florida, Hawaii, Idaho, Iowa, Kansas,
Louisiana, Minnesota, Mississippi, Missouri,
Montana, Nebraska, Nevada, New Mexico,
North Dakota, Oklahoma, Oregon, South
Dakota, Texas, Utah, Washington, Wyoming
Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201-0012
Any amount
A foreign country or U.S. territory
Internal Revenue Service Center
P.O. Box 409101
Ogden, UT 84409
Any amount
A group of corporations with members located in more than one service center area will often keep all the books and records at the principal office of
the managing corporation. In this case, the tax returns of the corporations may be filed with the service center for the area in which the principal
office of the managing corporation is located.
corporation that has dissolved must generally file by the 15th day
of the 4th month after the date it dissolved.
However, a corporation with a fiscal tax year ending June 30
must file by the 15th day of the 3rd month after the end of its tax
year. A corporation with a short tax year ending anytime in June
will be treated as if the short year ended on June 30, and must
file by the 15th day of the 3rd month after the end of its tax year.
the corporate officer. Returns and forms signed by a receiver or
trustee in bankruptcy on behalf of a corporation must be
accompanied by a copy of the order or instructions of the court
authorizing signing of the return or form.
Paid Preparer Use Only section. If an employee of the
corporation completes Form 1120, the paid preparer section
should remain blank. Anyone who prepares Form 1120 but does
not charge the corporation should not complete that section.
Generally, anyone who is paid to prepare the return must sign
and complete the section.
If the due date falls on a Saturday, Sunday, or legal holiday,
the corporation can file on the next business day.
Private Delivery Services
The paid preparer must complete the required preparer
information and:
Corporations can use certain private delivery services (PDS)
designated by the IRS to meet the “timely mailing as timely filing”
Sign the return in the space provided for the preparer's
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signature,
Include their Preparer Tax Identification Number (PTIN), and
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The PDS can tell you how to get written proof of the mailing
Give a copy of the return to the taxpayer.
date.
A paid preparer may sign original or amended returns by
For the IRS mailing address to use if you’re using a PDS, go
rubber stamp, mechanical device, or computer software
program.
TIP
Private delivery services can't deliver items to P.O.
boxes. You must use the U.S. Postal Service to mail any
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Paid Preparer Authorization
CAUTION
item to an IRS P.O. box address.
If the corporation wants to allow the IRS to discuss its 2023 tax
return with the paid preparer who signed it, check the “Yes” box
in the signature area of the return. This authorization applies only
to the individual whose signature appears in the “Paid Preparer
Use Only” section of the return. It does not apply to the firm, if
any, shown in that section.
Extension of Time To File
File Form 7004, Application for Automatic Extension of Time To
File Certain Business Income Tax, Information, and Other
Returns, to request an extension of time to file. Generally, the
corporation must file Form 7004 by the regular due date of the
return. See the Instructions for Form 7004.
If the “Yes” box is checked, the corporation is authorizing the
IRS to call the paid preparer to answer any questions that may
arise during the processing of its return. The corporation is also
authorizing the paid preparer to:
Who Must Sign
The return must be signed and dated by:
Give the IRS any information that is missing from the return;
Call the IRS for information about the processing of the return
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The president, vice president, treasurer, assistant treasurer,
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chief accounting officer; or
Any other corporate officer (such as tax officer) authorized to
or the status of any related refund or payment(s); and
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Respond to certain IRS notices about math errors, offsets,
sign.
and return preparation.
If a return is filed on behalf of a corporation by a receiver,
trustee, or assignee, the fiduciary must sign the return, instead of
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Instructions for Form 1120
The corporation is not authorizing the paid preparer to receive
any refund check, bind the corporation to anything (including any
additional tax liability), or otherwise represent the corporation
before the IRS.
and corporate income tax). Generally, electronic funds transfers
are made using the Electronic Federal Tax Payment System
(EFTPS). However, if the corporation does not want to use
EFTPS, it can arrange for its tax professional, financial
institution, payroll service, or other trusted third party to make
deposits on its behalf. Also, it may arrange for its financial
institution to submit a same-day payment (discussed below) on
its behalf. EFTPS is a free service provided by the Department of
the Treasury. Services provided by a tax professional, financial
institution, payroll service, or other third party may have a fee.
The authorization will automatically end no later than the due
date (excluding extensions) for filing the corporation's 2024 tax
return. If the corporation wants to expand the paid preparer's
authorization or revoke the authorization before it ends, see Pub.
947, Practice Before the IRS and Power of Attorney.
Assembling the Return
To get more information about EFTPS or to enroll in EFTPS,
the Telecommunications Relay Services (TRS), for people who
are deaf, hard of hearing, or have a speech disability, dial 711
and provide the TRS assistant the 800-555-4477 number above
or 800-733-4829.
To ensure that the corporation's tax return is correctly processed,
attach all schedules and other forms after page 6 of Form 1120
in the following order.
1. Schedule N (Form 1120).
2. Schedule D (Form 1120).
3. Form 4797.
4. Form 8949.
5. Form 8996.
Depositing on time. For any deposit made by EFTPS to be on
time, the corporation must submit the deposit by 8 p.m. Eastern
time the day before the date the deposit is due. If the corporation
uses a third party to make deposits on its behalf, they may have
different cutoff times.
6. Form 4626.
Same-day wire payment option. If the corporation fails to
submit a deposit transaction on EFTPS by 8 p.m. Eastern time
the day before the date a deposit is due, it can still make its
deposit on time by using the Federal Tax Collection Service
(FTCS). To use the same-day wire payment method, the
corporation will need to make arrangements with its financial
institution ahead of time regarding availability, deadlines, and
costs. Financial institutions may charge a fee for payments made
this way. To learn more about the information the corporation will
need to provide to its financial institution to make a same-day
7. Form 8050.
8. Form 1125-A.
9. Form 4136.
10. Form 8978.
11. Form 965-B.
12. Form 8941.
13. Form 3800.
14. Form 8997.
15. Form 6252.
16. Form 8936, Schedule A.
17. Additional schedules in alphabetical order.
18. Additional forms in numerical order.
19. Supporting statements and attachments.
Estimated Tax Payments
Generally, the following rules apply to the corporation's
payments of estimated tax.
The corporation must make installment payments of
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estimated tax if it expects its total tax for the year (less applicable
credits) to be $500 or more.
Complete every applicable entry space on Form 1120. Do not
enter “See Attached” or “Available Upon Request” instead of
completing the entry spaces. If more space is needed on the
forms or schedules, attach separate sheets using the same size
and format as the printed forms.
The installments are due by the 15th day of the 4th, 6th, 9th,
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and 12th months of the tax year. If any date falls on a Saturday,
Sunday, or legal holiday, the installment is due on the next
regular business day.
If there are supporting statements and attachments, arrange
them in the same order as the schedules or forms they support
and attach them last. Show the totals on the printed forms. Enter
the corporation's name and EIN on each supporting statement or
attachment.
The corporation must use electronic funds transfer to make
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installment payments of estimated tax.
If, after the corporation figures and deposits estimated tax, it
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finds that its tax liability for the year will be more or less than
originally estimated, it may have to refigure its required
installments. If earlier installments were underpaid, the
below.
Note. If the corporation had tax withheld under Chapter 3 or 4 of
the Internal Revenue Code and received a Form 1042-S, Form
8805, or Form 8288-A showing the amount of income tax
withheld, attach such form(s) to the corporation’s income tax
return to claim a withholding credit. The corporation should
report the tax withheld on Schedule J, Part II, line 20z. See the
If the corporation overpaid estimated tax, it may be able to get
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a quick refund by filing Form 4466, Corporation Application for
Quick Refund of Overpayment of Estimated Tax. See the
See section 6655 and Pub. 542, Corporations, for more
information on how to figure estimated taxes.
Tax Payments
Generally, the corporation must pay any tax due in full no later
than the due date for filing its tax return (not including
Estimated tax penalty. A corporation that does not make
estimated tax payments when due may be subject to an
underpayment penalty for the period of underpayment.
Generally, a corporation is subject to the penalty if its tax liability
is $500 or more and it did not timely pay at least the smaller of:
on a Saturday, Sunday, or legal holiday, the payment is due on
the next day that isn't a Saturday, Sunday, or legal holiday.
Its tax liability for the current year, or
Its prior year's tax.
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Electronic Deposit Requirement
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Corporations must use electronic funds transfer to make all
federal tax deposits (such as deposits of employment, excise,
5
Instructions for Form 1120
Use Form 2220, Underpayment of Estimated Tax by
Corporations, to see if the corporation owes a penalty and to
figure the amount of the penalty. If Form 2220 is completed,
cases, the method used must clearly show taxable income.
Permissible methods include cash, accrual, or any other method
authorized by the Internal Revenue Code.
Generally, the following rules apply. For more information, see
Pub. 538, Accounting Periods and Methods.
A corporation, or a partnership that has a corporation as a
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partner, cannot use the cash method of accounting unless it is a
small business taxpayer (defined later). A tax shelter (defined in
section 448(d)(3)) may never use the cash method. See sections
448(a)(1) through (a)(3). However, see Nonaccrual experience
method for service providers in the instructions for line 1a.
Interest and Penalties
If the corporation receives a notice about penalties after
it files its return, send the IRS an explanation and we will
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CAUTION
determine if the corporation meets reasonable-cause
criteria. Do not attach an explanation when the corporation's
Unless it is a small business taxpayer (defined below), a
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return is filed.
corporation must use an accrual method for sales and
purchases of inventory items. See the instructions for Form
1125-A.
Interest. Interest is charged on taxes paid late even if an
extension of time to file is granted. Interest is also charged on
penalties imposed for failure to file, negligence, fraud, substantial
valuation misstatements, substantial understatements of tax,
and reportable transaction understatements from the due date
(including extensions) to the date of payment. The interest
charge is figured at a rate determined under section 6621.
A corporation engaged in farming must use an accrual
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method. For exceptions, see section 447 and Pub. 225.
Special rules apply to long-term contracts. See section 460.
Dealers in securities must use the mark-to-market accounting
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•
method. Dealers in commodities and traders in securities and
commodities can elect to use the mark-to-market accounting
method. See section 475.
Late filing of return. A corporation that does not file its tax
return by the due date, including extensions, may be penalized
5% of the unpaid tax for each month or part of a month the return
is late, up to a maximum of 25% of the unpaid tax. The minimum
penalty for a tax return required to be filed in 2024 that is more
than 60 days late is the smaller of the tax due or $485. The
penalty will not be imposed if the corporation can show that the
earlier.
Small business taxpayer. For tax years beginning in 2023, a
corporation qualifies as a small business taxpayer if (a) it has
average annual gross receipts of $29 million or less for the 3
prior tax years, and (b) it is not a tax shelter (as defined in
section 448(d)(3)).
A small business taxpayer can account for inventory by (a)
treating the inventory as non-incidental materials and supplies,
or (b) conforming to its treatment of inventory in an applicable
financial statement (as defined in section 451(b)(3)). If it does
not have an applicable financial statement, it can use the method
of accounting used in its books and records prepared according
to its accounting procedures.
Late payment of tax. A corporation that does not pay the tax
when due may generally be penalized 1/2 of 1% of the unpaid tax
for each month or part of a month the tax is not paid, up to a
Change in accounting method. Generally, the corporation
must get IRS consent to change either an overall method of
accounting or the accounting treatment of any material item for
income tax purposes. To obtain consent, the corporation must
generally file Form 3115, Application for Change in Accounting
Method, during the tax year for which the change is requested.
See the Instructions for Form 3115 and Pub. 538 for more
information and exceptions. Also see the Instructions for Form
3115 for procedures that may apply for obtaining automatic
consent to change certain methods of accounting,
Trust fund recovery penalty. This penalty may apply if certain
excise, income, social security, and Medicare taxes that must be
collected or withheld are not collected or withheld, or these taxes
are not paid. These taxes are generally reported on:
Form 720, Quarterly Federal Excise Tax Return;
Form 941, Employer's QUARTERLY Federal Tax Return;
Form 943, Employer's Annual Federal Tax Return for
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•
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Agricultural Employees;
Form 944, Employer's ANNUAL Federal Tax Return; or
Form 945, Annual Return of Withheld Federal Income Tax.
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non-automatic change procedures, and reduced Form 3115
filing requirements.
The trust fund recovery penalty may be imposed on all
persons who are determined by the IRS to have been
Section 481(a) adjustment. If the corporation's taxable
income for the current tax year is figured under a method of
accounting different from the method used in the preceding tax
year, the corporation may have to make an adjustment under
section 481(a) to prevent amounts of income or expense from
being duplicated or omitted. The section 481(a) adjustment
period is generally 1 year for a net negative adjustment and 4
years for a net positive adjustment. For an eligible terminated S
corporation, the section 481(a) adjustment period is generally 6
years for a negative or positive adjustment that is attributable to
the S corporation's revocation of its election under section
1362(a) after December 21, 2017, and before December 22,
2019. See section 481(d). Also, see the Instructions for Form
3115.
Exceptions to the general section 481(a) adjustment period
may apply. Also, in some cases, a corporation can elect to
modify the section 481(a) adjustment period. The corporation
may have to complete the appropriate lines of Form 3115 to
make an election. See the Instructions for Form 3115 for more
information and exceptions.
responsible for collecting, accounting for, or paying over these
taxes, and who acted willfully in not doing so. The penalty is
equal to the full amount of the unpaid trust fund tax. See the
Instructions for Form 720, Pub. 15 (Circular E), Employer's Tax
Guide, or Pub. 51 (Circular A), Agricultural Employer's Tax
Guide, for details, including the definition of responsible persons.
Note. The trust fund recovery penalty will not apply to any
amount of trust fund taxes an employer holds back in anticipation
of the credit for qualified sick and family leave wages or the
employee retention credit that they are entitled to. See Pub. 15 or
Pub. 51 for more information.
Other penalties. Other penalties can be imposed for
negligence, substantial understatement of tax, reportable
transaction understatements, and fraud. See sections 6662,
6662A, and 6663.
Accounting Methods
Figure taxable income using the method of accounting regularly
used in keeping the corporation's books and records. In all
6
Instructions for Form 1120
If the net section 481(a) adjustment is positive, report the
ratable portion on Form 1120, line 10, as other income. If the net
section 481(a) adjustment is negative, report the ratable portion
on line 26 as a deduction.
2. Any transaction offered under conditions of confidentiality
for which the corporation (or a related party) paid an advisor a
fee of at least $250,000.
3. Certain transactions for which the corporation (or a
related party) has contractual protection against disallowance of
the tax benefits.
4. Certain transactions resulting in a loss of at least $10
million in any single year or $20 million in any combination of
years.
Accounting Period
A corporation must figure its taxable income on the basis of a tax
year. A tax year is the annual accounting period a corporation
uses to keep its records and report its income and expenses.
Generally, corporations can use a calendar year or a fiscal year.
Personal service corporations, however, must use a calendar
year unless they meet one of the exceptions discussed later
5. Any transaction identified by the IRS by notice, regulation,
or other published guidance as a “transaction of interest.”
For more information, see Regulations section 1.6011-4.
Also, see the Instructions for Form 8886.
Change of tax year. Generally, a corporation, including a
personal service corporation, must get the consent of the IRS
before changing its tax year by filing Form 1128, Application To
Adopt, Change, or Retain a Tax Year. However, exceptions may
apply. See the Instructions for Form 1128 and Pub. 538 for more
information.
Penalties. The corporation may have to pay a penalty if it is
required to disclose a reportable transaction under section 6011
and fails to properly complete and file Form 8886. Penalties may
also apply under section 6707A if the corporation fails to file
Form 8886 with its corporate return, fails to provide a copy of
Form 8886 to the Office of Tax Shelter Analysis (OTSA), or files a
form that fails to include all the information required (or includes
incorrect information). Other penalties, such as an
Rounding Off to
Whole Dollars
accuracy-related penalty under section 6662A, may also apply.
See the Instructions for Form 8886 for details on these and other
penalties.
The corporation may enter decimal points and cents when
completing its return. However, the corporation should round off
cents to whole dollars on its return, forms, and schedules to
make completing its return easier. The corporation must either
round off all amounts on its return to whole dollars, or use cents
for all amounts. To round, drop amounts under 50 cents and
increase amounts from 50 to 99 cents to the next dollar. For
example, $8.40 rounds to $8 and $8.50 rounds to $9.
Reportable transactions by material advisors. Material
advisors to any reportable transaction must disclose certain
information about the reportable transaction by filing Form 8918
with the IRS. For details, see the Instructions for Form 8918.
Transfers to a corporation controlled by the transferor.
Every significant transferor (as defined in Regulations section
1.351-3(d)(1)) that receives stock of a corporation in exchange
for property in a nonrecognition event must include the
statement required by Regulations section 1.351-3(a) on or with
the transferor's tax return for the tax year of the exchange. The
transferee corporation must include the statement required by
Regulations section 1.351-3(b) on or with its return for the tax
year of the exchange, unless all the required information is
included in any statement(s) provided by a significant transferor
that is attached to the same return for the same section 351
exchange. If the transferor or transferee corporation is a
controlled foreign corporation (CFC), each U.S. shareholder
(within the meaning of section 951(b)) must include the required
statement on or with its return.
If two or more amounts must be added to figure the amount to
enter on a line, include cents when adding the amounts and
round off only the total.
Recordkeeping
Keep the corporation's records for as long as they may be
needed for the administration of any provision of the Internal
Revenue Code. Usually, records that support an item of income,
deduction, or credit on the return must be kept for 3 years from
the date the return is due or filed, whichever is later. Keep
records that verify the corporation's basis in property for as long
as they are needed to figure the basis of the original or
replacement property.
The corporation should keep copies of all filed returns. They
help in preparing future and amended returns and in the
calculation of earnings and profits.
Distributions under section 355. Every corporation that
makes a distribution of stock or securities of a controlled
corporation, as described in section 355 (or so much of section
356 as it relates to section 355), must include the statement
required by Regulations section 1.355-5(a) on or with its return
for the year of the distribution. A significant distributee (as
defined in Regulations section 1.355-5(c)) that receives stock or
securities of a controlled corporation must include the statement
required by Regulations section 1.355-5(b) on or with its return
for the year of receipt. If the distributing or distributee corporation
is a CFC, each U.S. shareholder (within the meaning of section
951(b)) must include the statement on or with its return.
Other Forms and Statements That
May Be Required
Amended return. Use Form 1120-X, Amended U.S.
Corporation Income Tax Return, to correct a previously filed
Form 1120.
Reportable transaction disclosure statement. Disclose
information for each reportable transaction in which the
corporation participated. Form 8886, Reportable Transaction
Disclosure Statement, must be filed for each tax year that the
federal income tax liability of the corporation is affected by its
participation in the transaction. The following are reportable
transactions.
1. Any listed transaction, which is a transaction that is the
same as or substantially similar to one of the types of
transactions that the IRS has determined to be a tax avoidance
transaction and identified by notice, regulation, or other
published guidance as a listed transaction.
Dual consolidated losses. If a domestic corporation incurs a
dual consolidated loss (as defined in Regulations section
1.1503(d)-1(b)(5)), the corporation (or consolidated group) may
need to attach a domestic use agreement and/or an annual
certification, as provided in Regulations section 1.1503(d)-6(d)
and (g).
