Key Takeaways
- Form 1120-S is due March 15 for calendar-year S corporations.
- A 6-month extension to September 15 is available via Form 7004.
- S corporations are pass-through entities: income flows to shareholders via Schedule K-1.
- The corporation itself generally pays no federal income tax.
- Shareholders report their share of income/loss regardless of actual distributions received.
- Late filing penalty is $235 per shareholder per month (Tax Year 2024).
Form 1120-S Overview
Why This Matters for the Exam
Form 1120-S is the core S corporation return. The exam tests due dates, extension rules, pass-through taxation, and Schedule K-1 reporting.
Expect at least 3-4 questions on Form 1120-S.
What Is Form 1120-S?
Form 1120-S (U.S. Income Tax Return for an S Corporation) is an information return—the corporation reports its income, but generally pays no federal income tax.
| Form 1120-S | Description |
|---|---|
| Type | Information return |
| Entity tax | Generally $0 (pass-through) |
| Who receives income | Shareholders (via K-1) |
| Who pays tax | Shareholders (on personal returns) |
Filing Deadlines
| Return Year | Original Due Date | Extended Due Date |
|---|---|---|
| Tax Year 2024 (calendar year) | March 15, 2025 | September 15, 2025 |
| Fiscal year | 15th of 3rd month after year end | 6 months later |
Extension: Form 7004
| Extension Detail | Information |
|---|---|
| Form | Form 7004 |
| Length | 6 months automatic |
| Due date | Same as original return |
| Result | September 15 for calendar year |
Pass-Through Taxation
S corporations are pass-through entities—income is not taxed at the entity level:
| Level | Tax Treatment |
|---|---|
| Corporation | No federal income tax (with exceptions) |
| Shareholders | Taxed on distributive share |
| Distributions | Tax-free to extent of basis |
Schedule K-1 (Form 1120-S)
Each shareholder receives Schedule K-1 (Form 1120-S) reporting their share of:
| K-1 Item | Description |
|---|---|
| Box 1 | Ordinary business income (loss) |
| Box 2 | Net rental real estate income (loss) |
| Box 4 | Interest income |
| Box 5a | Ordinary dividends |
| Box 7 | Royalties |
| Box 8a | Net short-term capital gain (loss) |
| Box 9a | Net long-term capital gain (loss) |
| Box 10 | Net §1231 gain (loss) |
| Box 12 | Charitable contributions |
| Box 16 | Items affecting shareholder basis |
| Box 17 | Other information (including QBI for §199A) |
Taxed Whether or Not Distributed
Critical Point: Shareholders are taxed on their distributive share of income whether or not they actually receive distributions.
| Scenario | Shareholder Tax |
|---|---|
| S corp earns $100,000, distributes $100,000 | Taxed on $100,000 |
| S corp earns $100,000, distributes $0 | Still taxed on $100,000 |
| S corp earns $100,000, distributes $150,000 | Taxed on $100,000 |
Late Filing Penalties
| Penalty | Amount (Tax Year 2024) |
|---|---|
| Per shareholder per month | $235 |
| Maximum months | 12 months |
| Example (4 shareholders, 3 months late) | $235 × 4 × 3 = $2,820 |
No Double Taxation
| Entity Type | Taxation |
|---|---|
| C Corporation | Double (corporate + shareholder) |
| S Corporation | Single (shareholder only) |
Comparison:
- C Corp: 21% corporate tax + dividend tax to shareholders.
- S Corp: 0% corporate tax + pass-through to shareholders.
Exceptions: Entity-Level Taxes
| Exception | When It Applies |
|---|---|
| Built-in gains tax | Former C corp sells appreciated assets within 5 years |
| LIFO recapture | C corp with LIFO inventory converts to S |
| Passive investment income | S corp with C corp E&P and >25% passive income |
| Excess net passive income | Over $25,000 of excess passive income |
Real-World Scenario
Scenario: An S corporation with 3 shareholders files its Tax Year 2024 return 2 months late without extension.
- Penalty: $235 × 3 shareholders × 2 months = $1,410.
- Avoidance: File Form 7004 by March 15, 2025 for automatic 6-month extension.
On the Exam
Expect 3-4 questions on Form 1120-S, typically:
- Due Date Questions: "When is Form 1120-S due for a calendar-year S corp?"
- Taxation Questions: "When are shareholders taxed on S corp income?"
- K-1 Questions: "What does Schedule K-1 report?"
- Penalty Questions: "What is the late filing penalty?"
The key is to remember: Due March 15 (extend to Sept 15). Pass-through = taxed to shareholders. Taxed on distributive share regardless of distributions. Penalty = $235/shareholder/month.
What is the original due date for a calendar-year S corporation Form 1120-S?
How are shareholders of an S corporation taxed on their share of corporate income?
What is the Tax Year 2024 late filing penalty per shareholder per month?