Corporation Tax Preparation
Clear Federal Tax Filing for C Corporations and S Corporations
Corporation tax returns require accurate financial records, the correct federal tax classification, and careful review of transactions involving shareholders and related parties.
We prepare Form 1120, Form 1120-S, Schedule K-1, and applicable supporting forms for corporations and LLCs that have elected corporate tax treatment.
Get Corporation Tax Assistance
Who May Need This Service?
C Corporations
A domestic corporation generally files Form 1120 to report its income, deductions, credits, tax liability, and other required information.
S Corporations
A corporation with a valid S corporation election generally files Form 1120-S and provides Schedule K-1 to each shareholder.
LLCs Taxed as Corporations
A single-member or multi-member LLC may be treated as a corporation for federal tax purposes after making an applicable tax election.
Foreign-Owned U.S. Corporations
A U.S. corporation with foreign shareholders may have additional reporting requirements, particularly when it has transactions with foreign owners or other related parties.
Understanding C Corporation and S Corporation Taxation
C Corporation Taxation
A C corporation is generally taxed separately from its shareholders. It reports its income, deductions, credits, and federal income tax liability on Form 1120. When it distributes dividends, shareholders may also have income to report. The treatment depends on the corporation’s earnings and profits, the payment, and the shareholder’s circumstances.
S Corporation Taxation
An S corporation generally passes income, losses, deductions, and credits through to its shareholders. It files Form 1120-S and provides Schedule K-1 to each shareholder. Entity-level taxes can apply in certain circumstances, and a shareholder may have taxable income even without an equal cash distribution.
Eligibility for S Corporation Status
Not every corporation or LLC can qualify. Among other requirements, an S corporation must be domestic, have only allowable shareholders, have no more than 100 shareholders, and have only one class of stock.
A nonresident alien cannot be an S corporation shareholder. Businesses with foreign owners must therefore review shareholder eligibility before making or relying on an S corporation election.
Special Considerations for Foreign-Owned Corporations
Foreign Shareholder Information
The corporation may need information about each foreign shareholder, including the shareholder’s legal name, address, country of residence, ownership percentage, and tax classification.
Related-Party Transactions
A 25% foreign-owned U.S. corporation may need Form 5472 when it has reportable transactions with a foreign or domestic related party. These can include sales, purchases, rents, royalties, loans, interest, contributions, distributions, services, and other transfers.
Other International Reporting
A corporation with foreign operations, accounts, assets, or interests in foreign entities may need additional international information returns. The applicable forms depend on its activities, ownership, transactions, and the countries involved.
Shareholder, Officer, and Payroll Matters
Shareholder and Officer Transactions
Contributions, distributions, dividends, shareholder loans, officer compensation, reimbursements, personal expenses, and property transfers require careful classification and documentation. Their tax treatment depends on the purpose and supporting records.
Payroll and Officer Compensation
Corporate officers who perform services are generally employees for federal employment-tax purposes. An S corporation must consider reasonable compensation when a shareholder performs services. Payroll returns remain separate from the annual corporate income tax return.
Our Tax Preparation Process
1
Initial Filing Review
We confirm the entity’s federal tax classification, tax year, ownership, business activities, and prior filing history.
2
Document Collection
We provide a tailored list of financial records, ownership information, payroll documents, and supporting schedules.
3
Financial and Tax Review
We review the corporation’s income, expenses, assets, liabilities, equity, shareholder activity, payroll, and other relevant transactions.
4
Return Preparation
We prepare Form 1120 or Form 1120-S and the applicable schedules and supporting forms.
5
Client Review and Authorization
You receive the completed return for review. We explain important filing positions and request the required authorization.
6
Filing and Record Delivery
After authorization, we file the return using the applicable method and provide copies for the corporation’s records.
Documents We May Request
The documents required depend on the corporation’s activities and circumstances. They may include:
- Articles of incorporation or LLC formation documents
- EIN confirmation
- Bylaws, operating agreement, or shareholder agreement
- Federal tax-election documents
- Shareholder information and ownership percentages
- Profit and loss statement
- Balance sheet
- General ledger or categorized transaction records
- Business bank and payment-processor statements
- Accounts receivable and payable records
- Inventory and cost-of-goods-sold records
- Fixed-asset and depreciation schedules
- Payroll reports and Forms W-2 and W-3
- Contractor records and Forms 1099
- Shareholder contributions, distributions, loans, and payments
- Prior-year federal and state tax returns
- Estimated-tax payment records
- IRS correspondence or notices
- Foreign-owner and related-party transaction details
- Foreign accounts, assets, entities, or business activities
We will provide a tailored document request after reviewing the corporation’s filing situation.
Why Choose 4SYTE?
Experience With Foreign-Owned Businesses
We understand that foreign ownership and related-party transactions can create additional reporting requirements for U.S. corporations.
Clear Explanations
We explain the filing process and information requirements in plain language so that you understand what is needed.
Detailed Filing Review
We review financial records, ownership, shareholder transactions, payroll, and prior filings before preparing the return.
Organized Process
Our structured document collection and review process helps identify missing information before the return is finalized.
Frequently Asked Questions
What is the difference between Form 1120 and Form 1120-S?
A C corporation generally files Form 1120 and pays federal income tax at the corporate level. An S corporation files Form 1120-S and generally passes its tax items through to shareholders using Schedule K-1. Different rules and entity-level taxes can apply in particular circumstances.
Does every corporation have to file an annual federal return?
A domestic corporation generally must file an income tax return even if it had no taxable income, unless an applicable exception applies. The required return depends on its federal tax classification and valid elections.
Can an LLC file a corporation tax return?
Yes. An LLC may be treated as a corporation after making an applicable federal tax election. Depending on its elections and eligibility, it may file Form 1120 or Form 1120-S.
Can a foreign person own an S corporation?
A nonresident alien cannot be an S corporation shareholder. A foreign person may own shares in a C corporation, but additional reporting and withholding requirements may apply.
Does every foreign-owned corporation file Form 5472?
No. Form 5472 generally applies when the corporation meets the foreign-ownership requirements and has a reportable transaction with a related party. Both requirements must be reviewed.
Are payments to shareholders automatically deductible?
No. The treatment depends on the reason and supporting records. A payment may be compensation, a loan, a reimbursement, a dividend, a return of capital, or another type of transaction.
Does an S corporation shareholder receive Schedule K-1?
Yes. An S corporation generally provides Schedule K-1 to each shareholder. C corporation shareholders do not receive Schedule K-1 merely because they own corporate shares.
Can a corporation obtain an extension to file?
An eligible corporation can generally request an automatic extension by timely filing Form 7004. An extension to file does not normally extend the time to pay tax.
What if the corporation had no business activity?
A domestic corporation generally still has an annual federal return requirement even if it had little or no activity. Its records should be reviewed for formation costs, bank activity, capital contributions, expenses, tax elections, and other reportable items.
What if a corporate return is filed late?
Late filing or late payment can result in penalties and interest. S corporations may also face penalties based on the number of shareholders and the length of the delay. Available relief depends on the facts and is not automatic.
Get Help With Your Corporation Tax Filing
Corporate tax reporting may involve income tax, shareholder transactions, payroll, tax elections, and international information-reporting requirements. We can review your corporation’s circumstances, identify the applicable federal filings, and help you complete the filing process.
Discuss Your Corporation Filing