Election to reduce basis under section 362(e)(2)(C). If
property is transferred to a corporation subject to section 362(e)
(2), the transferor and the transferee corporation may elect,
under section 362(e)(2)(C), to reduce the transferor's basis in
the stock received instead of reducing the transferee
7
Instructions for Form 1120
corporation's basis in the property transferred. Once made, the
election is irrevocable. For more information, see section 362(e)
(2) and Regulations section 1.362-4. If an election is made, a
statement must be filed in accordance with Regulations section
1.362-4(d)(3).
file in addition to the forms and statements discussed throughout
these instructions.
Specific Instructions
Annual information reporting by specified domestic enti-
ties under section 6038D. Certain domestic corporations that
are formed or availed of to hold specified foreign financial assets
(“specified domestic entities”) must file Form 8938. Form 8938
must be filed each year the value of the corporation's specified
foreign financial assets is more than $50,000 on the last day of
the tax year or more than $75,000 at any time during the tax
year. For more information on domestic corporations that are
specified domestic entities and the types of foreign financial
assets that must be reported, see the Instructions for Form 8938,
generally, and in particular, Who Must File, Specified Domestic
Entity, Specified Foreign Financial Assets, Interests in Specified
Foreign Financial Assets, Assets Not Required To Be Reported,
and Exceptions to Reporting.
Period Covered
File the 2023 return for calendar year 2023 and fiscal years that
begin in 2023 and end in 2024. For a fiscal or short tax year
return, fill in the tax year space at the top of the form.
The 2023 Form 1120 can also be used if:
The corporation has a tax year of less than 12 months that
•
begins and ends in 2024, and
The 2024 Form 1120 is not available at the time the
•
corporation is required to file its return.
The corporation must show its 2024 tax year on the 2023 Form
1120 and take into account any tax law changes that are
effective for tax years beginning after December 31, 2023.
Name and Address
In addition, a domestic corporation required to file Form 8938
with its Form 1120 for the tax year should check “Yes” to
Schedule N (Form 1120), Question 8, and also include that
schedule with its Form 1120.
Enter the corporation's true name (as set forth in the charter or
other legal document creating it), address, and EIN on the
appropriate lines. Enter the address of the corporation's principal
office or place of business. Include the suite, room, or other unit
number after the street address. If the post office does not
deliver mail to the street address and the corporation has a P.O.
box, show the box number instead.
Form 8975. Certain U.S. persons that are the ultimate parent
entity of a U.S. multinational enterprise group with annual
revenue for the preceding reporting period of $850 million or
more are required to file Form 8975, Country-by-Country Report.
Form 8975 and Schedule A (Form 8975) must be filed with the
income tax return of the ultimate parent entity of a U.S.
Note. Do not use the address of the registered agent for the
state in which the corporation is incorporated. For example, if a
business is incorporated in Delaware or Nevada and the
corporation's principal office is located in Little Rock, Arkansas,
the corporation should enter the Little Rock address.
multinational enterprise group for the tax year in or within which
the reporting period covered by Form 8975 ends. For more
information, see Form 8975, Schedule A (Form 8975) and the
Instructions for Form 8975, and Schedule A (Form 8975).
If the corporation receives its mail in care of a third party
(such as an accountant or an attorney), enter on the street
address line “C/O” followed by the third party's name and street
address or P.O. box.
Paycheck Protection Program (PPP) loans. A corporation
that had tax-exempt income resulting from the forgiveness of a
PPP loan should attach a statement to its return reporting each
tax year for which the corporation is applying Rev. Proc.
2021-48, sections 3.01(1), (2), or (3). Any statement for the
current tax year should include the following information, for
each PPP loan:
If the corporation has a foreign address, include the city or
town, state or province, country, and foreign postal code. Do not
abbreviate the country name. Follow the country's practice for
entering the name of the state or province and postal code.
1. The corporation's name, address, and EIN;
2. A statement that the corporation is applying or applied
section 3.01(1), (2), or (3) of Rev. Proc. 2021-48, and for what
tax year, as applicable;
3. The amount of tax-exempt income from forgiveness of the
PPP loan that the corporation is treating as received or accrued
and for which tax year; and
Item A. Identifying Information
Consolidated Return
Corporations filing a consolidated return must check Item A,
box 1a, and attach Form 851, Affiliations Schedule, and other
supporting statements to the return. Also, for the first year a
subsidiary corporation is being included in a consolidated return,
attach Form 1122 to the parent's consolidated return. Attach a
separate Form 1122 for each new subsidiary being included in
the consolidated return.
4. Whether forgiveness of the PPP loan has been granted as
of the date the return is filed.
A corporation that reported tax-exempt income from the
forgiveness of a PPP loan on its 2020 return, the timing of which
corresponds to one of the options presented in Rev. Proc.
2021-48, need not file an amended return solely to attach the
statement that is described in these instructions.
If a corporation treats tax-exempt income resulting from a
PPP loan as received or accrued prior to when forgiveness of the
PPP loan is granted and the amount of forgiveness granted is
less than the amount of tax-exempt income that was previously
treated as received or accrued, the corporation should make a
prior-period adjustment on Schedule M-2 for the tax year in
which the corporation receives notice that the PPP loan was not
details.
File supporting statements for each corporation included in
the consolidated return. Do not use Form 1120 as a supporting
statement. On the supporting statement, use columns to show
the following, both before and after adjustments.
1. Items of gross income and deductions.
2. A computation of taxable income.
3. Balance sheets, as of the beginning and end of the tax
year.
4. A reconciliation of income per books with income per
return.
5. A reconciliation of retained earnings.
Other forms and statements. See Pub. 542, Corporations, for
Enter on Form 1120 the totals for each item of income, gain,
loss, expense, or deduction, net of eliminating entries for
a list of other forms and statements a corporation may need to
8
Instructions for Form 1120
intercompany transactions between corporations within the
consolidated group. Attach consolidated balance sheets and a
reconciliation of consolidated retained earnings.
the tax year, or (b) are not required to file Schedule M-3 (Form
1120) and voluntarily file Schedule M-3 (Form 1120), must either
(i) complete Schedule M-3 (Form 1120) entirely, or (ii) complete
Schedule M-3 (Form 1120) through Part I, and complete Form
1120, Schedule M-1, instead of completing Parts II and III of
Schedule M-3 (Form 1120). If the corporation chooses to
complete Schedule M-1 instead of completing Parts II and III of
Schedule M-3, the amount on Schedule M-1, line 1, must equal
the amount on Schedule M-3, Part I, line 11. See the Instructions
for Schedule M-3 (Form 1120) for more details. Also, see the
instructions for Schedule M-1, later.
The corporation does not have to provide the information
requested in (3), (4), and (5), above, if its total receipts
(line 1a plus lines 4 through 10 on page 1 of the return)
TIP
and its total assets at the end of the tax year (Schedule L,
line 15(d)) are less than $250,000. See Schedule K, Question
13.
For more information on consolidated returns, see the
regulations under section 1502.
If you are filing Schedule M-3, check Item A, box 4, to indicate
that Schedule M-3 is attached.
Life-Nonlife Consolidated Return
Item B. Employer Identification
Number (EIN)
If Item A, box 1a, is checked and the corporation is the common
parent of a consolidated group that includes a life insurance
company, also check box 1b. See Regulations section
1.1502-47(m) for the requirements for filing a consolidated tax
return for a life-nonlife consolidated group.
Enter the corporation's EIN. If the corporation does not have an
EIN, it must apply for one. An EIN can be applied for:
•
once the application information is validated.
By faxing or mailing Form SS-4, Application for Employer
Personal Holding Company
•
A personal holding company must check Item A, box 2, and
attach Schedule PH (Form 1120), U.S. Personal Holding
Company (PHC) Tax. See the Instructions for Schedule PH
(Form 1120) for details.
Identification Number.
Corporations located in the United States or U.S.
territories can use the online application. Foreign
corporations should call 267-941-1099 (not a toll free
!
CAUTION
number) for more information on obtaining an EIN. See the
Instructions for Form SS-4.
Personal Service Corporation
If the corporation is a personal service corporation, check Item
A, box 3. A personal service corporation is a corporation whose
principal activity for the testing period is the performance of
personal services. The testing period for a tax year is generally
the prior tax year unless the corporation has just been formed.
Personal services include any activity performed in the fields of
accounting, actuarial science, architecture, consulting,
EIN applied for, but not received. If the corporation has not
received its EIN by the time the return is due, enter “Applied For”
and the date the corporation applied in the space for the EIN.
However, if the corporation is filing its return electronically, an
EIN is required at the time the return is filed. An exception
applies to subsidiaries of corporations whose returns are filed
with the parent's electronically filed consolidated Form 1120.
These subsidiaries should enter “Applied For” in the space for
the EIN on their returns. The subsidiaries' returns are identified
under the parent corporation's EIN.
engineering, health, law, and the performing arts. The services
must be substantially performed by employee-owners.
A personal service corporation must use a calendar tax year
unless:
It elects to use a 52-53-week tax year that ends with reference
•
For more information, see the Instructions for Form SS-4.
to the calendar year or tax year elected under section 444;
It can establish a business purpose for a different tax year and
•
Item D. Total Assets
obtains the approval of the IRS (see the Instructions for Form
1128 and Pub. 538); or
Enter the corporation's total assets (as determined by the
accounting method regularly used in keeping the corporation's
books and records) at the end of the tax year. If there are no
assets at the end of the tax year, enter -0-.
It elects under section 444 to have a tax year other than a
•
calendar year. To make the election, use Form 8716, Election To
Have a Tax Year Other Than a Required Tax Year.
If the corporation is required to complete Schedule L, enter
the total assets from Schedule L, line 15, column (d), on page 1,
Item D. If filing a consolidated return, report total consolidated
assets for all corporations joining in the return.
If a corporation makes the section 444 election, its deduction
for certain amounts paid to employee-owners may be limited.
See Schedule H (Form 1120), Section 280H Limitations for a
Personal Service Corporation (PSC), to figure the maximum
deduction.
Item E. Initial Return, Final Return,
Name Change, or Address Change
If a section 444 election is terminated and the termination
results in a short tax year, type or print at the top of the first page
of Form 1120 for the short tax year “SECTION 444 ELECTION
TERMINATED.”
If this is the corporation's first return, check the “Initial return”
•
box.
If this is the corporation's final return and it will no longer exist,
•
Schedule M-3 (Form 1120)
check the “Final return” box.
If the corporation changed its name since it last filed a return,
•
A corporation with total assets (nonconsolidated or consolidated
for all corporations included within a consolidated tax group) of
$10 million or more on the last day of the tax year must file
Schedule M-3 (Form 1120) instead of Schedule M-1. A
corporation filing Form 1120 that is not required to file
Schedule M-3 may voluntarily file Schedule M-3 instead of
Schedule M-1.
check the “Name change” box. Generally, a corporation must
also have amended its articles of incorporation and filed the
amendment with the state in which it was incorporated.
If the corporation has changed its address since it last filed a
•
return (including a change to an “in care of” address), check the
“Address change” box.
Corporations that (a) are required to file Schedule M-3 (Form
1120) and have less than $50 million total assets at the end of
Note. If a change in address or responsible party occurs after
the return is filed, use Form 8822-B, Change of Address or
9
Instructions for Form 1120
Responsible Party— Business, to notify the IRS. See the
instructions for Form 8822-B for details.
The services are in the fields of health, law, engineering,
•
architecture, accounting, actuarial science, performing arts, or
consulting; or
The corporation meets the section 448(c) gross receipts test
•
Income
for all prior years.
Except as otherwise provided in the Internal Revenue Code,
gross income includes all income from whatever source derived.
This provision does not apply to any amount if interest is
required to be paid on the amount or if there is any penalty for
failure to timely pay the amount. See Regulations section
1.448-3 for more information on the nonaccrual experience
method, including information on safe harbor methods.
For information on a book safe harbor method of accounting
for corporations that use the nonaccrual experience method of
accounting, see Rev. Proc. 2011-46, 2011-42 I.R.B. 518
successor. Also, see the Instructions for Form 3115 for
procedures to obtain automatic consent to change to this
method or make certain changes within this method.
Corporations that qualify to use the nonaccrual experience
method should attach a statement to its return showing total
gross receipts, the amount not accrued because of the
application of section 448(d)(5), and the net amount accrued.
Enter the net amount on line 1a.
Exception for income from qualifying shipping activities.
Gross income does not include income from qualifying shipping
activities if the corporation makes an election under section 1354
to be taxed on its notional shipping income (as defined in section
1353) at the highest corporate tax rate. If the election is made,
the corporation generally may not claim any loss, deduction, or
credit with respect to qualifying shipping activities. A corporation
making this election may also elect to defer gain on the
disposition of a qualifying vessel.
Use Form 8902, Alternative Tax on Qualifying Shipping
Activities, to figure the tax. Include the alternative tax on
Schedule J, Part I, line 9e.
Line 1. Gross Receipts or Sales
Line 1a. Gross receipts or sales. Enter on line 1a gross
receipts or sales from all business operations, except for
amounts that must be reported on lines 4 through 10.
Special rules apply to certain income, as discussed below.
Advance payments. In general, advance payments must be
included in income in the year of receipt. For exceptions to this
general rule for corporations that use the accrual method of
accounting, see the following.
Line 1b. Returns and allowances. Enter cash and credit
refunds the corporation made to customers for returned
merchandise, rebates, and other allowances made on gross
receipts or sales.
Line 2. Cost of Goods Sold
Complete and attach Form 1125-A, Cost of Goods Sold, if
applicable. Enter on Form 1120, line 2, the amount from Form
1125-A, line 8. See Form 1125-A and its instructions.
To report income from long-term contracts, see section 460.
For rules that allow a limited deferral of advance payments
•
•
beyond the current tax year, see section 451(c). Also, see
Regulations sections 1.451-8(c), (d), and (e). For applicability
dates, see Regulations section 1.451-8(h).
•
Line 4. Dividends and Inclusions
See the instructions for Schedule C, later. Complete Schedule C
For information on adopting or changing to a permissible
and enter on line 4 the amount from Schedule C, line 23, column
(a).
method for reporting advance payments for services and certain
goods by an accrual method corporation, see the Instructions for
Form 3115.
Line 5. Interest
Installment sales. Generally, the installment method cannot
be used for dealer dispositions of property. A “dealer disposition”
is any disposition of (a) personal property by a person who
regularly sells or otherwise disposes of personal property of the
same type on the installment plan, or (b) real property held for
sale to customers in the ordinary course of the taxpayer's trade
or business.
Enter taxable interest on U.S. obligations and on loans, notes,
mortgages, bonds, bank deposits, corporate bonds, tax refunds,
etc. Do not offset interest expense against interest income.
Special rules apply to interest income from certain
below-market-rate loans. See section 7872 for details.
Note. Report tax-exempt interest on Schedule K, item 9. Also, if
required, include the same amount on Schedule M-1, line 7, or
Schedule M-3 (Form 1120), Part II, line 13, if applicable.
The restrictions on using the installment method do not apply
to the following.
Dispositions of property used or produced in the trade or
•
business of farming.
Line 6. Gross Rents
Certain dispositions of timeshares and residential lots
•
Enter the gross amount received for the rental of property.
Deduct expenses such as repairs, interest, taxes, and
depreciation on the proper lines for deductions. A rental activity
held by a closely held corporation or a personal service
corporation may be subject to the passive activity loss rules. See
Passive activity limitations, later.
reported under the installment method for which the corporation
elects to pay interest under section 453(I)(3).
Enter on line 1a (and carry to line 3) the gross profit on
collections from these installment sales. Attach a statement
showing the following information for the current and the 3
preceding years: (a) gross sales, (b) cost of goods sold, (c)
gross profits, (d) percentage of gross profits to gross sales, (e)
amount collected, and (f) gross profit on the amount collected.
For sales of timeshares and residential lots reported under
the installment method, if the corporation elects to pay interest
under section 453(I)(3), the corporation's income tax is
increased by the interest payable under section 453(l)(3). Report
this addition to the tax on Schedule J, Part I, line 9g.
Line 10. Other Income
Enter any other taxable income not reported on lines 1 through
9. List the type and amount of income on an attached statement.
If the corporation has only one item of other income, describe it
in parentheses on line 10.
Examples of other income to report on line 10 include the
following.
Nonaccrual experience method for service providers.
Accrual method corporations are not required to accrue certain
amounts to be received from the performance of services that,
based on their experience, will not be collected, if:
Recoveries of bad debts deducted in prior years under the
•
specific charge-off method.
Any amount includible in income from Form 6478, Biofuel
•
Producer Credit.
10
Instructions for Form 1120
Any amount includible in income from Form 8864, Biodiesel,
qualified leave wages were paid, which might, under certain
circumstances, not occur until a quarter after September 30,
2021, including quarters in 2023.
•
Renewable Diesel, or Sustainable Aviation Fuels Credit.
Refunds of taxes deducted in prior years to the extent they
•
reduced the amount of tax imposed. See section 111 and the
related regulations. Do not offset current-year taxes against tax
refunds.
Deductions
Limitations on Deductions
Uniform capitalization rules. The uniform capitalization rules
of section 263A require corporations to capitalize certain costs to
inventory or other property. Corporations subject to the section
263A uniform capitalization rules are required to capitalize:
Ordinary income from trade or business activities of a
•
partnership (from Schedule K-1 (Form 1065)). Do not offset
ordinary losses against ordinary income. Instead, include the
losses on line 26. Show the partnership's name, address, and
EIN on a separate statement attached to this return. If the
amount entered is from more than one partnership, identify the
amount from each partnership.
1. Direct costs of assets produced or acquired for resale,
The transferred loss amount identified as “Section 91
•
and
Transferred Loss Amount,” which is required to be recognized
when substantially all the assets of a foreign branch are
transferred to a specified 10% owned foreign corporation (as
defined in section 245A(b)) with respect to which the corporation
was a U.S. shareholder immediately after the transfer. See
section 91.
2. Certain indirect costs (including taxes) that are properly
allocable to property produced or property acquired for resale.
The corporation cannot deduct the costs required to be
capitalized under section 263A until it sells, uses, or otherwise
disposes of the property (to which the costs relate). The
corporation recovers these costs through depreciation,
amortization, or cost of goods sold.
Any LIFO recapture amount under section 1363(d). The
•
corporation may have to include a LIFO recapture amount in
income if it:
A small business taxpayer (defined earlier) is not required to
capitalize costs under section 263A. A small business taxpayer
that wants to discontinue capitalizing costs under section 263A
must change its method of accounting. See section 263A(i) and
Regulations section 1.263A-1(j). Also, see the Instructions for
Form 3115.
1. Used the LIFO inventory method for its last tax year
before the first tax year for which it elected to become an S
corporation, or
2. Transferred LIFO inventory assets to an S corporation in a
nonrecognition transaction in which those assets were
transferred basis property.
For more information on the uniform capitalization rules, see
Pub. 538. Also, see Regulations sections 1.263A-1 through
1.263A-3. See section 263A(d), Regulations section 1.263A-4,
and Pub. 225 for rules for property produced in a farming
business.
The LIFO recapture amount is the amount by which the C
corporation's inventory under the FIFO method exceeds the
inventory amount under the LIFO method at the close of the
corporation's last tax year as a C corporation (or for the year of
the transfer, if (2) above applies). Also, see the instructions for
Transactions between related taxpayers. Generally, an
accrual basis taxpayer can only deduct business expenses and
interest owed to a related party in the year the payment is
included in the income of the related party. See sections 163(e)
(3) and 267(a)(2) for limitations on deductions for unpaid interest
and expenses.
