S Corporation Tax Tips – How to Complete Items H and I on Form 1120S
Posted on September 12, 2011 | No Comments
Wayne Davies asked:
All S Corporations must file Form 1120S to report income and expenses to the IRS. Form 1120S is a daunting 4-page tax return that is not for the financially faint at heart. The purpose of this article is to help you complete Items H and I, found at the top of Page 1, right below the name and address section.
Item H. There are 5 boxes here. If any of them apply, check the box. You may not need to check any of them, or you may need to check one of more of them. Here’s an explanation of each of these 5 boxes:
1. Final return. Is this the last Form 1120S for this corporation? This would be true if you closed the corporation.
2. Name change. Did you change the name of your corporation? This usually requires that paperwork be filed with the Secretary of State’s office in your state of incorporation, so be sure that you are in compliance with your state’s name change laws.
3. Address change. Is the address at the top of Page 1 the same as that reported on last year’s return? If not, check this box.
4. Amended return. If you need to amend your S Corporation federal income tax return, there is no separate form to do that, such as Form 1040X (which is required to amend your personal federal income tax return). Instead, a previously filed Form 1120S is corrected by using Form 1120S again, but with the correct amounts used throughout the return. So if you happen to be amending a return from a prior year, check this box.
5. S election termination or revocation. The corporation’s status as an S Corporation can be terminated or revoked. If that has happened to your corporation, check this box.
Item I. This field is used to report the number of people who own stock in the corporation. These people are known as “shareholders”, and each of them will receive a Schedule K-1 from the corporation to report his or her share of the corporation’s profit or loss. Please note that this field should show the number of shareholders who were shareholders during any part of the tax year, so this would include people who owned stock at the beginning of the year but then sold their stock during the year, as well as people who may not have owned stock at the beginning of the year but obtained shares during the year.
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All S Corporations must file Form 1120S to report income and expenses to the IRS. Form 1120S is a daunting 4-page tax return that is not for the financially faint at heart. The purpose of this article is to help you complete Items H and I, found at the top of Page 1, right below the name and address section.
Item H. There are 5 boxes here. If any of them apply, check the box. You may not need to check any of them, or you may need to check one of more of them. Here’s an explanation of each of these 5 boxes:
1. Final return. Is this the last Form 1120S for this corporation? This would be true if you closed the corporation.
2. Name change. Did you change the name of your corporation? This usually requires that paperwork be filed with the Secretary of State’s office in your state of incorporation, so be sure that you are in compliance with your state’s name change laws.
3. Address change. Is the address at the top of Page 1 the same as that reported on last year’s return? If not, check this box.
4. Amended return. If you need to amend your S Corporation federal income tax return, there is no separate form to do that, such as Form 1040X (which is required to amend your personal federal income tax return). Instead, a previously filed Form 1120S is corrected by using Form 1120S again, but with the correct amounts used throughout the return. So if you happen to be amending a return from a prior year, check this box.
5. S election termination or revocation. The corporation’s status as an S Corporation can be terminated or revoked. If that has happened to your corporation, check this box.
Item I. This field is used to report the number of people who own stock in the corporation. These people are known as “shareholders”, and each of them will receive a Schedule K-1 from the corporation to report his or her share of the corporation’s profit or loss. Please note that this field should show the number of shareholders who were shareholders during any part of the tax year, so this would include people who owned stock at the beginning of the year but then sold their stock during the year, as well as people who may not have owned stock at the beginning of the year but obtained shares during the year.
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