U.S. Corporation Income Tax Return

By: Sonia Lee Ng, CPA

Date: September 15, 2025

Introduction

Form 1120 is used by all C Corporations, including LLCs taxed as corporations. This form is used to report gross income, deductions, credits, and calculate corporate income tax owed. It also provides financial information to the IRS about corporate operations.

Original Due Date: April 15 for calendar year

Due Date with Extension: October 15

Extension: File Form 7004

Structure of Form 1120

Page 1: Header, Income, Deductions, and Taxes

• Header: corporation name, address, EIN, date of incorporation, total assets at the end of the year, business activity code (NAICS), accounting method.

• Income: Gross receipts, less returns and allowances, cost of goods sold, and other income (dividends, interest, rents, royalties, capital gains, etc.).

• Deductions: ordinary and necessary business expenses (salaries and wages, repairs and maintenance, bad debts, rents, taxes and licenses, interest, depreciation, advertising, pension and profit-sharing contributions, other deductions

• Tax Refundable Credits and Payments: Taxable income, total tax, total payments and credits, and estimated tax penalty.

• Signatures

  
  

Page 2 - Schedule C: Dividends, Inclusions, and Special Deductions

• Dividends Received: Corporations report ordinary dividends, including:

  • Dividends from domestic corporations

  • Dividends from foreign corporations (with special rules)

• Dividends Received Deduction (DRD): corporations may deduct a percentage of dividends received to prevent triple taxation:

  • 50% deduction for most corporations owning <20% of the dividend-paying company

  • 65% deduction if owning 20-79%

  • 100% deduction if owning 80% or more

• Net Dividends: Subtract the DRD from the total dividends received to determine taxable dividend income.

• Special Rules: Foreign tax paid may be limited. Certain adjustments may apply for corporate-owned life insurance dividends or other non-taxable dividends.

  
  

Page 3 - Schedule J: Tax Computation and Payments

Calculation of total tax liability, tax credits, estimated tax payments and amounts applied from prior years, and balance due or overpayment

Page 4-5 - Schedule K: Other Information

Questions about: accounting method, business activity code and description, product or service, parent-subsidiary or affiliated corporate group, foreign transactions, ownership, and prior-year activity.

Page 6 - Schedules L, M-1, and M-2

• Schedule L: Balance Sheet per Books

  Assets, Liabilities and Shareholders Equity balances at the beginning of tax year and at the end of tax year

• Schedule M-1: Reconciliation of Income (Loss) per Books with Income (Loss) per Return

  Income plus or minus reconciling items.

• Schedule M-2: Analysis of Unappropriated Retained Earnings per Books

  Balance at beginning of year plus items increasing R/E or minus items decreasing R/Es.

Disclaimer

The information provided is for general informational purposes only and does not constitute professional tax, legal, or accounting advice. Tax laws and regulations are complex and subject to interpretation, and their application can vary based on individual circumstances. Always consult a qualified tax professional or advisor to discuss your specific situation before making any tax-related decisions. Neither the author nor the platform assumes any liability for errors, omissions, or for any outcomes related to the use of this information.

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