Form 1120 is the federal income tax return filed by C corporations to report their income, gains, losses, deductions, credits, and tax liability to the Internal Revenue Service (IRS).
Unlike partnerships or S corporations, C corporations are taxed separately from their owners. The corporation pays income tax directly on its profits.
Form 1120 must be filed by:
- Domestic C corporations
- Corporations with taxable income
- Corporations claiming credits or refunds
- Certain foreign corporations engaged in U.S. trade or business
Even inactive corporations may still be required to file.
Form 1120 provides a full summary of the corporation’s financial activity, including:
- Gross receipts or sales
- Cost of goods sold
- Dividends and interest income
- Officer compensation
- Salaries and wages
- Repairs and maintenance
- Taxes and licenses
- Depreciation and amortization
- Charitable contributions
- Net operating income
- Federal income tax calculation
C corporations:
- Pay tax at the corporate level
- May distribute profits as dividends
- Shareholders pay tax again on dividends received
This is commonly referred to as “double taxation.”