The ratable portion of any net positive section 481(a)
•
Part or all of the proceeds received from certain
•
corporate-owned life insurance contracts issued after August 17,
2006. Corporations that own one or more employer-owned life
insurance contracts issued after this date must file Form 8925,
Report of Employer-Owned Life Insurance Contracts. See Form
8925.
Limitations on business interest expense. Business interest
expense may be limited. See section 163(j) and Form 8990.
Income from cancellation of debt (COD) from the repurchase
•
of a debt instrument for less than its adjusted issue price.
The corporation's share of the following income from Form
•
Section 291 limitations. Corporations may be required to
adjust deductions for depletion of iron ore and coal, intangible
drilling and exploration and development costs, certain
deductions for financial institutions, and the amortizable basis of
pollution control facilities. See section 291 to determine the
amount of the adjustment.
8621, Information Return by a Shareholder of a Passive Foreign
Investment Company or Qualified Electing Fund.
1. Ordinary earnings of a qualified electing fund.
2. Gain or loss from marking passive foreign investment
company (PFIC) stock to market.
Election to deduct business start-up and organizational
costs. A corporation can elect to deduct a limited amount of
start-up and organizational costs it paid or incurred. Any
remaining costs must generally be amortized over a 180-month
period. See sections 195 and 248 and the related regulations.
Time for making an election. The corporation generally
elects to deduct start-up or organizational costs by claiming the
deduction on its income tax return filed by the due date
(including extensions) for the tax year in which the active trade or
business begins. For more details, see the Instructions for Form
4562.
3. Gain or loss from sale or other disposition of section 1296
stock.
4. Excess distributions from a section 1291 fund allocated to
the current year and pre-PFIC years, if any.
See Form 8621 and the Instructions for Form 8621 for details.
Any payroll tax credit taken by an employer on its 2023
•
employment tax returns (Forms 941, 943, and 944) for qualified
paid sick and qualified paid family leave under FFCRA and ARP
(both the nonrefundable and refundable portions). The
corporation must include the full amount of the credit for qualified
sick and family leave wages in gross income for the tax year that
includes the last day of any calendar quarter in which the credit
is allowed.
If the corporation timely filed its return for the year without
making an election, it can still make an election by filing an
amended return within 6 months of the due date of the return
(excluding extensions). Clearly indicate the election on the
amended return and enter “Filed pursuant to section
Note. A credit is available only if the leave was taken after
March 31, 2020, and before October 1, 2021, and only after the
301.9100-2” at the top of the amended return. File the amended
11
Instructions for Form 1120
return at the same address the corporation filed its original
return. The election applies when figuring taxable income for the
current tax year and all subsequent years.
The corporation can choose to forgo the elections above by
affirmatively electing to capitalize its start-up or organizational
costs on its income tax return filed by the due date (including
extensions) for the tax year in which the active trade or business
begins.
If the corporation has any of the credits listed above, figure
the current-year credit before figuring the deduction for expenses
on which the credit is based. If the corporation capitalized any
costs on which it figured the credit, it may need to reduce the
amount capitalized by the credit attributable to these costs.
See the instructions for the form used to figure the applicable
credit for more details.
Limitations on deductions related to property leased to
tax-exempt entities. If a corporation leases property to a
governmental or other tax-exempt entity, the corporation cannot
claim deductions related to the property to the extent that they
exceed the corporation's income from the lease payments. This
disallowed tax-exempt use loss can be carried over to the next
tax year and treated as a deduction with respect to the property
for that tax year. See section 470(d) for exceptions.
Note. The election to either amortize or capitalize start-up costs
is irrevocable and applies to all start-up costs that are related to
the trade or business.
Report the deductible amount of start-up and organizational
costs and any amortization on line 26. For amortization that
begins during the current tax year, complete and attach Form
4562, Depreciation and Amortization.
Limitation on tax benefits for remuneration under the Pa-
tient Protection and Affordable Care Act. The $1 million
compensation limit is reduced to $500,000 for remuneration for
services provided by individuals for or on behalf of certain health
insurance providers. The $500,000 limitation applies to
remuneration that is deductible in the tax year during which the
services were performed and remuneration for services during
the year that is deductible in a future tax year (called "deferred
deduction remuneration"). The $500,000 limitation is reduced by
any amounts disallowed as excess parachute payments. See
section 162(m)(6) and Regulations section 1.162-31 for
definitions and other special rules.
Passive activity limitations. Limitations on passive activity
losses and credits under section 469 apply to personal service
corporations (defined earlier) and closely held corporations
(defined later).
Generally, the two kinds of passive activities are:
Trade or business activities in which the corporation did not
•
materially participate for the tax year; and
Rental activities, regardless of its participation.
•
For exceptions, see Form 8810, Corporate Passive Activity Loss
and Credit Limitations.
Corporations subject to the passive activity limitations must
complete Form 8810 to compute their allowable passive activity
loss and credit. Before completing Form 8810, see Temporary
Regulations section 1.163-8T, which provides rules for allocating
interest expense among activities. If a passive activity is also
subject to the at-risk rules of section 465 or the tax-exempt use
loss rules of section 470, those rules apply before the passive
loss rules.
For more information, see section 469, the related
regulations, and Pub. 925, Passive Activity and At-Risk Rules.
Closely held corporations. A corporation is a closely held
corporation if:
Line 12. Compensation of Officers
Enter deductible officers' compensation on line 12. Do not
include compensation deductible elsewhere on the return, such
as amounts included in cost of goods sold, elective contributions
to a section 401(k) cash or deferred arrangement, or amounts
contributed under a salary reduction SEP agreement or a
SIMPLE IRA plan.
If the corporation's total receipts (line 1a, plus lines 4 through
10) are $500,000 or more, complete Form 1125-E,
Compensation of Officers. Enter on Form 1120, line 12, the
amount from Form 1125-E, line 4.
At any time during the last half of the tax year more than 50%
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in value of its outstanding stock is directly or indirectly owned by
or for not more than five individuals, and
Line 13. Salaries and Wages
The corporation is not a personal service corporation.
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Enter the total salaries and wages paid for the tax year. Do not
include salaries and wages deductible elsewhere on the return,
such as amounts included in officers' compensation, cost of
goods sold, elective contributions to a section 401(k) cash or
deferred arrangement, or amounts contributed under a salary
reduction SEP agreement or a SIMPLE IRA plan.
Certain organizations are treated as individuals for purposes
of this test. See section 542(a)(2). For rules for determining
stock ownership, see section 544 (as modified by section 465(a)
(3)).
Reducing certain expenses for which credits are allowable.
If the corporation claims certain credits, it may need to reduce
the otherwise allowable deductions for expenses used to figure
the credit. This applies to credits such as the following.
If the corporation provided taxable fringe benefits to its
employees, such as personal use of a car, do not deduct as
wages the amount allocated for depreciation and other expenses
claimed on lines 20 and 26.
Work opportunity credit (Form 5884).
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•
•
•
•
•
Credit for increasing research activities (Form 6765).
Orphan drug credit (Form 8820).
If the corporation claims a credit for any wages paid or
incurred, it may need to reduce any corresponding
!
Disabled access credit (Form 8826).
CAUTION
deduction for officers' compensation and salaries and
Empowerment zone employment credit (Form 8844).
Credit for employer social security and Medicare taxes paid
allowable, earlier.
on certain employee tips (Form 8846).
Credit for small employer pension plan start-up costs (Form
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8881).
Line 14. Repairs and Maintenance
Credit for employer-provided childcare facilities and services
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Enter the cost of repairs and maintenance not claimed
elsewhere on the return, such as labor and supplies, that are not
payments to produce or improve real or tangible personal
property. See Regulations section 1.263(a)-1. For example,
amounts are paid for improvements if they are for betterments to
the property, restorations of the property (such as the
(Form 8882).
Low sulfur diesel fuel production credit (Form 8896).
Credit for employer differential wage payments (Form 8932).
Credit for small employer health insurance premiums (Form
•
•
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8941).
Employer credit for paid family and medical leave (Form
•
replacements of major components or substantial structural
parts), or if they adapt the property to a new or different use.
8994).
12
Instructions for Form 1120
Amounts paid to produce or improve property must be
capitalized. See Regulations sections 1.263(a)-2 and (a)-3.
property (these taxes must be treated as a part of the cost of the
acquired property or, in the case of a disposition, as a reduction
in the amount realized on the disposition).
The corporation can deduct repair and maintenance
expenses only to the extent they relate to a trade or business
activity. See Regulations section 1.162-4. The corporation may
elect to capitalize certain repair and maintenance costs
consistent with its books and records. See Regulations section
1.263(a)-3(n) for information on how to make the election.
Taxes assessed against local benefits that increase the value
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of the property assessed (such as for paving, etc.).
Taxes deducted elsewhere on the return, such as those
•
reflected in cost of goods sold.
See section 164(d) for information on apportionment of taxes
on real property between seller and purchaser.
Line 15. Bad Debts
Do not reduce the corporation's deduction for social
Enter the total debts that became worthless in whole or in part
during the tax year. A small bank or thrift institution using the
reserve method of section 585 should attach a statement
showing how it figured the current year's provision. A corporation
that uses the cash method of accounting cannot claim a bad
debt deduction unless the amount was previously included in
income.
security and Medicare taxes by the nonrefundable and
!
CAUTION
refundable portions of any FFCRA and ARP credits for
qualified sick and family leave wages claimed on its employment
tax returns. Instead, report this amount as income on line 10.
Line 18. Interest
Note. Do not offset interest income against interest expense.
The corporation must make an interest allocation if the
proceeds of a loan were used for more than one purpose (for
example, to purchase a portfolio investment and to acquire an
interest in a passive activity). See Temporary Regulations
section 1.163-8T for the interest allocation rules.
Line 16. Rents
If the corporation rented or leased a vehicle, enter the total
annual rent or lease expense paid or incurred during the year.
Also, complete Part V of Form 4562. If the corporation leased a
vehicle for a term of 30 days or more, the deduction for vehicle
lease expense may have to be reduced by an amount includible
in income called the inclusion amount. The corporation may
have an inclusion amount if:
Mutual savings banks, building and loan associations, and
cooperative banks can deduct the amounts paid or credited to
the accounts of depositors as dividends, interest, or earnings.
See section 591.
And the vehicle's FMV on
the first day of the lease
Do not deduct the following interest.
The lease term began:
exceeded:
Interest on indebtedness incurred or continued to purchase or
•
carry obligations if the interest is wholly exempt from income tax.
See section 265(b) for special rules and exceptions for financial
institutions. Also, see section 265(b)(7) for a de minimis
exception for financial institutions for certain tax-exempt bonds
issued in 2009 and 2010.
Cars (excluding trucks and vans)
After 12/31/22 but before 1/1/24
After 12/31/21 but before 1/1/23
After 12/31/20 but before 1/1/22
After 12/31/17 but before 1/1/21
After 12/31/12 but before 1/1/18
Trucks and vans
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$60,000
$56,000
$51,000
$50,000
$19,000
For cash basis taxpayers, prepaid interest allocable to years
•
following the current tax year. For example, a cash basis
calendar year taxpayer who in 2023 prepaid interest allocable to
any period after 2023 can deduct only the amount allocable to
2023.
After 12/31/22 but before 1/1/24
After 12/31/21 but before 1/1/23
After 12/31/20 but before 1/1/22
After 12/31/17 but before 1/1/21
After 12/31/13 but before 1/1/18
After 12/31/09 but before 1/1/14
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$60,000
$56,000
$51,000
$50,000
$19,500
$19,000
Interest and carrying charges on straddles. Generally, these
•
amounts must be capitalized. See section 263(g).
Interest on debt allocable to the production of designated
•
property by a corporation for its own use or for sale. The
corporation must capitalize this interest. Also, capitalize any
interest on debt allocable to an asset used to produce the
property. See section 263A(f) and Regulations sections
1.263A-8 through 1.263A-15 for definitions and more
information.
Interest paid or incurred on any portion of an underpayment of
•
tax that is attributable to an understatement arising from an
undisclosed listed transaction or an undisclosed reportable
avoidance transaction (other than a listed transaction) entered
into in tax years beginning after October 22, 2004.
See Pub. 463, Travel, Gift, and Car Expenses, for instructions
on figuring the inclusion amount.
Special rules apply to:
Forgone interest on certain below-market-rate loans (see
•
Note. The inclusion amount for lease terms beginning in 2024
section 7872).
Original issue discount (OID) on certain high yield discount
will be published in the Internal Revenue Bulletin in early 2024.
•
obligations. See section 163(e)(5) to determine the amount of
the deduction for OID that is deferred and the amount that is
disallowed on a high yield discount obligation. The rules under
section 163(e)(5) do not apply to certain high yield discount
obligations issued after August 31, 2008, and before January 1,
2011. See section 163(e)(5)(F).
Line 17. Taxes and Licenses
Enter taxes paid or accrued during the tax year, but do not
include the following.
Federal income taxes.
•
Foreign or U.S. territory income taxes if a foreign tax credit is
•
claimed.
Interest which is allocable to unborrowed policy cash values of
•
Taxes not imposed on the corporation.
life insurance, endowment, or annuity contracts issued after
June 8, 1997. See section 264(f). Attach a statement showing
the computation of the deduction.
•
Taxes, including state or local sales taxes, that are paid or
•
incurred in connection with an acquisition or disposition of
13
Instructions for Form 1120
“100%” for “10%” ) over all other allowable charitable
contributions. Any excess qualified conservation contributions
can be carried over to the next 15 years, subject to the 100%
limitation. See sections 170(b)(2)(B) and (C).
Limitation on deduction. Under section 163(j), business
interest expense is generally limited to the sum of business
interest income, 30% of the adjusted taxable income, and floor
plan financing interest. The amount of any business interest
expense that is not allowed as a deduction for the tax year is
carried forward to the following year. If section 163(j) applies, use
Form 8990 to figure the amount of business interest expense the
corporation can deduct for the current tax year and the amount
that can be carried forward to the next year. See the Instructions
24, later.
Cash contributions. For contributions of cash, check, or other
monetary gifts (regardless of the amount), the corporation must
maintain a bank record, or a receipt, letter, or other written
communication from the donee organization indicating the name
of the organization, the date of the contribution, and the amount
of the contribution.
Contributions of $250 or more. A corporation can deduct a
contribution of $250 or more only if it gets a written
Line 19. Charitable Contributions
acknowledgment from the donee organization that shows the
amount of cash contributed, describes any property contributed
(but not its value), and either gives a description and a good faith
estimate of the value of any goods or services provided in return
for the contribution or states that no goods or services were
provided in return for the contribution. The acknowledgment
must be obtained by the due date (including extensions) of the
corporation's return, or, if earlier, the date the return is filed. Do
not attach the acknowledgment to the tax return, but keep it with
the corporation's records.
Enter contributions or gifts actually paid within the tax year to or
for the use of charitable and governmental organizations
described in section 170(c) and any unused contributions
carried over from prior years. Special rules and limits apply to
contributions to organizations conducting lobbying activities. See
section 170(f)(9).
Corporations reporting taxable income on the accrual method
can elect to treat as paid during the tax year any contributions
paid by the due date for filing the corporation’s tax return (not
including extensions), if the contributions were authorized by the
board of directors during the tax year. Attach a declaration to the
return stating that the resolution authorizing the contributions
was adopted by the board of directors during the tax year. The
declaration must include the date the resolution was adopted.
See section 170(a)(2)(B).
Contributions of property other than cash. If a corporation
(other than a closely held or personal service corporation)
contributes property other than cash and claims over a $500
deduction for the property, it must attach a statement to the
return describing the kind of property contributed and the
method used to determine its FMV. Closely held corporations
and personal service corporations must complete Form 8283,
Noncash Charitable Contributions, and attach it to their returns.
All other corporations must generally complete and attach Form
8283 to their returns for contributions of property (other than
money) if the total claimed deduction for all property contributed
was more than $5,000. Special rules apply to the contribution of
certain property. See the Instructions for Form 8283.
Qualified conservation contributions. Special rules apply
to qualified conservation contributions, including contributions of
certain easements on buildings located in a registered historic
district. See section 170(h) and Pub. 526, Charitable
Contributions.
Limitation on deduction. Generally, the total amount claimed
cannot be more than 10% of taxable income (line 30) computed
without regard to the following.
Any deduction for contributions.
•
•
•
The special deductions on line 29b.
The limitation under section 249 on the deduction for bond
premium.
Any net operating loss (NOL) carryback to the tax year under
•
section 172.
Any capital loss carryback to the tax year under section
•
1212(a)(1).
Deduction for income attributable to domestic production
•
activities of specified agricultural or horticultural cooperatives.
Other special rules. The corporation must reduce its
deduction for contributions of certain ordinary income and
capital gain property. See section 170(e).
Carryover. Charitable contributions over the 10% limitation
cannot be deducted for the tax year but can be carried over to
the next 5 tax years. See the exception below for farmers and
ranchers and certain Native Corporations.
Special rules apply if the corporation has an NOL carryover to
the tax year. In figuring the charitable contributions deduction for
the current tax year, the 10% limit is applied using the taxable
income after taking into account any deduction for the NOL.
To figure the amount of any remaining NOL carryover to later
years, taxable income must be modified (see section 172(b)). To
the extent that contributions are used to reduce taxable income
for this purpose and increase an NOL carryover, a contributions
carryover is not allowed. See section 170(d)(2)(B).
A larger deduction is allowed for certain contributions
including:
Inventory and other property to certain organizations for use in
•
the care of the ill, needy, or infants (see section 170(e)(3)),
including qualified contributions of “apparently wholesome food”;
and
Scientific equipment used for research to institutions of higher
•
learning or to certain scientific research organizations (other than
by personal holding companies and service organizations). See
section 170(e)(4).
For more information on charitable contributions, including
substantiation and recordkeeping requirements, see section 170
and the related regulations and Pub. 526. For other special rules
that apply to corporations, see Pub. 542.
Suspension of 10% limitation for farmers and ranchers and
certain Native Corporations. Certain corporations can deduct
contributions of qualified conservation property without regard to
the general 10% limit. This applies to:
Line 20. Depreciation
A qualified farmer or rancher (as defined in section 170(b)(1)
•
Include on line 20 depreciation and the cost of certain property
that the corporation elected to expense under section 179 from
Form 4562. Include amounts not claimed on Form 1125-A or
elsewhere on the return. See Form 4562 and the Instructions for
Form 4562.
(E)(v)) that does not have publicly traded stock; and
A Native Corporation (as defined in section 170(b)(2)(C)(iii))
•
that contributes property which was land conveyed under the
Alaska Native Claims Settlement Act.
The total amount of the contribution claimed for the qualified
conservation property cannot exceed 100% of the excess of the
corporation's taxable income (as computed above substituting
14
Instructions for Form 1120
Certain costs of a qualified film, television, or live theatrical
•
Line 21. Depletion
production commencing before January 1, 2026 (after
December 31, 2015, and before January 1, 2026, for a live
theatrical production). This deduction does not apply to any
portion of the aggregate cost of the production above $15
million. There is a higher allowance for production in certain
areas. See section 181 and the related regulations.
If the corporation has an economic interest in mineral property or
standing timber, it can take a deduction for depletion. More than
one person can have an economic interest in the same mineral
deposit or timber. In the case of leased property, the depletion
deduction is divided between the lessor and the lessee.
Note. Certain film, television, or live theatrical productions
acquired and placed in service after September 27, 2017 (for
which a deduction would have been allowable under section 181
without regard to the dollar limitation), are qualified property
eligible for the special depreciation allowance under section
168(k). See the Instructions for Form 4562.
See sections 613 and 613A for percentage depletion rates
applicable to natural deposits. Also, see section 291 for the
limitation on the depletion deduction for iron ore and coal
(including lignite).
Attach Form T (Timber), Forest Activities Schedule, if a
deduction for depletion of timber is taken.
Certain business start-up and organizational costs (discussed
•
Foreign intangible drilling costs and foreign exploration and
development costs must either be added to the corporation's
basis for cost depletion purposes or be deducted ratably over a
10-year period. See sections 263(i), 616, and 617 for details.
Reforestation costs. The corporation can elect to deduct up to
•
$10,000 of qualifying reforestation expenses for each qualified
timber property. The corporation can elect to amortize over 84
months any amount not deducted. See the Instructions for Form
T (Timber).
Line 23. Pension, Profit-Sharing, etc., Plans
Insurance premiums.
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•
•
Enter the deduction for contributions to qualified pension,
profit-sharing, or other funded deferred compensation plans.
Employers who maintain such a plan must generally file one of
the forms listed below unless exempt from filing under
regulations or other applicable guidance, even if the plan is not a
qualified plan under the Internal Revenue Code. The filing
requirement applies even if the corporation does not claim a
deduction for the current tax year. There are penalties for failure
to file these forms on time and for overstating the pension plan
deduction. See sections 6652(e) and 6662(f). Also, see the
instructions for the applicable form.
Legal and professional fees.
Supplies used and consumed in the business.
Travel, meals, and entertainment expenses. Special rules
apply (discussed later).
Utilities.
•
•
Ordinary losses from trade or business activities of a
partnership (from Schedule K-1 (Form 1065)). Do not offset
ordinary income against ordinary losses. Instead, include the
income on line 10. Show the partnership's name, address, and
EIN on a separate statement attached to this return. If the
amount is from more than one partnership, identify the amount
from each partnership.
Form 5500, Annual Return/Report of Employee Benefit Plan.
Any extraterritorial income exclusion (from Form 8873).
•
Form 5500-SF, Short Form Annual Return/Report of Small
Employee Benefit Plan. File this form instead of Form 5500
generally if there were under 100 participants at the beginning of
the plan year.
Any net negative section 481(a) adjustment, or in the case of
•
an eligible terminated S corporation, the ratable portion of any
negative section 481(a) adjustment. See Section 481(a)
adjustment, earlier.
Dividends paid in cash on stock held by an employee stock
•
Note. Form 5500 and Form 5500-SF must be filed electronically
under the computerized ERISA Filing Acceptance System
(EFAST2). For more information, see the EFAST2 website at
ownership plan.
However, a deduction may be taken for these dividends only if,
according to the plan, the dividends are:
1. Paid in cash directly to the plan participants or
beneficiaries;
Form 5500-EZ, Annual Return of A One-Participant (Owners/
Partners and Their Spouses) Retirement Plan or A Foreign Plan.
File this form for a plan that only covers the owner (or the owner
and spouse) or a foreign plan that is required to file an annual
return and does not file the annual return electronically on Form
5500-SF. See the Instructions for Form 5500-EZ.
2. Paid to the plan, which distributes them in cash to the
plan participants or their beneficiaries no later than 90 days after
the end of the plan year in which the dividends are paid;
3. At the election of such participants or their beneficiaries
(a) payable as provided under (1) or (2) above, or (b) paid to the
plan and reinvested in qualifying employer securities; or
Line 24. Employee Benefit Programs
4. Used to make payments on a loan described in section
Enter contributions to employee benefit programs not claimed
elsewhere on the return (for example, insurance or health and
welfare programs) that are not an incidental part of a pension,
profit-sharing, etc., plan included on line 23.
404(a)(9).
See section 404(k) for more details and the limitation on certain
dividends.
Do not deduct expenses such as the following.
Line 25. Energy Efficient Commercial Buildings
Deduction
Amounts paid or incurred to, or at the direction of, a
•
government or governmental entity for the violation, or
investigation or inquiry into the potential violation, of a law.
Complete and attach Form 7205 if claiming the energy efficient
commercial building deduction. See the Instructions for Form
7205 for more information. Also, see section 179D.
Any amount that is allocable to a class of exempt income. See
•
section 265(b) for exceptions.
Line 26. Other Deductions
Lobbying expenses. However, see exceptions discussed later.
Amounts paid or incurred for any settlement, payout, or
•
•
Attach a statement, listing by type and amount, all allowable
deductions that are not deductible elsewhere on Form 1120.
Enter the total on line 26.
attorney fees related to sexual harassment or sexual abuse, if
such payments are subject to a nondisclosure agreement. See
section 162(q).
Examples of other deductions include the following.
Amortization. See Part VI of Form 4562.
•
15
Instructions for Form 1120
of, a government or governmental entity for violating any law, or
for the investigation or inquiry into the potential violation of a law,
except:
Travel, meals, and entertainment. Subject to limitations and
restrictions discussed below, a corporation can deduct ordinary
and necessary travel, meal, and non-entertainment expenses
paid or incurred in its trade or business. Generally, entertainment
expenses, membership dues, and facilities used in connection
with these activities cannot be deducted. In addition, no
deduction is generally allowed for qualified transportation fringe
benefits. Special rules apply to deductions for gifts, luxury water
travel, and convention expenses. See section 274 and Pub. 463,
for details.
Amounts that constitute restitution or remediation of property,
Amounts paid to come into compliance with the law,
Amounts paid or incurred as the result of orders or
•
•
•
agreements in which no government or governmental entity is a
party, and
Amounts paid or incurred for taxes due.
No deduction is allowed unless the amounts are specifically
•
identified in the order or agreement and the corporation
establishes that the amounts were paid for that purpose. Also,
any amount paid or incurred as reimbursement to the
government for the costs of any investigation or litigation are not
eligible for the exceptions and are nondeductible. See section
162(f).
Travel. The corporation cannot deduct travel expenses of any
individual accompanying a corporate officer or employee,
including a spouse or dependent of the officer or employee,
unless:
That individual is an employee of the corporation, and
•
That individual’s travel is for a bona fide business purpose and
•
would otherwise be deductible by that individual.
Meals. Generally, the corporation can deduct only 50% of the
amount otherwise allowable for non-entertainment-related meal
expenses paid or incurred in its trade or business. Meals not
separately stated from entertainment are generally not
deductible. In addition (subject to exceptions under section
274(k)(2)):
Lobbying expenses. Generally, lobbying expenses are not
deductible. These expenses include:
Amounts paid or incurred in connection with influencing
•
federal, state, or local legislation; or
Amounts paid or incurred in connection with any
•
communication with certain federal executive branch officials in
an attempt to influence the official actions or positions of the
officials. See Regulations section 1.162-29 for the definition of
“influencing legislation.”
Meals must not be lavish or extravagant, and
•
An employee of the corporation must be present at the meal.
•
See section 274(n)(3) for a special rule that applies to
Dues and other similar amounts paid to certain tax-exempt
organizations may not be deductible. If certain in-house lobbying
expenditures do not exceed $2,000, they are deductible.
expenses for meals consumed by individuals subject to the
hours of service limits of the Department of Transportation.
Qualified transportation fringes (QTFs). Generally, no
deduction is allowed under section 274(a)(4) for QTFs provided
by employers to their employees. QTFs are defined in section
132(f)(1) and include:
Line 28. Taxable Income Before NOL Deduction
and Special Deductions
At-risk rules. Generally, special at-risk rules under section 465
apply to closely held corporations (see Passive activity
limitations, earlier) engaged in any activity as a trade or business
or for the production of income. These corporations may have to
adjust the amount on line 28. (See below.)
Transportation in a commuter highway vehicle between the
•
employee's residence and place of employment,
Any transit pass, and
•
Qualified parking.
•
See section 274 and Pub. 15-B, Employers Tax Guide to
Fringe Benefits, for details.
The at-risk rules do not apply to:
Holding real property placed in service by the taxpayer before
•
Membership dues. The corporation can deduct amounts
paid or incurred for membership dues in civic or public service
organizations, professional organizations (such as bar and
medical associations), business leagues, trade associations,
chambers of commerce, boards of trade, and real estate boards.
However, no deduction is allowed if a principal purpose of the
organization is to entertain or provide entertainment facilities for
members or their guests. In addition, corporations cannot deduct
membership dues in any club organized for business, pleasure,
recreation, or other social purpose. This includes country clubs,
golf and athletic clubs, airline and hotel clubs, and clubs
operated to provide meals under conditions favorable to
business discussion.
Entertainment facilities. Generally, the corporation cannot
deduct an expense paid or incurred for a facility (such as a yacht
or hunting lodge) used for an activity usually considered
entertainment, amusement, or recreation.
Amounts treated as compensation. Generally, the
corporation may be able to deduct otherwise nondeductible
entertainment, amusement, or recreation expenses if the
amounts are treated as compensation to the recipient and
reported on Form W-2 for an employee or on Form 1099-NEC for
an independent contractor.
1987;
Equipment leasing under sections 465(c)(4), (5), and (6); or
•
•
Any qualifying business of a qualified corporation under
section 465(c)(7).
However, the at-risk rules do apply to the holding of mineral
property.
If the at-risk rules apply, adjust the amount on this line for any
section 465(d) losses. These losses are limited to the amount for
which the corporation is at risk for each separate activity at the
close of the tax year. If the corporation is involved in one or more
activities, any of which incurs a loss for the year, report the
losses for each activity separately. Attach Form 6198, At-Risk
Limitations, showing the amount at risk and gross income and
deductions for the activities with the losses.
If the corporation sells or otherwise disposes of an asset or its
interest (either total or partial) in an activity to which the at-risk
rules apply, determine the net profit or loss from the activity by
combining the gain or loss on the sale or disposition with the
profit or loss from the activity. If the corporation has a net loss, it
may be limited because of the at-risk rules.
Treat any loss from an activity not allowed for the tax year as a
deduction allocable to the activity in the next tax year.
However, if the recipient is an officer, director, beneficial
owner (directly or indirectly), or other “specified individual” (as
defined in section 274(e)(2)(B) and Regulations section
1.274-9(b)), special rules apply.
Line 29a. Net Operating Loss Deduction
A corporation can use the NOL incurred in one tax year to
reduce its taxable income in another tax year. Enter on line 29a
the total NOL carryovers from other tax years, but do not enter
more than the corporation's taxable income (after special
Fines or similar penalties. Generally, no deduction is allowed
for fines or similar penalties paid or incurred to, or at the direction
16
Instructions for Form 1120
deductions). Attach a statement showing the computation of the
NOL deduction. Complete item 12 on Schedule K.
2. 80% of the excess, if any, of taxable income determined
without any NOL deduction, section 199A deduction, or section
250 deduction, over any NOL carryover to the tax year from tax
years beginning before January 1, 2018.
The following special rules apply.
If an ownership change (described in section 382(g)) occurs,
•
the amount of the taxable income of a loss corporation that may
be offset by the pre-change NOL carryovers may be limited. See
section 382 and the related regulations. A loss corporation must
include the information statement as provided in Regulations
section 1.382-11(a) with its income tax return for each tax year
that it is a loss corporation in which an ownership shift, equity
structure shift, or other transaction described in Temporary
Regulations section 1.382-2T(a)(2)(i) occurs. If the corporation
makes the closing-of-the-books election, see Regulations
section 1.382-6(b).
An exception applies for NOLs of insurance companies other
than life insurance companies. The 80% taxable income limit
does not apply to these entities. See sections 172(b) and (f).
Merchant Marine capital construction fund. To take a
deduction for amounts contributed to a capital construction fund
(CCF), reduce the amount that would otherwise be entered on
line 30 by the amount of the deduction. On the dotted line next to
the entry space, enter “CCF” and the amount of the deduction.
For more information, see section 7518.
The limitations under section 382 do not apply to certain
ownership changes after February 17, 2009, made pursuant to a
restructuring plan under the Emergency Economic Stabilization
Act of 2008. See section 382(n).
For guidance in applying section 382 to loss corporations
whose instruments were acquired by Treasury under certain
programs under the Emergency Economic Stabilization Act of
2008, see Notice 2010-2, 2010-2 I.R.B. 251.
Line 32
Reserved for future use.
Line 34. Estimated Tax Penalty
Generally, the corporation does not have to file Form 2220
because the IRS can figure the penalty amount, if any, and bill
the corporation. However, even if the corporation does not owe
the penalty, it must complete and attach Form 2220 if:
If a corporation acquires control of another corporation (or
•
The annualized income or adjusted method is used, or
The corporation is a large corporation (as defined in the
•
acquires its assets in a reorganization), the amount of
pre-acquisition losses that may offset recognized built-in gain
may be limited (see section 384).
•
Instructions for Form 2220) computing its first required
installment based on the prior year's tax.
If a corporation elects the alternative tax on qualifying
•
shipping activities under section 1354, no deduction is allowed
for an NOL attributable to the qualifying shipping activities to the
extent that the loss is carried forward from a tax year preceding
the first tax year for which the alternative tax election was made.
See section 1358(b)(2).
If Form 2220 is attached, check the box on line 34, and enter
any penalty on this line.
If the corporation's tax liability includes a CAMT liability,
the corporation must complete and attach Form 2220.
!
CAUTION
The affected corporation must also include an amount of
For more details on the NOL deduction, see section 172 and
the Instructions for Form 1139.
estimated tax penalty on Form 1120, line 34, even if that amount
is zero. Failure to follow these instructions could result in the
corporation receiving a penalty notice that will require an
abatement request to apply any penalty relief. See Notice
Line 29b. Special Deductions
See the instructions for Schedule C.
Line 30. Taxable Income
Line 35. Amount Owed
If the corporation cannot pay the full amount of tax owed, it can
apply for an installment agreement online. The corporation can
apply for an installment agreement online if:
Minimum taxable income. The corporation's taxable income
cannot be less than the largest of the following amounts.
The inversion gain of the corporation for the tax year, if the
•
It cannot pay the full amount shown on line 35,
The total amount owed is $25,000 or less, and
The corporation can pay the liability in full in 24 months.
•
•
•
corporation is an expatriated entity or a partner in an expatriated
entity. See section 7874(a).
The sum of the corporation's excess inclusions from its
•
To apply using the Online Payment Agreement Application, go to
residual interest in a REMIC from Schedules Q (Form 1066),
line 2c, and the corporation's taxable income determined solely
with respect to its ownership and high-yield interests in FASITs.
See sections 860E(a) and 860J (repealed).
Under an installment agreement, the corporation can pay
what it owes in monthly installments. There are certain
conditions that must be met to enter into and maintain an
installment agreement, such as paying the liability within 24
months and making all required deposits and timely filing tax
returns during the length of the agreement.
Net operating loss (NOL). If line 30 (figured without regard to
the items listed above under minimum taxable income) is zero or
less, the corporation may have an NOL that can be carried back
or forward as a deduction to other tax years.
Only farming losses and losses of an insurance company
(other than a life insurance company) can be carried back. The
carryback period for these losses is 2 years. For NOLs that can
be carried back, the corporation can elect to waive the carryback
period and instead carry the NOL forward to future tax years.
on making the election to waive the carryback period. See the
Instructions for Form 1139 for other special rules and elections.
If the installment agreement is accepted, the corporation will
be charged a fee and it will be subject to penalties and interest
on the amount of tax not paid by the due date of the return.
Line 37
Enter the amount of any overpayment that should be refunded or
applied to next year's estimated tax.
Note. This election to apply some or all of the overpayment
amount to the corporation's 2024 estimated tax cannot be
changed at a later date.
The NOL deduction for tax year 2023 cannot exceed the
aggregate amount of NOLs arising in tax years beginning before
January 1, 2018, carried to such year plus the lesser of:
1. The aggregate amount of NOLs arising in tax years
Direct deposit of refund. If the corporation wants its refund
beginning after December 31, 2017, carried to such tax year; or
directly deposited into its checking or savings account at any
17
Instructions for Form 1120
U.S. bank or other financial institution instead of having a check
sent to the corporation, complete Form 8050, Direct Deposit of
Corporate Tax Refund, and attach it to the corporation's tax
return.
Line 3, Columns (b) and (c)
Dividends received on certain debt-financed stock acquired after
July 18, 1984, are not entitled to the full 50% or 65%
dividends-received deduction under section 243 or 245(a). The
50% or 65% deduction is reduced by a percentage that is related
to the amount of debt incurred to acquire the stock. See section
246A. Also, see section 245(a) before making this computation
for an additional limitation that applies to certain dividends
received from foreign corporations. Attach a statement to Form
1120 showing how the amount on line 3, column (c), was figured.
Schedule C. Dividends, Inclusions,
and Special Deductions
For purposes of the 20% ownership test on lines 1 through 7, the
percentage of stock owned by the corporation is based on voting
power and value of the stock. Preferred stock described in
section 1504(a)(4) is not taken into account.
Line 4, Column (a)
Enter dividends received on preferred stock of a
Consolidated returns. Corporations filing a consolidated
return should see Regulations sections 1.1502-13, 1.1502-26,
and 1.1502-27 before completing Schedule C.
Corporations filing a consolidated return must not report as
dividends on Schedule C any amounts received from
corporations within the consolidated group. Such dividends are
eliminated in consolidation rather than offset by the
dividends-received deduction.
less-than-20%-owned public utility that is subject to income tax
and is allowed the 23.3% deduction provided in sections 244
and 247 (as affected by P.L.113-295, Div. A, section 221(a)(41)
(A), Dec. 19, 2014, 128 Stat. 4043) for dividends paid.
Line 5, Column (a)
Enter dividends received on preferred stock of a
20%-or-more-owned public utility that is subject to income tax
and is allowed the 26.7% deduction provided in sections 244
and 247 (as affected by P.L.113-295, Div. A, section 221(a)(41)
(A), Dec. 19, 2014, 128 Stat. 4043) for dividends paid.
Line 1, Column (a)
Enter dividends (except those received on certain debt-financed
stock acquired after July 18, 1984—see section 246A) that are:
Received from less-than-20%-owned domestic corporations
•
Line 6, Column (a)
subject to income tax, and
Enter the U.S.-source portion of dividends that:
Qualified for the 50% deduction under section 243(a)(1).
•
Are received from less-than-20%-owned foreign corporations,
•
Also, include on line 1 the following.
and
Taxable distributions from an IC-DISC or former DISC that are
•
Qualify for the 50% deduction under section 245(a). To qualify
•
designated as eligible for the 50% deduction and certain
for the 50% deduction, the corporation must own at least 10% of
the stock of the foreign corporation by vote and value.
dividends of Federal Home Loan Banks. See section 246(a)(2).
Dividends (except those received on certain debt-financed
•
Also, include dividends received from a
less-than-20%-owned FSC that:
stock acquired after July 18, 1984) from a regulated investment
company (RIC). The amount of dividends eligible for the
dividends-received deduction under section 243 is limited by
section 854(b). The corporation should receive a notice from the
RIC specifying the amount of dividends that qualify for the
deduction.
Are attributable to income treated as effectively connected
•
with the conduct of a trade or business within the United States
(excluding foreign trade income), and
Qualify for the 50% deduction under section 245(c)(1)(B).
•
Report so-called dividends or earnings received from mutual
savings banks, etc., as interest. Do not treat them as dividends.
Line 7, Column (a)
Enter the U.S.-source portion of dividends that:
Are received from 20%-or-more-owned foreign corporations,
•
Line 2, Column (a)
and
Qualify for the 65% deduction under sections 243 and 245(a).
Enter on line 2:
•
Dividends (except those received on certain debt-financed
•
Also, include dividends received from a 20%-or-more-owned
FSC that:
stock acquired after July 18, 1984) that are received from
20%-or-more-owned domestic corporations subject to income
tax and that are subject to the 65% deduction under section
243(c), and
Are attributable to income treated as effectively connected
•
with the conduct of a trade or business within the United States
(excluding foreign trade income), and
Taxable distributions from an IC-DISC or former DISC that are
•
considered eligible for the 65% deduction.
Qualify for the 65% deduction under section 245(c)(1)(B).
•
Line 3, Column (a)
Line 8, Column (a)
Enter the following.
Enter dividends received from wholly owned foreign subsidiaries
that are eligible for the 100% deduction under section 245(b).
Dividends received on certain debt-financed stock acquired
•
after July 18, 1984, from domestic and foreign corporations
subject to income tax that would otherwise be subject to the
dividends-received deduction under section 243(a)(1), 243(c), or
245(a). Generally, debt-financed stock is stock that the
corporation acquired by incurring a debt (for example, it
borrowed money to buy the stock).
In general, the deduction under section 245(b) applies to
dividends paid out of the earnings and profits of a foreign
corporation for a tax year during which:
All of its outstanding stock is directly or indirectly owned by
•
the domestic corporation receiving the dividends, and
All of its gross income from all sources is effectively
•
Dividends received from a RIC on debt-financed stock. The
•
connected with the conduct of a trade or business within the
United States.
amount of dividends eligible for the dividends-received
deduction is limited by section 854(b). The corporation should
receive a notice from the RIC specifying the amount of dividends
that qualify for the deduction.
Line 9, Column (c)
Generally, line 9, column (c), cannot exceed the amount from the
Worksheet for Schedule C, line 9. However, in a year in which an
18
Instructions for Form 1120
NOL occurs, this limitation does not apply even if the loss is
created by the dividends-received deduction. See sections
172(d) and 246(b).
section 245A deduction pursuant to Regulations section
1.245A-5(g)(2). Include such amounts on line 16c.)
Line 16b, Column (a)
Line 10, Columns (a) and (c)
Enter the total subpart F inclusions attributable to tiered hybrid
dividends. This should equal the sum of the amounts reported by
the U.S. shareholder on Form(s) 5471, Schedule I, line 1b.
Small business investment companies operating under the Small
Business Investment Act of 1958 must enter dividends that are
received from domestic corporations subject to income tax even
though a deduction is allowed for the entire amount of those
dividends. To claim the 100% deduction on line 10, column (c),
the company must file with its return a statement that it was a
federal licensee under the Small Business Investment Act of
1958 at the time it received the dividends.
Line 16c, Column (a)
Enter all other amounts included in income under section 951.
This should equal the sum of the amounts reported by the U.S.
shareholder on Form(s) 5471, Schedule I, lines 1(c) through
1(h), 2, and 4.
Line 11, Columns (a) and (c)
Line 17, Column (a)
Enter only dividends that qualify under section 243(b) for the
100% dividends-received deduction described in section 243(a)
(3). Corporations taking this deduction are subject to the
provisions of section 1561.
Enter amounts included in income under section 951A. See
Form 8992, Part II, line 5, and the Instructions for Form 8992.
Also, if applicable, attach Form(s) 5471.
Note. Consider the applicability of section 951A with respect to
CFCs owned by domestic partnerships in which the corporation
has an interest.
The 100% deduction does not apply to affiliated group
members that are joining in the filing of a consolidated return.
Line 12, Column (a)
Line 18, Column (a)
Enter dividends from FSCs that are attributable to foreign trade
income and that are eligible for the 100% deduction provided in
section 245(c)(1)(A).
Include gross-up for taxes deemed paid under section 960.
Line 19, Column (a)
Enter taxable distributions from an IC-DISC or former DISC that
are designated as not eligible for a dividends-received
deduction.
Line 13, Column (a)
Enter the foreign-source portion of dividends that:
Are received from specified 10%-owned foreign corporations
•
No deduction is allowed under section 243 for a dividend from
an IC-DISC or former DISC (as defined in section 992(a)) to the
extent the dividend:
(as defined in section 245A(b)), including, for example, gain from
the sale of stock of a foreign corporation that is treated as a
dividend under sections 1248(a) and (j); and
Is paid out of the corporation's accumulated IC-DISC income
Qualify for the section 245A deduction.
•
•
or previously taxed income, or
Is a deemed distribution under section 995(b)(1).
Line 14, Column (a)
•
Enter the foreign dividends not reportable on line 3, 6, 7, 8, 11,
12, or 13 of column (a).
Line 20, Column (a)
Include the following.
Include on line 14 the foreign-source portion of any dividend
that does not qualify for the section 245A deduction (for
example, hybrid dividends within the meaning of section
245A(e), ineligible amounts of dividends within the meaning of
Regulations section 1.245A-5(b), dividends that fail to meet the
holding period requirement under section 246(c)(5), etc.).
1. Dividends (other than capital gain distributions reported
on Schedule D (Form 1120), Capital Gains and Losses, and
exempt-interest dividends) that are received from RICs and that
are not subject to the 50% deduction.
2. Dividends from tax-exempt organizations.
3. Dividends (other than capital gain distributions) received
from a REIT that, for the tax year of the trust in which the
dividends are paid, qualifies under sections 856 through 860.
Also, include on line 14 the corporation's share of
distributions from a section 1291 fund from Form 8621, to the
extent that the amounts are taxed as dividends under section
301. See Form 8621 and the Instructions for Form 8621.
4. Dividends not eligible for a dividends-received deduction,
which include the following.
Attach a statement identifying the amount of each dividend
reported on line 14 and the provision pursuant to which a
deduction is not allowed with respect to such dividend.
a. Dividends received on any share of stock held for less
than 46 days during the 91-day period beginning 45 days before
the ex-dividend date. When counting the number of days the
corporation held the stock, you cannot count certain days during
which the corporation's risk of loss was diminished. See section
246(c)(4) and Regulations section 1.246-5 for more details.
Line 15, Column (a)
Reserved for future use.
b. Dividends received on any share of preferred stock which
are attributable to periods totaling more than 366 days if such
stock was held for less than 91 days during the 181-day period
that began 90 days before the ex-dividend date. When counting
the number of days the corporation held the stock, you cannot
count certain days during which the corporation's risk of loss was
diminished. See section 246(c)(4) and Regulations section
1.246-5 for more details. Preferred dividends attributable to
periods totaling less than 367 days are subject to the 46-day
holding period rule discussed above.
Line 15, Column (c)
Reserved for future use.
Line 16a, Column (a)
Enter the foreign-source portion of any subpart F inclusions
attributable to the sale or exchange by a CFC of stock in another
foreign corporation described in section 964(e)(4). This should
equal the sum of the amounts reported by the U.S. shareholder
on Form(s) 5471, Schedule I, line 1a. (Do not include on line 16a
any portion of such subpart F inclusion that is not eligible for the
19
Instructions for Form 1120
Keep for Your Records
Worksheet for Schedule C, line 9
1. Refigure Form 1120, page 1, line 28, without any adjustment under section 1059 and without any capital loss
carryback to the tax year under section 1212(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.
2.
3.
4.
2. Complete lines 10, 11, 12, and 13, column (c), and enter the total here . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. Multiply line 3 by 65% (0.65) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. Add lines 2, 5, 7, and 8, column (c), and the part of the deduction on line 3, column (c), that is attributable to
dividends from 20%-or-more-owned corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.
6.
6. Enter the smaller of line 4 or line 5. If line 5 is greater than line 4, stop here; enter the amount from line 6 on line 9,
column (c), and do not complete the rest of this worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7. Enter the total amount of dividends from 20%-or-more-owned corporations that are included on lines 2, 3, 5, 7,
and 8, column (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.
8.
8. Subtract line 7 from line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9. Multiply line 8 by 50% (0.50) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10. Subtract line 5 from line 9, column (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11. Enter the smaller of line 9 or line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.
10.
11.
12. Dividends-received deduction after limitation (sec. 246(b)). Add lines 6 and 11. Enter the result here and on
line 9, column (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.
c. Dividends on any share of stock to the extent the
corporation is under an obligation (including a short sale) to
make related payments with respect to positions in substantially
similar or related property.
department. Enter the combined tax on line 1. Attach Form
1120-L as a schedule (and identify it as such), together with the
annual statements and schedules required to be filed with Form
1120-L. See Regulations section 1.6012-2(c)(1)(ii).
Exception for insurance companies filing their federal
income tax returns electronically. If an insurance company
files its income tax return electronically, it should not include the
annual statements and schedules required to be filed with Form
1120-L. However, such statements must be available at all times
for inspection by the IRS and retained for so long as such
statements may be material in the administration of any Internal
Revenue law.
5. Any other taxable dividend income not properly reported
elsewhere on Schedule C.
If patronage dividends or per-unit retain allocations are
included on line 20, identify the total of these amounts in a
statement attached to Form 1120.
Line 21, Column (c)
Section 247 (as affected by P.L.113-295, Div. A, section 221(a)
(41)(A), Dec. 19, 2014, 128 Stat. 4043) allows public utilities a
deduction of 40% of the smaller of (a) dividends paid on their
preferred stock during the tax year, or (b) taxable income
computed without regard to this deduction. In a year in which an
NOL occurs, compute the deduction without regard to section
247(a)(1)(B).
Deferred tax under section 1291. If the corporation was a
shareholder in a PFIC and received an excess distribution or
disposed of its investment in the PFIC during the year, it must
include the increase in taxes due under section 1291(c)(2) (from
Form 8621) in the total for line 1. On the dotted line next to line 1,
enter “Section 1291” and the amount.
Do not include on line 1 any interest due under section
1291(c)(3). Instead, include the amount of interest owed on
Schedule J, Part I, line 9z.
Line 22, Column (c)
Enter the section 250 deduction claimed for foreign-derived
intangible income (FDII) and global intangible low-taxed income
(GILTI). This should equal the sum of the amounts on Form
8993, Part III, lines 28 and 29.
For more information on reporting the deferred tax and
interest, see the Instructions for Form 8621.
Increase in tax attributable to partner's audit liability under
section 6226. If the corporation is filing Form 8978, Partner’s
Additional Reporting Year Tax, to report adjustments shown on
Form 8986, Push Out to Partners under IRC 6226(a)(2), they
received from partnerships that have been audited and have
elected to push out imputed underpayments to their partners,
include any increase in taxes due from Form 8978, line 14, in the
total for Form 1120, Schedule J, line 1. On the dotted line next to
line 1, enter "FROM FORM 8978" and the amount. Attach Form
8978. If Form 8978, line 14, shows a decrease in tax, see the
Schedule J.
Tax Computation and Payment
Part I—Tax Computation
Line 1
Multiply taxable income (page 1, line 30) by 21% (0.21). Enter
this amount on line 1.
Additional tax under section 197(f). A corporation that elects
to recognize gain and pay tax on the sale of a section 197
intangible under the related person exception to the
Mutual savings bank conducting life insurance business.
The tax under section 594 consists of the sum of (a) a partial tax
computed on Form 1120 on the taxable income of the bank,
determined without regard to income or deductions allocable to
the life insurance department, and (b) a partial tax on the taxable
income computed on Form 1120-L of the life insurance
anti-churning rules should include any additional tax due in the
total for line 1. On the dotted line next to line 1, enter “Section
197” and the amount. See section 197(f)(9)(B)(ii).
20
Instructions for Form 1120
the end of the 5-year recapture period under section 50(a), enter
the increase in tax from Form 4255. See the Instructions for
Form 4255.
Line 2
If the corporation had gross receipts of at least $500 million in
any 1 of the 3 tax years preceding the current tax year, complete
and attach Form 8991. Enter on line 2 the base erosion minimum
tax amount from Form 8991, Part IV, line 5e. See section 59A
and the Instructions for Form 8991. Also, see Schedule K,
Question 22, later.
Line 9b. Recapture of low-income housing credit. If the
corporation disposed of property (or there was a reduction in the
qualified basis of the property) for which it took the low-income
housing credit, and the corporation did not follow the procedures
that would have prevented recapture of the credit, it may owe a
tax. See Form 8611.
Line 3
Line 9c. Interest due under the look-back method—com-
pleted long-term contracts. If the corporation used the
percentage-of-completion method under section 460(b) for
certain long-term contracts, figure any interest due or to be
refunded using the look-back method, described in section
460(b)(2). Use Form 8697 to figure any interest due or to be
refunded. See the Instructions for Form 8697. Include any
interest due on line 9c.
Enter on line 3 the amount from Form 4626, Alternative Minimum
Tax—Corporations, Part II, line 13, if applicable. See the
Instructions for Form 4626.
Line 5
Line 5a. To find out when a corporation can take the credit for
payment of income tax to a foreign country or U.S. territory, see
Form 1118, Foreign Tax Credit—Corporations.
Line 9d. Interest due under the look-back method—income
forecast method. If the corporation used the income forecast
method to depreciate property, it must figure any interest due or
to be refunded using the look-back method, described in section
167(g)(2). Use Form 8866 to figure any interest due or to be
refunded. See the Instructions for Form 8866. Include any
interest due on line 9d.
Line 5b. Enter any qualified electric vehicle passive activity
credits from prior years allowed for the current tax year from
Form 8834, Qualified Electric Vehicle Credit, line 7. Attach Form
8834.
Line 5c. Use Form 3800 to claim any general business credits.
Enter on line 5c the allowable credit from Form 3800, Part II,
line 38. See the Instructions for Form 3800.
Line 9e. Alternative tax on qualifying shipping activities.
Enter any alternative tax on qualifying shipping activities from
Form 8902.
Line 5d. Enter any allowable credit from Form 8827, Credit for
Prior Year Minimum Tax—Corporations. Complete and attach
Form 8827.
Line 9f. Interest/tax due under section 453A(c). Include any
interest on deferred tax attributable to certain nondealer
installment obligations (section 453A(c)).
Line 5e. Enter the allowable credits from Form 8912, Credit to
Line 9g. Interest/tax due under section 453(l). Include any
interest on deferred tax attributable to dealer installment
obligations (section 453(l)).
Holders of Tax Credit Bonds, line 12.
Line 6
Line 9z. Other. Include on line 9z additional taxes and interest
such as the following. Attach a statement showing the
computation of each item included in the total for line 9z and
identify the applicable Code section and the type of tax or
interest.
Add lines 5a through 5e. Enter the total on line 6.
Decrease attributable to partner's audit liability under sec-
tion 6226. If the corporation is filing Form 8978 to report
adjustments shown on Form 8986 they received from
Recapture of Indian employment credit. Generally, if an
•
employer terminates the employment of a qualified employee
less than 1 year after the date of initial employment, any Indian
employment credit allowed for a prior tax year because of wages
paid or incurred to that employee must be recaptured. For
details, see Form 8845 and section 45A.
partnerships that have been audited and have elected to push
out imputed underpayments to their partners, include any
decrease in taxes due (negative amount) from Form 8978,
line 14, in the total for Form 1120, Schedule J, line 6. On the
dotted line next to line 6, enter "FROM FORM 8978" and the
amount. Attach Form 8978. If Form 8978, line 14, shows an
Recapture of new markets credit (see Form 8874 and Form
•
8874-B, Notice of Recapture Event for New Markets Credit).
Recapture of employer-provided childcare facilities and
•
services credit (see Form 8882).
Tax and interest on a nonqualified withdrawal from a capital
Line 8
•
construction fund (section 7518(g)).
A corporation is taxed as a personal holding company under
section 542 if:
Interest due on deferred gain (section 1260(b)).
•
•
Interest due under section 1291(c)(3). See Form 8621 and the
At least 60% of its adjusted ordinary gross income for the tax
•
Instructions for Form 8621.
year is personal holding company income, and
Recapture of section 45Q carbon oxide sequestration credit
•
At any time during the last half of the tax year more than 50%
•
(see Form 8933, Part III, line 22).
in value of its outstanding stock is directly or indirectly owned by
five or fewer individuals.
Line 11
See Schedule PH (Form 1120) for definitions and details on
how to figure the tax.
Include any deferred tax on the termination of a section 1294
election applicable to shareholders in a qualified electing fund in
the amount entered on line 11.
Line 9
Subtract the following amounts from the total for line 11.
Include any of the following taxes and interest.
Deferred tax on the corporation's share of undistributed
•
Line 9a. Recapture of investment credit. If the corporation
earnings of a qualified electing fund. See the Instructions for
Form 8621.
disposed of investment credit property or changed its use before
21
Instructions for Form 1120
Deferred LIFO recapture tax (section 1363(d)). This tax is the
investment company (RIC) or a real estate investment trust
(REIT) on undistributed long-term capital gains included in the
corporation's income. Attach Form 2439.
•
part of the LIFO recapture tax that will be deferred and paid with
Form 1120-S in the future. To figure the deferred tax, first figure
the total LIFO recapture tax. Follow the steps below to figure the
total LIFO recapture tax and the deferred amount. Also, see
Line 10. Other Income, earlier.
Line 20b. Credit for federal tax on fuels. Enter the total
income tax credit claimed on Form 4136, Credit for Federal Tax
Paid on Fuels. Attach Form 4136.
Step 1. Figure the tax on the corporation's income including
the LIFO recapture amount. Complete Schedule J, Part I, lines 1
through 10.
Line 20c. Reserved for future use.
Line 20z. Other. Include on line 20z any other refundable credit
the corporation is claiming, including the following. Attach a
statement listing the type of credit and the amount of the credit.
Step 2. Using a separate worksheet, complete Schedule J
again, but do not include the LIFO recapture amount in the
corporation's taxable income.
Credit for tax withheld under Chapter 3 or 4 of the Internal
•
Revenue Code that is shown on Form 1042-S, Form 8805, or
Form 8288-A. Attach the applicable form.
Credit for tax on ozone-depleting chemicals. See section
•
Step 3. Compare the tax in Step 2 to the tax in Step 1. The
4682(g)(2).
Credit under section 960(c) (section 960(b) for pre-2018 tax
difference between the two is the LIFO recapture tax.
•
years of foreign corporations). If an increase in the limitation
under section 960(c) (section 960(b) (pre-2018)) exceeds the
total tax on Schedule J, Part I, line 11, for the tax year, the
amount of the excess is deemed an overpayment of tax for the
tax year. See section 960(c) (section 960(b) (pre-2018)) for more
information regarding the circumstances under which such an
excess arises.
Step 4. Multiply the amount figured in Step 3 by 75% (0.75).
The result is the deferred LIFO recapture tax.
How to report. Attach a statement showing the computation of
each item included in, or subtracted from, the total for line 11. On
the dotted line next to line 11, specify (a) the applicable Code
section, (b) the type of tax, and (c) enter the amount of tax. For
example, if the corporation is deferring a $100 LIFO recapture
tax, subtract this amount from the total on line 11, then enter
“Section 1363—Deferred Tax—$100” on the dotted line next to
line 11.
Line 22. Elective Payment Election Amount From
Form 3800
Part II—Payments and Refundable Credits
Line 12
Enter on line 22 the total net elective payment election amount
from Form 3800, Part III, line 6, column (i). See the Instructions
for Form 3800.
Reserved for future use.
Schedule K.
Line 14
Other Information
Complete all items that apply to the corporation.
Enter any estimated tax payments the corporation made for the
current tax year.
Question 2
Beneficiaries of trusts. If the corporation is the beneficiary of a
trust, and the trust makes a section 643(g) election to credit its
estimated tax payments to its beneficiaries, include the
corporation's share of the payment in the total for line 14. Enter
“T” and the amount of the payment on the dotted line next to the
entry space.
See the list of Principal Business Activity Codes later in the
instructions. Using the list of codes and activities, determine
from which activity the corporation derives the highest
percentage of its total receipts. Enter on lines 2a, 2b, and 2c the
principal business activity code number, the corporation's
business activity, and a description of the principal product or
service of the corporation. For nonstore retailers, select the PBA
code by the primary product that your establishment sells. For
example, establishments primarily selling prescription and
non-prescription drugs, select PBA code 456110 Pharmacies &
Drug Retailers.
Line 15
If the corporation overpaid estimated tax, it may be able to get a
quick refund by filing Form 4466. The overpayment must be at
least 10% of the corporation's expected income tax liability and
at least $500. File Form 4466 after the end of the corporation's
tax year, and no later than the due date for filing the corporation’s
tax return (not including extensions). Form 4466 must be filed
before the corporation files its tax return. See the instructions for
Form 4466.
Question 3
Check the “Yes” box for question 3 if:
The corporation is a subsidiary in an affiliated group (defined
•
below), but is not filing a consolidated return for the tax year with
that group; or
The corporation is a subsidiary in a parent–subsidiary
•
Line 18
controlled group. For a definition of a parent–subsidiary
controlled group, see the Instructions for Schedule O (Form
1120).
If the corporation had federal income tax withheld from any
payments it received because, for example, it failed to give the
payer its correct EIN or was otherwise subjected to backup
withholding, include the amount withheld in the total for line 18.
Any corporation that meets either of the requirements above
should check the “Yes” box. This applies even if the corporation
is a subsidiary member of one group and the parent corporation
of another.
Line 20. Refundable Credits
Note. If the corporation is an “excluded member” of a controlled
Line 20a. Credit from Form 2439. Enter any credit from Form
2439, Notice to Shareholder of Undistributed Long-Term Capital
Gains, for the corporation's share of the tax paid by a regulated
group (see definition in the Instructions for Schedule O (Form
22
Instructions for Form 1120
1120)), it is still considered a member of a controlled group for
this purpose.
Question 5b
List each foreign or domestic partnership in which the
corporation, at the end of the tax year, owned directly an interest
of 20% or more, or owned, directly or indirectly, an interest of
50% or more in the profit, loss, or capital of the partnership. List
each trust in which the corporation, at the end of the tax year,
owned directly an interest of 20% or more, or owned, directly or
indirectly, an interest of 50% or more in the trust beneficial
interest. Indicate the name, EIN (if any), country of organization,
and the maximum percentage interest owned, directly or
indirectly, in the profit, loss, or capital of the partnership at the
end of the partnership tax year, or, for a trust, the percentage
interest owned in the trust beneficial interest. List a partnership
or trust owned through a disregarded entity rather than the
disregarded entity.
Affiliated group. An affiliated group is one or more chains of
includible corporations (as defined in section 1504(b))
connected through stock ownership with a common parent
corporation. See section 1504(a). The common parent must be
an includible corporation and the following requirements must be
met.
1. The common parent must own directly stock that
represents at least 80% of the total voting power and at least
80% of the total value of the stock of at least one of the other
includible corporations.
2. Stock that represents at least 80% of the total voting
power and at least 80% of the total value of the stock of each of
the other corporations (except for the common parent) must be
owned directly by one or more of the other includible
corporations.
Maximum percentage owned in partnership profit, loss, or
capital. For the purposes of question 5b, the term “maximum
percentage owned” means the highest percentage of interest in
a partnership's profit, loss, or capital as of the end of the
partnership's tax year, as determined under the partnership
agreement, when taking into account the constructive ownership
rules, earlier. If the partnership agreement does not express the
partner's share of profit, loss, and capital as fixed percentages,
use a reasonable method in arriving at the percentage items for
the purposes of completing question 5b. Such method must be
consistent with the partnership agreement. The method used to
compute a percentage share of profit, loss, and capital must be
applied consistently from year to year. Maintain records to
support the determination of the share of profits, losses, and
capital.
Example. Corporation A owns, directly, a 50% interest in the
profit, loss, or capital of Partnership B. Corporation A also owns,
directly, a 15% interest in the profit, loss, or capital of Partnership
C and owns, directly, 15% of the voting stock of Corporation D.
Partnership B owns, directly, a 70% interest in the profit, loss, or
capital of Partnership C and owns, directly, 70% of the voting
stock of Corporation D. Corporation A owns, indirectly, through
Partnership B, a 35% interest (50% of 70%) in the profit, loss, or
capital of Partnership C and owns, indirectly, 35% of the voting
stock of Corporation D. Corporation A owns, directly or indirectly,
a 50% interest in the profit, loss, or capital of Partnership C (15%
directly and 35% indirectly), and owns, directly or indirectly, 50%
of the voting stock of Corporation D (15% directly and 35%
indirectly).
For this purpose, the term “stock” generally does not include
any stock that (a) is nonvoting, (b) is nonconvertible, (c) is limited
and preferred as to dividends and does not participate
significantly in corporate growth, and (d) has redemption and
liquidation rights that do not exceed the issue price of the stock
(except for a reasonable redemption or liquidation premium).
See section 1504(a)(4).
Question 4. Constructive Ownership of the
Corporation
For purposes of question 4, the constructive ownership rules of
section 267(c) (excluding section 267(c)(3)) apply to ownership
of interests in corporate stock and ownership of interests in the
profit, loss, or capital of a partnership. If the corporation checked
“Yes” to question 4a or 4b, complete and attach Schedule G
(Form 1120), Information on Certain Persons Owning the
Corporation's Voting Stock.
Question 5. Constructive Ownership of Other
Entities
For purposes of determining the corporation's constructive
ownership of other entities, the constructive ownership rules of
section 267(c) (excluding section 267(c)(3)) apply to ownership
of interests in partnerships and trusts as well as corporate stock.
Generally, if an entity (a corporation, partnership, or trust) is
owned, directly or indirectly, by or for another entity (corporation,
partnership, estate, or trust), the owned entity is considered to
be owned proportionately by or for the owners (shareholders,
partners, or beneficiaries) of the owning entity.
Corporation A reports in its answer to question 5a that it
owns, directly or indirectly, 50% of the voting stock of
Corporation D. Corporation A reports in its answer to question 5b
that it owns, directly, an interest of 50% in the profit, loss, or
capital of Partnership B and owns, directly or indirectly, 50% of
the profit, loss, or capital of Partnership C.
Question 5a
List each foreign or domestic corporation not included on Form
851, Affiliations Schedule, in which the corporation, at the end of
the tax year, owned directly 20% or more, or owned, directly or
indirectly, 50% or more of the total voting power of all classes of
stock entitled to vote. Indicate the name of the corporation, EIN
(if any), country of incorporation, and the percentage interest
owned, directly or indirectly, in the total voting power. List the
parent corporation of an affiliated group of corporations filing a
consolidated tax return rather than the subsidiary members
except for subsidiary members in which an interest is owned,
directly or indirectly, independent of the interest owned, directly
or indirectly, in the parent corporation. List a corporation owned
through a disregarded entity rather than the disregarded entity.
Question 7
Check the “Yes” box if one foreign person owned at least 25% of
the total voting power of all classes of stock of the corporation
entitled to vote or at least 25% of the total value of all classes of
stock of the corporation.
The constructive ownership rules of section 318 apply in
determining if a corporation is foreign owned. See section
6038A(c)(5) and the related regulations.
Enter on line 7a the percentage owned by the foreign person
specified in question 7. On line 7b, enter the name of the owner’s
country.
Note. If there is more than one 25%-or-more foreign owner,
complete question 7 for the foreign person with the highest
percentage of ownership.
23
Instructions for Form 1120
For 2023, the corporation's total assets equal or exceed $10
•
Foreign person. The term “foreign person” means:
An individual who is not a citizen or resident of the United
million;
•
The corporation or a related party issued audited financial
•
States;
statements reporting all or a portion of the corporation's
An individual who is a citizen or resident of a U.S. territory who
•
operations for all or a portion of the corporation's tax year; and
is not otherwise a citizen or resident of the United States;
The corporation has one or more tax positions that must be
•
Any partnership, association, company, or corporation that is
•
reported on Schedule UTP.
not created or organized in the United States;
Any foreign estate or trust within the meaning of section
•
Attach Schedule UTP to the corporation's income tax return.
Do not file it separately. A taxpayer that files a protective Form
1120 must also file Schedule UTP if it satisfies the requirements
set forth above.
7701(a)(31); or
A foreign government (or one of its agencies or
•
instrumentalities) to the extent that it is engaged in the conduct
of a commercial activity, as described in
section 892.
For details, see the Instructions for Schedule UTP.
However, the term "foreign person" does not include any
foreign person who consents to the filing of a joint U.S. income
tax return.
Questions 15a and 15b
If the corporation made any payment in 2023 that would require
the corporation to file any Form(s) 1099, check the “Yes” box for
question 15a and answer question 15b. Otherwise, check the
“No” box for question 15a and skip question 15b. See Am I
IRS.gov.
Owner's country. For individuals, the term “owner's country”
means the country of residence. For all others, it is the country
where incorporated, organized, created, or administered.
Requirement to file Form 5472. If the corporation checked
“Yes,” it may have to file Form 5472, Information Return of a 25%
Foreign-Owned U.S. Corporation or a Foreign Corporation
Engaged in a U.S. Trade or Business. Generally, a 25%
foreign-owned corporation that had a reportable transaction with
a foreign or domestic related party during the tax year must file
Form 5472. See the Instructions for Form 5472, for filing
instructions and penalties for failure to file.
Question 19
If the corporation made any payments in 2023 that would require
the corporation to file any Forms 1042, Annual Withholding Tax
Return for U.S. Source Income of Foreign Persons, and 1042-S,
Foreign Person's U.S. Source Income Subject to Withholding,
check the “Yes” box. See the Instructions for Form 1042 and
Instructions for Form 1042-S for information regarding who is
required to file Forms 1042 and 1042-S and what types of
payments are subject to reporting on Forms 1042 and 1042-S.
Item 9
Show any tax-exempt interest received or accrued. Include any
exempt-interest dividends received as a shareholder in a mutual
fund or other RIC. Also, if required, include the same amount on
Schedule M-1, line 7 (or Schedule M-3 (Form 1120), Part II,
line 13, if applicable).
Question 21
If the corporation paid or accrued (including through a
partnership) any interest or royalty for which a deduction is not
allowed under section 267A, check "Yes" for question 21 and
enter the total amount for which a deduction is not allowed.
Item 11
Generally, if the corporation has an NOL for tax year 2023, it can
elect to waive the entire carryback period for the NOL and
instead carry the NOL forward to future tax years. To do so,
check the box on line 11 and file the tax return by its due date,
including extensions. Do not attach the statement described in
Temporary Regulations section 301.9100-12T. Generally, once
made, the election is irrevocable.
Payments to which section 267A applies. Interest or royalty
paid or accrued by a domestic corporation (including, in the case
of a domestic corporation that is a partner in a partnership, the
domestic corporation's allocable share of interest or royalty paid
or accrued by the partnership) is subject to section 267A.
Section 267A generally applies to interest or royalty paid or
accrued according to a hybrid arrangement (such as, for
example, a payment according to a hybrid instrument, or a
payment to a reverse hybrid), provided that the payment or
accrual is to a related party (or according to a structured
arrangement). In addition, under an imported mismatch rule,
section 267A generally applies to interest or royalties paid or
accrued according to a non-hybrid arrangement where the
income attributable to that payment or accrual is directly or
indirectly offset by certain deductions involving hybridity incurred
by a related party or according to a structured arrangement.
However, section 267A does not apply if a de minimis exception
is satisfied. See Regulations section 1.267A-1(c). For purposes
of section 267A, interest and royalties are defined broadly. For
additional information about arrangements subject to section
267A, see Regulations sections 1.267A-2 and 1.267A-4. Also,
see the anti-avoidance rule under Regulations section
1.267A-5(b)(6).
If the corporation timely filed its return for the loss year without
making the election, it can make the election on an amended
return filed within 6 months of the due date of the loss year return
(excluding extensions). Attach the election to the amended
return and write "Filed pursuant to section 301.9100-2" on the
election statement. See the Instructions for Form 1139.
Corporations filing a consolidated return that elect to waive
the entire carryback period for the group must also attach the
statement required by Regulations section 1.1502-21(b)(3) or
the election will not be valid.
Item 12
Enter the amount of the NOL carryover to the tax year from prior
years, even if some of the loss is used to offset income on this
return. The amount to enter is the total of all NOLs generated in
prior years but not used to offset income (either as a carryback
or carryover) to a tax year prior to 2023. Do not reduce the
amount by any NOL deduction reported on line 29a.
Extent to which deduction is disallowed. When section
267A applies to interest or royalties paid or accrued pursuant to
a hybrid arrangement, it generally disallows a deduction for the
amount to the extent that, under the foreign tax law, there is not a
corresponding income inclusion (including long-term deferral).
However, the deduction is not disallowed to the extent the
amount is directly or indirectly included in income in the United
States, such as if the amount is taken into account with respect
Question 14
A corporation that files Form 1120 must file Schedule UTP (Form
1120), Uncertain Tax Position Statement, with its 2023 income
tax return if:
24
Instructions for Form 1120
to a U.S. shareholder under section 951(a) or section 951A. For
additional information, see Regulations sections 1.267A-2
through 1.267A-4. For examples illustrating the application of
section 267A, see Regulations section 1.267A-6.
partnerships, or proprietorships, and affiliated service groups.
See section 448(c) and the Instructions for Form 8990 for
additional information.
Question 25
Question 22
To certify as a QOF, the corporation must file Form 1120 and
attach Form 8996, even if the corporation had no income or
expenses to report. If the corporation is attaching Form 8996,
check the “Yes” box for question 25. On the line following the
dollar sign, enter the amount from Form 8996, line 15.
If the corporation had gross receipts of at least $500 million in
any 1 of the 3 preceding tax years, complete and attach Form
8991. For this purpose, the corporation's gross receipts include
the gross receipts of all persons aggregated with the
corporation, as specified in section 59A(e)(3). See the
Instructions for Form 8991 to determine if the corporation is
subject to the base erosion minimum tax.
The penalty reported on this line from Form 8996, line 15, is
not due with the filing of this form. The IRS will separately send
to you a notice setting forth the due date for the penalty payment
and where that payment should be sent.
Question 23
The limitation on business interest expense applies to every
taxpayer with a trade or business, unless the taxpayer meets
certain specified exceptions. A taxpayer may elect out of the
limitation for certain businesses otherwise subject to the
the Instructions for Form 8990.
Certain real property trades or businesses and farming
businesses qualify to make an election not to limit business
interest expense. This is an irrevocable election. If you make this
election, you are required to use the alternative depreciation
system to depreciate any nonresidential real property, residential
rental property, and qualified improvement property for an
electing real property trade or business, and any property with a
recovery period of 10 years or more for an electing farming
business. See section 168(g)(1)(F). Also, you are not entitled to
the special depreciation allowance for that property. For a
taxpayer with more than one qualifying business, the election is
made with respect to each business.
Question 26
Check the “Yes” box if:
1. On or after December 22, 2017, a foreign corporation
directly or indirectly acquired substantially all of the properties
held directly or indirectly by the corporation; and
2. The ownership percentage with respect to the acquisition
was greater than 50% (by vote or by value).
If “Yes” is checked, also enter in the space provided the
ownership percentage both by vote and by value. If there are
multiple acquisitions that must be reported, enter the ownership
for the most recent acquisition. Attach a statement reporting the
ownership percentage by vote and by value for the other
acquisitions.
Section 7874 applies in certain cases in which a foreign
corporation directly or indirectly acquires substantially all of the
properties of a domestic corporation. Generally, it applies when
three requirements are satisfied.
1. Pursuant to a plan or series of related transactions, a
foreign corporation must acquire directly or indirectly
substantially all of the properties held directly or indirectly by a
domestic corporation.
Check “Yes” if the corporation has an election in effect to
exclude a real property trade or business or a farming business
from section 163(j). For more information, see the Instructions for
Form 8990.
Question 24
2. After the acquisition, the ownership percentage (by vote
or value) must be at least 60%.
Generally, a taxpayer with a trade or business must file Form
8990 to claim a deduction for business interest. In addition, Form
8990 must be filed by any taxpayer that owns an interest in a
partnership with current-year, or prior-year carryover, excess
business interest expense allocated from the partnership.
3. After the acquisition, the expanded affiliated group that
includes the foreign acquiring corporation must not have
substantial business activities in the foreign country in which the
foreign acquiring corporation is created or organized.
Exclusions from filing. A taxpayer is not required to file Form
8990 if the taxpayer is a small business taxpayer (defined below)
and does not have excess business interest expense from a
partnership. A taxpayer also is not required to file Form 8990 if
the taxpayer only has business interest expense from these
excepted trades or businesses:
When section 7874 applies, the tax treatment of the
acquisition depends on the ownership percentage. If the
ownership percentage is at least 80%, then the foreign acquiring
corporation is treated as a domestic corporation for all purposes
of the Internal Revenue Code. See section 7874(b). If the
ownership percentage is at least 60% but less than 80%, then
the foreign acquiring corporation is respected as a foreign
corporation, but the domestic corporation and certain other
persons are subject to special rules that reduce the tax benefits
of the acquisition. See section 7874(a).
An electing real property trade or business,
An electing farming business, or
Certain utility businesses.
•
•
•
Small business taxpayer. A small business taxpayer is not
subject to the business interest expense limitation and is not
required to file Form 8990. A small business taxpayer is a
taxpayer that (a) is not a tax shelter (as defined in section 448(d)
(3)), and (b) meets the gross receipts test of section 448(c),
discussed next.
See the regulations under section 7874 for rules regarding
the computation of the ownership percentage. See sections
59A(d)(4), 965(l), 4501(d), and 4985 for additional rules
regarding the tax treatment of certain expatriated entities.
Question 27
Gross receipts test. For 2023, a taxpayer meets the gross
receipts test if the taxpayer has average annual gross receipts of
$29 million or less for the 3 prior tax years. A taxpayer's average
annual gross receipts for the 3 prior tax years is determined by
adding the gross receipts for the 3 prior tax years and dividing
the total by 3. Gross receipts include the aggregate gross
receipts from all persons treated as a single employer, such as a
controlled group of corporations, commonly controlled
Digital assets are any digital representations of value that are
recorded on a cryptographically secured distributed ledger or
any similar technology. For example, digital assets include
non-fungible tokens (NFTs) and virtual currencies, such as
cryptocurrencies and stablecoins. If a particular asset has the
characteristics of a digital asset, it will be treated as a digital
asset for federal income tax purposes.
25
Instructions for Form 1120
Check the “Yes” box if at any time during 2023 the corporation
received (as a reward, award, or payment for property or
services); or (b) sold, exchanged, or otherwise disposed of a
digital asset (or any financial interest in any digital asset).
the stock repurchase excise tax if, during the corporation's
taxable year, (a) the corporation is publicly traded and
repurchased its stock (or a specified affiliate of the corporation
acquired the corporation's stock); (b) the corporation is a
specified affiliate of an applicable foreign corporation; or (c) the
corporation is an expatriated entity with respect to a covered
surrogate foreign corporation.
For example, check “Yes” if at any time during 2023 the
corporation:
Received digital assets as payment for property or services
•
Do not complete a Form 7208 until the date specified in
upcoming regulations under section 4501. For additional
information, see section 4501 and Announcement 2023-18,
2023-30 I.R.B. 366, available at IRS.gov/irb/
provided;
Received digital assets as a result of a reward or award;
•
•
Received new digital assets as a result of mining, staking, and
similar activities;
Received digital assets as a result of a hard fork;
Disposed of digital assets in exchange for property or
•
•
Question 31
services;
Disposed of a digital asset in exchange or trade for another
•
If the answer to question 31 is “Yes,” attach a statement titled
“Schedule K Statement of Subchapter K Basis Adjustments” that
includes the information required for each tax basis adjustment
described in (1) through (4) below. Provide the required
information for each partnership where 80 % or more of the
capital or profits of the partnership is owned, directly or indirectly,
by members of the corporation's controlled group of corporations
(as defined in section 1563). If there are unrelated third-party
minority partner interests in the partnership, the corporation is
not required to include such partners' information on this
statement.
digital asset;
Sold a digital asset; or
•
•
Otherwise disposed of any other financial interest in a digital
asset.
The corporation has a financial interest in a digital asset if it is
the owner of record of a digital asset, or has an ownership stake
in an account that holds one or more digital assets, including the
rights and obligations to acquire a financial interest, or owns a
wallet that holds digital assets.
The following actions or transactions in 2023, alone, generally
do not require the corporation to check “Yes:"
1. If the adjusted basis of a partner's partnership interest
differs from the partner's share of the partnership's adjusted
basis of partnership property by $10 million or more at the end of
the tax year and at any other relevant date (for example, at the
time of a transfer of a partnership interest or the liquidation of a
partnership) provide the partnership's name and TIN, partner's
name and TIN, and the amount and allocation of such difference
for each partner.
Holding a digital asset in a wallet or account;
•
Transferring a digital asset from one wallet or account the
•
corporation owns or controls to another wallet or account that it
owns or controls; or
Purchasing digital assets using U.S. or other real currency,
•
including through the use of electronic platforms such as PayPal
and Venmo.
2. If a partnership makes a basis adjustment of $10 million
or more at the end of the tax year and at any other relevant date,
pursuant to section 743 (including section 743(d)) upon the
transfer of a partnership interest in such partnership to a partner
that is, directly or indirectly, a controlled group member, provide
the partnership's name and TIN, name and TIN of the transferor
partner and transferee partner, and the amount and allocation of
the basis adjustment.
3. If a partnership makes a basis adjustment that is $10
million or more at the end of the tax year and at any other
relevant date made pursuant to section 734 (including section
734(d)) upon the distribution of property to a controlled group
member (directly or indirectly), provide the name and TIN of
each partnership, the name and TIN of the controlled group
member, and a schedule detailing the amount and allocation of
the adjustment.
4. If a partnership distributed property, directly or indirectly,
to a controlled group member, and the controlled group
member's basis in the property under section 732(a) or (b)
differs from the partnership's basis in the property immediately
before the distribution by $10 million or more at the end of the tax
year and at any other relevant date, provide the partnership's
name and TIN, the name and TIN of the controlled group
member, and the amount and allocation of the basis adjustment.
Do not leave the question unanswered. The corporation must
answer "Yes" or “No” by checking the appropriate box. For more
If the corporation disposed of any digital asset which was
held as a capital asset, through a sale, trade, exchange,
payment, or other transfer, use Form 8949 to calculate the
capital gain or loss and report that gain or loss on Schedule D
(Form 1120). If the corporation received any digital asset as
compensation for services or disposed of any digital asset that
was held for sale to customers in a trade or business, it must
report the income as it would report other income of the same
type.
Question 28
If the corporation is a member of a controlled group, check the
"Yes" box. Complete and attach Schedule O (Form 1120),
Consent Plan and Apportionment Schedule for a Controlled
Group. Component members of a controlled group must use
Schedule O to report the apportionment of certain tax benefits
between the members of the group. See Schedule O and the
Instructions for Schedule O for more information.
Question 29
Check the appropriate boxes to indicate if the corporation is
required to file Form 4626. If the corporation does not meet the
requirements of the safe harbor method, as provided under
section 59(k)(3)(A) and Notice 2023-7, 2023-3 I.R.B. 390,
current year, Form 4626 must be completed and attached to the
corporation's return. See the instructions for Form 4626.
Schedule L.
Balance Sheets per Books
The balance sheets should agree with the corporation's books
and records.
Corporations with total receipts (page 1, line 1a plus lines 4
through 10) and total assets at the end of the tax year less than
$250,000 are not required to complete Schedules L, M-1, and
M-2 if the “Yes” box on Schedule K, question 13, is checked.
Question 30
Under section 4501, the corporation may be required to file Form
7208, Excise Tax on Repurchase of Corporate Stock, and pay
26
Instructions for Form 1120
Corporations with total assets nonconsolidated (or
consolidated for all corporations included within the consolidated
tax group) of $10 million or more on the last day of the tax year
must file Schedule M-3 (Form 1120) instead of Schedule M-1.
However, see the instructions for Schedule M-1 below. See the
separate Instructions for Schedule M-3 (Form 1120) for
provisions that also affect Schedule L.
If filing a consolidated return, report total consolidated assets,
liabilities, and shareholder's equity for all corporations joining in
complete Schedule M-1 instead of completing Parts II and III of
Schedule M-3, the amount on Schedule M-1, line 1, must equal
the amount on Schedule M-3, Part I, line 11. See the Instructions
for Schedule M-3 (Form 1120) for more information.
Line 5c
Include any of the following applicable expenses.
Entertainment expenses not deductible under section 274(a).
Meal expenses not deductible under section 274(n).
•
•
•
Qualified transportation fringes not deductible under section
274(a)(4).
Expenses for the use of an entertainment facility.
•
•
•
Line 1
The part of business gifts over $25.
Include certificates of deposit as cash on this line.
Expenses of an individual over $2,000, allocable to
conventions on cruise ships.
Line 5
Employee achievement awards of nontangible or tangible
•
Include on this line:
property over $400 ($1,600 if part of a qualified plan).
State and local government obligations, the interest on which
•
The cost of skyboxes.
•
•
•
is excludable from gross income under section 103(a), and
Nondeductible club dues.
Stock in a mutual fund or other RIC that distributed
•
The part of luxury water travel expenses not deductible under
exempt-interest dividends during the tax year of the corporation.
section 274(m).
Expenses for travel as a form of education.
•
•
Line 26
Other nondeductible travel and entertainment expenses.
Some examples of adjustments to report on this line include:
Unrealized gains and losses on securities held “available for
•
Line 7
sale,”
Report any tax-exempt interest received or accrued, including
any exempt-interest dividends received as a shareholder in a
mutual fund or other RIC. Also, report this same amount on
Schedule K, item 9.
Foreign currency translation adjustments,
•
•
The excess of additional pension liability over unrecognized
prior service cost,
Guarantees of employee stock (ESOP) debt, and
•
•
Compensation related to employee stock award plans.
The corporation should include tax-exempt income from
forgiven PPP loans on line 7 of Schedule M-1 (if it was included
on line 1 of the Schedule M-1), or on Part II, line 25 of
Schedule M-3 (Form 1120), column (c) as a negative number (if
it was included on line 25 in column (a) as Income per Income
Statement).
If the total adjustment to be entered on line 26 is a negative
amount, enter the amount in parentheses.
Schedule M-1. Reconciliation of
Income (Loss) per Books With
Schedule M-2. Analysis of
Unappropriated Retained Earnings
per Books
Income per Return
In completing Schedule M-1, the following apply.
Corporations with total receipts (page 1, line 1a plus lines 4
•
through 10) and total assets at the end of the tax year less than
$250,000 are not required to complete Schedules L, M-1, and
M-2 if the “Yes” box on Schedule K, question 13, is checked.
If the corporation treats tax-exempt income resulting from a PPP
loan as received or accrued prior to when forgiveness of the PPP
loan is granted and the amount of forgiveness granted is less
than the amount of tax-exempt income that was previously
treated as received or accrued, the corporation should include
the difference as a decrease in tax-exempt income on
Schedule M-2, line 6, for the tax year in which the taxpayer
receives notice that the PPP loan was not fully forgiven. The
corporation should attach a statement to Schedule M-2 including
the following information:
Corporations with total assets non-consolidated (or
•
consolidated for all corporations included within the consolidated
tax group) of $10 million or more on the last day of the tax year
must file Schedule M-3 (Form 1120) instead of Schedule M-1.
A corporation filing Form 1120 that is not required to file
•
Schedule M-3 may voluntarily file Schedule M-3 instead of
Schedule M-1. See the Instructions for Schedule M-3 (Form
1120) for more information.
Corporations that (a) are required to file Schedule M-3 (Form
•
1. The corporation's name, address, and EIN;
1120) and have less than $50 million total assets at the end of
the tax year, or (b) are not required to file Schedule M-3 (Form
1120) and voluntarily file Schedule M-3 (Form 1120), must either
(i) complete Schedule M-3 (Form 1120) entirely, or (ii) complete
Schedule M-3 (Form 1120) through Part I, and complete Form
1120, Schedule M-1, instead of completing Parts II and III of
Schedule M-3 (Form 1120). If the corporation chooses to
2. A statement that the corporation is making adjustments in
accordance with section 3.03 of Rev. Proc. 2021-48; and
3. The tax year for which tax-exempt income was originally
reported, the amount of tax-exempt income that was originally
reported for such tax year, and the amount of tax-exempt income
being adjusted on Schedule M-2.
27
Instructions for Form 1120
Paperwork Reduction Act Notice. We ask for the information on these forms to carry out the Internal Revenue laws of the United
States. You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to
figure and collect the right amount of tax.
You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form
displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents
may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential,
as required by section 6103.
Estimates of Taxpayer Burden. The following tables show burden estimates based on current statutory requirements as of
December 2023 for taxpayers filing 2023 Forms 1065, 1120, 1120-C, 1120-F, 1120-H, 1120-ND, 1120-S, 1120-SF, 1120-FSC, 1120-L,
1120-PC, 1066, 1120-REIT, 1120-RIC, 1120-POL, and related attachments. Time spent and out-of-pocket costs are presented
separately. Time burden is broken out by taxpayer activity, with reporting representing the largest component. Out-of-pocket costs
include any expenses incurred by taxpayers to prepare and submit their tax returns. Examples include tax return preparation and
submission fees, postage and photocopying costs, and tax preparation software costs. While these estimates don't include burden
associated with post-filing activities, IRS operational data indicate that electronically prepared and filed returns have fewer arithmetic
errors, implying lower post-filing burden.
Reported time and cost burdens are national averages and don't necessarily reflect a “typical” case. Most taxpayers experience
lower than average burden, with taxpayer burden varying considerably by taxpayer type.
The average burden for partnerships filing Forms 1065 and related attachments is about 60 hours and $5,000; the average burden
for corporations filing Form 1120 and associated forms is about 105 hours and $6,700; and the average burden for Forms 1066,
1120-REIT, 1120-RIC, 1120S, and all related attachments is 65 hours and $4,400. Within each of these estimates there is significant
variation in taxpayer activity. Tax preparation fees and other out-of-pocket costs vary extensively depending on the tax situation of the
taxpayer, the type of software or professional preparer used, and the geographic location. Third-party burden hours are not included in
these estimates.
Table 1 – Taxpayer Burden for Entities Taxed as Partnerships
Forms 1065, 1066, and all attachments
Primary Form Filed or Type of
Taxpayer
Total Number of Returns
(millions)
Average Time (hours)
Average Cost ($)
Average Monetized
Burden ($)
All Partnerships
Small
5.3
4.9
0.4
60
50
200
5,000
3,200
27,800
8,700
5,200
50,800
Large*
*A large business is defined as one having end-of-year assets greater than $10 million. A large business is defined the same way for partnerships, taxable corporations, and
pass-through corporations. A small business is any business that doesn't meet the definition of a large business.
Table 2 – Taxpayer Burden for Entities Taxed as Taxable Corporations
Forms 1120, 1120-C, 1120-F, 1120-H, 1120-ND, 1120-SF, 1120-FSC, 1120-L, 1120-PC, 1120-POL, and all attachments
Primary Form Filed or Type of
Taxpayer
Total Number of Returns
(millions)
Average Time (hours)
Average Cost ($)
Average Monetized
Burden ($)
All Taxable Corporations
2.1
2.0
0.1
105
55
830
6,700
3,600
53,800
14,900
6,200
149,000
Small
Large*
*A large business is defined as one having end-of-year assets greater than $10 million. A large business is defined the same way for partnerships, taxable corporations, and
pass-through corporations. A small business is any business that doesn't meet the definition of a large business.
Table 3 – Taxpayer Burden for Entities Taxed as Pass-Through Corporations
Forms 1120-REIT, 1120-RIC, 1120-S, and all attachments
Primary Form Filed or Type of
Taxpayer
Total Number of Returns
(millions)
Average Time (hours)
Average Cost ($)
Average Monetized
Burden ($)
All Pass-Through Corporations
5.8
5.7
0.1
65
60
295
4,400
3,800
37,700
7,500
6,400
71,800
Small
Large*
*A large business is defined as one having end-of-year assets greater than $10 million. A large business is defined the same way for partnerships, taxable corporations, and
pass-through corporations. A small business is any business that doesn't meet the definition of a large business.
Comments. If you have comments concerning the accuracy of these time estimates or suggestions for making these forms simpler,
we would be happy to hear from you. You can send us comments through IRS.gov/FormComments. Or you can write to the Internal
Revenue Service, Tax Forms and Publications, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not send the tax form
28
Instructions for Form 1120
Using the list of activities and codes below,
considered a manufacturer and must use one of the
manufacturing codes (311110–339900).
Principal Business Activity Codes
determine from which activity the company derives the
largest percentage of its “total receipts.” Total receipts is
defined as the sum of gross receipts or sales (page 1,
line 1a) plus all other income (page 1, lines 4 through
10). If the company purchases raw materials and
supplies them to a subcontractor to produce the finished
product, but retains title to the product, the company is
This list of principal business activities and their
associated codes is designed to classify an enterprise
by the type of activity in which it is engaged to facilitate
the administration of the Internal Revenue Code. These
principal business activity codes are based on the North
American Industry Classification System.
Once the principal business activity is determined,
entries must be made on Form 1120, Schedule K, lines
2a, 2b, and 2c. On line 2a, enter the six-digit code
selected from the list below. On line 2b, enter the
company's business activity. On line 2c, enter a brief
description of the principal product or service of the
company.
238290 Other Building Equipment
Contractors
238300 Building Finishing Contractors
(including drywall, insulation,
painting, wallcovering, flooring,
tile, & finished carpentry)
238900 Other Specialty Trade
Contractors (including site
preparation)
Plastics and Rubber Products
Manufacturing
Furniture and Related Product
Manufacturing
Agriculture, Forestry, Fishing,
326100 Plastics Product Mfg
326200 Rubber Product Mfg
337000 Furniture & Related Product
and Hunting
Manufacturing
Crop Production
Miscellaneous Manufacturing
Nonmetallic Mineral Product
111100 Oilseed & Grain Farming
Manufacturing
339110 Medical Equipment & Supplies
111210 Vegetable & Melon Farming
Mfg
327100 Clay Product & Refractory Mfg
327210 Glass & Glass Product Mfg
327300 Cement & Concrete Product Mfg
327400 Lime & Gypsum Product Mfg
(including potatoes & yams)
339900 Other Miscellaneous
111300 Fruit & Tree Nut Farming
Manufacturing
111400 Greenhouse, Nursery, &
Manufacturing
Food Manufacturing
Wholesale Trade
Floriculture Production
327900 Other Nonmetallic Mineral
111900 Other Crop Farming (including
tobacco, cotton, sugarcane, hay,
peanut, sugar beet, & all other
crop farming)
Merchant Wholesalers, Durable Goods
311110 Animal Food Mfg
311200 Grain & Oilseed Milling
Product Mfg
423100 Motor Vehicle & Motor Vehicle
Primary Metal Manufacturing
Parts & Supplies
311300 Sugar & Confectionery Product
331110 Iron & Steel Mills & Ferroalloy
423200 Furniture & Home Furnishings
Animal Production
Mfg
Mfg
423300 Lumber & Other Construction
112111 Beef Cattle Ranching & Farming
112112 Cattle Feedlots
311400 Fruit & Vegetable Preserving &
Specialty Food Mfg
331200 Steel Product Mfg from
Purchased Steel
Materials
423400 Professional & Commercial
Equipment & Supplies
311500 Dairy Product Mfg
331310 Alumina & Aluminum Production
112120 Dairy Cattle & Milk Production
112210 Hog & Pig Farming
& Processing
311610 Animal Slaughtering &
423500 Metal & Mineral (except
Processing
331400 Nonferrous Metal (except
Aluminum) Production &
Processing
Petroleum)
112300 Poultry & Egg Production
112400 Sheep & Goat Farming
311710 Seafood Product Preparation &
Packaging
423600 Household Appliances &
Electrical & Electronic Goods
112510 Aquaculture (including shellfish &
331500 Foundries
311800 Bakeries, Tortilla & Dry Pasta Mfg
423700 Hardware, Plumbing, & Heating
finfish farms & hatcheries)
Fabricated Metal Product
311900 Other Food Mfg (including
coffee, tea, flavorings &
seasonings)
Equipment & Supplies
112900 Other Animal Production
Forestry and Logging
Manufacturing
423800 Machinery, Equipment, &
Supplies
332110 Forging & Stamping
113110 Timber Tract Operations
Beverage and Tobacco Product
332210 Cutlery & Handtool Mfg
423910 Sporting & Recreational Goods &
Manufacturing
113210 Forest Nurseries & Gathering of
Supplies
332300 Architectural & Structural Metals
Forest Products
312110 Soft Drink & Ice Mfg
312120 Breweries
Mfg
423920 Toy & Hobby Goods & Supplies
423930 Recyclable Materials
113310 Logging
332400 Boiler, Tank, & Shipping
Container Mfg
Fishing, Hunting, and Trapping
114110 Fishing
312130 Wineries
312140 Distilleries
423940 Jewelry, Watch, Precious Stone,
332510 Hardware Mfg
& Precious Metals
114210 Hunting & Trapping
332610 Spring & Wire Product Mfg
312200 Tobacco Manufacturing
Textile Mills and Textile Product Mills
313000 Textile Mills
423990 Other Miscellaneous Durable
Goods
Support Activities for Agriculture and
332700 Machine Shops; Turned Product;
Forestry
& Screw, Nut, & Bolt Mfg
Merchant Wholesalers, Nondurable
Goods
115110 Support Activities for Crop
Production (including cotton
ginning, soil preparation,
332810 Coating, Engraving, Heat
Treating, & Allied Activities
314000 Textile Product Mills
Apparel Manufacturing
424100 Paper & Paper Products
332900 Other Fabricated Metal Product
424210 Drugs & Druggists' Sundries
424300 Apparel, Piece Goods, & Notions
424400 Grocery & Related Products
424500 Farm Product Raw Materials
424600 Chemical & Allied Products
424700 Petroleum & Petroleum Products
planting, & cultivating)
315100 Apparel Knitting Mills
315210 Cut & Sew Apparel Contractors
Mfg
115210 Support Activities for Animal
Machinery Manufacturing
Production (including farriers)
315250 Cut & Sew Apparel Mfg (except
333100 Agriculture, Construction, &
115310 Support Activities for Forestry
Contractors)
Mining Machinery Mfg
315990 Apparel Accessories & Other
Apparel Mfg
333200 Industrial Machinery Mfg
Mining
333310 Commercial & Service Industry
211120 Crude Petroleum Extraction
211130 Natural Gas Extraction
212110 Coal Mining
Leather and Allied Product
424800 Beer, Wine, & Distilled Alcoholic
Machinery Mfg
Manufacturing
Beverages
333410 Ventilation, Heating,
Air-Conditioning, & Commercial
Refrigeration Equipment Mfg
316110 Leather & Hide Tanning &
Finishing
424910 Farm Supplies
212200 Metal Ore Mining
212310 Stone Mining & Quarrying
424920 Book, Periodical, & Newspapers
316210 Footwear Mfg (including rubber &
333510 Metalworking Machinery Mfg
424930 Flower, Nursery Stock, & Florists'
plastics)
Supplies
333610 Engine, Turbine & Power
212320 Sand, Gravel, Clay, & Ceramic &
Refractory Minerals Mining &
Quarrying
316990 Other Leather & Allied Product
Mfg
Transmission Equipment Mfg
424940 Tobacco Products & Electronic
Cigarettes
333900 Other General Purpose
Machinery Mfg
Wood Product Manufacturing
212390 Other Nonmetallic Mineral
424950 Paint, Varnish, & Supplies
Mining & Quarrying
321110 Sawmills & Wood Preservation
Computer and Electronic Product
424990 Other Miscellaneous Nondurable
Manufacturing
213110 Support Activities for Mining
321210 Veneer, Plywood, & Engineered
Goods
Wood Product Mfg
334110 Computer & Peripheral
Equipment Mfg
Wholesale Trade Agents and Brokers
Utilities
321900 Other Wood Product Mfg
Paper Manufacturing
425120 Wholesale Trade Agents &
334200 Communications Equipment Mfg
334310 Audio & Video Equipment Mfg
221100 Electric Power Generation,
Brokers
Transmission & Distribution
322100 Pulp, Paper, & Paperboard Mills
322200 Converted Paper Product Mfg
Printing and Related Support Activities
Retail Trade
Motor Vehicle and Parts Dealers
441110 New Car Dealers
221210 Natural Gas Distribution
334410 Semiconductor & Other
Electronic Component Mfg
221300 Water, Sewage & Other Systems
221500 Combination Gas & Electric
334500 Navigational, Measuring,
Electromedical, & Control
Instruments Mfg
323100 Printing & Related Support
441120 Used Car Dealers
441210 Recreational Vehicle Dealers
441222 Boat Dealers
Activities
Construction
Petroleum and Coal Products
Manufacturing
334610 Manufacturing & Reproducing
Construction of Buildings
Magnetic & Optical Media
236110 Residential Building Construction
324110 Petroleum Refineries (including
441227 Motorcycle, ATV, & All Other
Electrical Equipment, Appliance, and
Component Manufacturing
integrated)
236200 Nonresidential Building
Motor Vehicle Dealers
Construction
324120 Asphalt Paving, Roofing, &
Saturated Materials Mfg
441300 Automotive Parts, Accessories, &
Tire Retailers
335100 Electric Lighting Equipment Mfg
335200 Household Appliance Mfg
335310 Electrical Equipment Mfg
Heavy and Civil Engineering
Construction
324190 Other Petroleum & Coal Products
Furniture and Home Furnishings
Mfg
237100 Utility System Construction
237210 Land Subdivision
Retailers
335900 Other Electrical Equipment &
Chemical Manufacturing
449110 Furniture Retailers
Component Mfg
325100 Basic Chemical Mfg
237310 Highway, Street, & Bridge
449121 Floor Covering Retailers
449122 Window Treatment Retailers
Transportation Equipment
Manufacturing
Construction
325200 Resin, Synthetic Rubber, &
Artificial & Synthetic Fibers &
Filaments Mfg
237990 Other Heavy & Civil Engineering
Construction
449129 All Other Home Furnishings
336100 Motor Vehicle Mfg
Retailers
336210 Motor Vehicle Body & Trailer Mfg
336300 Motor Vehicle Parts Mfg
336410 Aerospace Product & Parts Mfg
336510 Railroad Rolling Stock Mfg
336610 Ship & Boat Building
325300 Pesticide, Fertilizer, & Other
Specialty Trade Contractors
Electronics and Appliance Retailers
Agricultural Chemical Mfg
238100 Foundation, Structure, & Building
Exterior Contractors (including
framing carpentry, masonry,
449210 Electronics & Appliance Retailers
325410 Pharmaceutical & Medicine Mfg
325500 Paint, Coating, & Adhesive Mfg
(including Computers)
Building Material and Garden
glass, roofing, & siding)
325600 Soap, Cleaning Compound, &
Equipment and Supplies Dealers
238210 Electrical Contractors
Toilet Preparation Mfg
336990 Other Transportation Equipment
444110 Home Centers
238220 Plumbing, Heating, &
325900 Other Chemical Product &
Preparation Mfg
Mfg
444120 Paint & Wallpaper Retailers
444140 Hardware Retailers
Air-Conditioning Contractors
29
Principal Business Activity Codes (Continued)
444180 Other Building Material Dealers
485410 School & Employee Bus
523210 Securities & Commodity
Exchanges
541380 Testing Laboratories & Services
Transportation
444200 Lawn & Garden Equipment &
Specialized Design Services
Supplies Retailers
485510 Charter Bus Industry
523900 Other Financial Investment
Activities (including portfolio
management & investment
advice)
541400 Specialized Design Services
Food and Beverage Retailers
485990 Other Transit & Ground
(including interior, industrial,
Passenger Transportation
graphic, & fashion design)
445110 Supermarkets & Other Grocery
Retailers (except Convenience)
Pipeline Transportation
Computer Systems Design and Related
Insurance Carriers and Related
Services
445131 Convenience Retailers
445132 Vending Machine Operators
445230 Fruit & Vegetable Retailers
445240 Meat Retailers
486000 Pipeline Transportation
Scenic & Sightseeing Transportation
Activities
541511 Custom Computer Programming
Services
524110 Direct Life, Health, & Medical
Insurance Carriers
487000 Scenic & Sightseeing
541512 Computer Systems Design
Transportation
524120 Direct Insurance (except Life,
Services
Support Activities for Transportation
Health, & Medical) Carriers
445250 Fish & Seafood Retailers
445291 Baked Goods Retailers
445292 Confectionery & Nut Retailers
541513 Computer Facilities Management
Services
488100 Support Activities for Air
524210 Insurance Agencies &
Brokerages
Transportation
541519 Other Computer Related
488210 Support Activities for Rail
Transportation
524290 Other Insurance Related
Activities (including third-party
administration of insurance &
pension funds)
Services
445298 All Other Specialty Food
Retailers
Other Professional, Scientific, and
Technical Services
488300 Support Activities for Water
445320 Beer, Wine, & Liquor Retailers
Health and Personal Care Retailers
456110 Pharmacies & Drug Retailers
Transportation
541600 Management, Scientific, &
Funds, Trusts, and Other Financial
488410 Motor Vehicle Towing
Technical Consulting Services
Vehicles
488490 Other Support Activities for Road
541700 Scientific Research &
Development Services
525100 Insurance & Employee Benefit
Funds
456120 Cosmetics, Beauty Supplies, &
Transportation
Perfume Retailers
488510 Freight Transportation
Arrangement
541800 Advertising, Public Relations, &
525910 Open-End Investment Funds
456130 Optical Goods Retailers
Related Services
(Form 1120-RIC)
456190 Other Health & Personal Care
488990 Other Support Activities for
541910 Marketing Research & Public
Opinion Polling
525920 Trusts, Estates, & Agency
Accounts
Retailers
Transportation
Gasoline Stations & Fuel Dealers
Couriers and Messengers
541920 Photographic Services
525990 Other Financial Vehicles
(including mortgage REITs &
closed-end investment funds)
457100 Gasoline Stations (including
492110 Couriers & Express Delivery
541930 Translation & Interpretation
convenience stores with gas)
Services
Services
457210 Fuel Dealers (including Heating
Oil & Liquefied Petroleum)
492210 Local Messengers & Local
Delivery
541940 Veterinary Services
Real Estate and Rental and
Leasing
Real Estate
541990 All Other Professional, Scientific,
Clothing and Accessories Retailers
Warehousing and Storage
& Technical Services
458110 Clothing & Clothing Accessories
493100 Warehousing & Storage (except
lessors of miniwarehouses &
self-storage units)
Management of Companies
(Holding Companies)
Retailers
531110 Lessors of Residential Buildings
& Dwellings (including equity
REITs)
458210 Shoe Retailers
458310 Jewelry Retailers
Information
551111 Offices of Bank Holding
458320 Luggage & Leather Goods
Companies
531120 Lessors of Nonresidential
Motion Picture and Sound Recording
Retailers
Buildings (except
Industries
551112 Offices of Other Holding
Companies
Sporting Goods, Hobby, Book, Musical
Instrument and Miscellaneous Retailers
Miniwarehouses) (including
equity REITs)
512100 Motion Picture & Video Industries
(except video rental)
459110 Sporting Goods Retailers
Administrative and Support and
Waste Management and
Remediation Services
Administrative and Support Services
561110 Office Administrative Services
561210 Facilities Support Services
561300 Employment Services
561410 Document Preparation Services
561420 Telephone Call Centers
561430 Business Service Centers
(including private mail centers &
copy shops)
561440 Collection Agencies
561450 Credit Bureaus
531130 Lessors of Miniwarehouses &
Self-Storage Units (including
equity REITs)
512200 Sound Recording Industries
Publishing Industries
459120 Hobby, Toy, & Game Retailers
459130 Sewing, Needlework, & Piece
513110 Newspaper Publishers
513120 Periodical Publishers
513130 Book Publishers
531190 Lessors of Other Real Estate
Goods Retailers
Property (including equity REITs)
459140 Musical Instrument & Supplies
Retailers
531210 Offices of Real Estate Agents &
Brokers
513140 Directory & Mailing List
459210 Book Retailers & News Dealers
531310 Real Estate Property Managers
531320 Offices of Real Estate Appraisers
Publishers
(including newsstands)
513190 Other Publishers
459310 Florists
531390 Other Activities Related to Real
513210 Software Publishers
459410 Office Supplies & Stationery
Estate
Retailers
Broadcasting, Content Providers, and
Rental and Leasing Services
Telecommunications
459420 Gift, Novelty, & Souvenir
Retailers
532100 Automotive Equipment Rental &
516100 Radio & Television Broadcasting
Stations
Leasing
459510 Used Merchandise Retailers
459910 Pet & Pet Supplies Retailers
459920 Art Dealers
532210 Consumer Electronics &
Appliances Rental
516210 Media Streaming, Social
Networks, & Other Content
Providers
532281 Formal Wear & Costume Rental
532282 Video Tape & Disc Rental
532283 Home Health Equipment Rental
532284 Recreational Goods Rental
561490 Other Business Support
Services (including repossession
services, court reporting, &
stenotype services)
459930 Manufactured (Mobile) Home
517000 Telecommunications (including
Wired, Wireless, Satellite, Cable
& Other Program Distribution,
Resellers, Agents, Other
Dealers
459990 All Other Miscellaneous Retailers
(including tobacco, candle, &
trophy retailers)
561500 Travel Arrangement &
Telecommunications, & Internet
Service Providers)
532289 All Other Consumer Goods
Reservation Services
General Merchandise Retailers
455110 Department Stores
Rental
561600 Investigation & Security Services
Data Processing, Web Search Portals, &
532310 General Rental Centers
561710 Exterminating & Pest Control
Other Information Services
455210 Warehouse Clubs, Supercenters,
532400 Commercial & Industrial
Machinery & Equipment Rental &
Leasing
Services
& Other General Merch. Retailers 518210 Computing Infrastructure
Providers, Data Processing, Web
561720 Janitorial Services
Nonstore Retailers
Hosting, & Related Services
561730 Landscaping Services
Lessors of Nonfinancial Intangible
Nonstore retailers sell all types of
519200 Web Search Portals, Libraries,
561740 Carpet & Upholstery Cleaning
Assets (except copyrighted works)
merchandise using such
Archives, & Other Info. Services
Services
methods as Internet, mail-order
catalogs, interactive television, or
direct sales. These types of
533110 Lessors of Nonfinancial
Intangible Assets (except
copyrighted works)
561790 Other Services to Buildings &
Dwellings
Finance and Insurance
Retailers should select the PBA
associated with their primary line
of products sold. For example,
establishments primarily selling
prescription and non-prescription
drugs, select PBA code 456110
Pharmacies & Drug Retailers
Depository Credit Intermediation
522110 Commercial Banking
522130 Credit Unions
561900 Other Support Services
(including packaging & labeling
services, & convention & trade
show organizers)
Professional, Scientific, and
Technical Services
522180 Savings Institutions & Other
Legal Services
Waste Management and Remediation
Depository Credit Intermediation
Services
541110 Offices of Lawyers
541190 Other Legal Services
Nondepository Credit Intermediation
522210 Credit Card Issuing
522220 Sales Financing
562000 Waste Management &
Remediation Services
Transportation and
Warehousing
Air, Rail, and Water Transportation
481000 Air Transportation
Accounting, Tax Preparation,
Bookkeeping, and Payroll Services
Educational Services
522291 Consumer Lending
541211 Offices of Certified Public
611000 Educational Services (including
522292 Real Estate Credit (including
Accountants
schools, colleges, & universities)
mortgage bankers & originators)
541213 Tax Preparation Services
541214 Payroll Services
482110 Rail Transportation
483000 Water Transportation
Truck Transportation
522299 Intl, Secondary Market, & Other
Nondepos. Credit Intermediation
Health Care and Social
Assistance
541219 Other Accounting Services
Activities Related to Credit
Architectural, Engineering, and Related
Intermediation
484110 General Freight Trucking, Local
Offices of Physicians and Dentists
Services
522300 Activities Related to Credit
Intermediation (including loan
brokers, check clearing, & money
transmitting)
484120 General Freight Trucking,
621111 Offices of Physicians (except
541310 Architectural Services
541320 Landscape Architecture Services
541330 Engineering Services
541340 Drafting Services
Long-distance
mental health specialists)
484200 Specialized Freight Trucking
621112 Offices of Physicians, Mental
Health Specialists
Transit and Ground Passenger
Securities, Commodity Contracts, and
Other Financial Investments and
Related Activities
Transportation
621210 Offices of Dentists
541350 Building Inspection Services
485110 Urban Transit Systems
Offices of Other Health Practitioners
621310 Offices of Chiropractors
621320 Offices of Optometrists
541360 Geophysical Surveying &
523150 Investment Banking & Securities
485210 Interurban & Rural Bus
Mapping Services
Intermediation
Transportation
541370 Surveying & Mapping (except
Geophysical) Services
523160 Commodity Contracts
Intermediation
485310 Taxi & Ridesharing Services
485320 Limousine Service
621330 Offices of Mental Health
Practitioners (except Physicians)
30
Principal Business Activity Codes (Continued)
621340 Offices of Physical, Occupational 624310 Vocational Rehabilitation
721120 Casino Hotels
811410 Home & Garden Equipment &
Appliance Repair & Maintenance
& Speech Therapists, &
Services
721191 Bed & Breakfast Inns
Audiologists
624410 Childcare Services
811420 Reupholstery & Furniture Repair
721199 All Other Traveler
621391 Offices of Podiatrists
Accommodation
811430 Footwear & Leather Goods
Arts, Entertainment, and
Recreation
621399 Offices of All Other
Miscellaneous Health
Practitioners
Repair
721210 RV (Recreational Vehicle) Parks
& Recreational Camps
811490 Other Personal & Household
Goods Repair & Maintenance
721310 Rooming & Boarding Houses,
Performing Arts, Spectator Sports, and
Outpatient Care Centers
Dormitories, & Workers’ Camps
Personal and Laundry Services
812111 Barber Shops
812112 Beauty Salons
812113 Nail Salons
Related Industries
621410 Family Planning Centers
Food Services and Drinking Places
711100 Performing Arts Companies
621420 Outpatient Mental Health &
722300 Special Food Services (including
food service contractors &
caterers)
711210 Spectator Sports (including
Substance Abuse Centers
sports clubs & racetracks)
621491 HMO Medical Centers
621492 Kidney Dialysis Centers
812190 Other Personal Care Services
(including diet & weight reducing
centers)
711300 Promoters of Performing Arts,
Sports, & Similar Events
722410 Drinking Places (Alcoholic
Beverages)
621493 Freestanding Ambulatory
711410 Agents & Managers for Artists,
Athletes, Entertainers, & Other
Public Figures
Surgical & Emergency Centers
722511 Full-Service Restaurants
812210 Funeral Homes & Funeral
621498 All Other Outpatient Care
Centers
722513 Limited-Service Restaurants
Services
722514 Cafeterias, Grill Buffets, & Buffets 812220 Cemeteries & Crematories
722515 Snack & Non-alcoholic Beverage 812310 Coin-Operated Laundries &
711510 Independent Artists, Writers, &
Medical and Diagnostic Laboratories
Performers
621510 Medical & Diagnostic
Bars
Drycleaners
Museums, Historical Sites, and Similar
Institutions
Laboratories
812320 Drycleaning & Laundry Services
Other Services
Home Health Care Services
(except Coin-Operated)
712100 Museums, Historical Sites, &
Similar Institutions
Repair and Maintenance
621610 Home Health Care Services
Other Ambulatory Health Care Services
812330 Linen & Uniform Supply
Amusement, Gambling, and Recreation
Industries
811110 Automotive Mechanical &
812910 Pet Care (except Veterinary)
Electrical Repair & Maintenance
Services
621900 Other Ambulatory Health Care
713100 Amusement Parks & Arcades
713200 Gambling Industries
811120 Automotive Body, Paint, Interior,
& Glass Repair
Services (including ambulance
812920 Photofinishing
services & blood & organ banks)
812930 Parking Lots & Garages
812990 All Other Personal Services
811190 Other Automotive Repair &
Maintenance (including oil
change & lubrication shops & car
washes)
Hospitals
713900 Other Amusement & Recreation
Industries (including golf
courses, skiing facilities,
622000 Hospitals
Religious, Grantmaking, Civic,
Nursing and Residential Care Facilities
Professional, and Similar Organizations
marinas, fitness centers, &
bowling centers)
623000 Nursing & Residential Care
813000 Religious, Grantmaking, Civic,
811210 Electronic & Precision Equipment
Facilities
Professional, & Similar
Repair & Maintenance
Accommodation and Food
Services
Accommodation
Organizations (including
condominium & homeowners
associations)
Social Assistance
811310 Commercial & Industrial
Machinery & Equipment (except
Automotive & Electronic) Repair
& Maintenance
624100 Individual & Family Services
624200 Community Food & Housing, &
Emergency & Other Relief
Services
Other
999000 Unclassified Establishments
721110 Hotels (except Casino Hotels) &
(unable to classify)
Motels
31
Index
A
Financial asset securitization investment
R
G
Amortization 11
Recordkeeping 7
B
I
Interest due
S
Interest income:
Schedule:
C 18
J 20
C
K 22
Capital construction fund (See Merchant
L 26
Marine capital construction fund)
L
M-1 27
LIFO recapture:
Signature 4
M
T
Merchant Marine capital construction
D
fund:
Minimum tax:
Deductions 11
Depletion 15
Depreciation 14
Mutual savings banks conducting life
U
N
W
Worksheets:
E
O
Entities electing to be taxed as
corporations 2
Estimated tax:
P
F
32