2020 Instructions For Form 1120

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2020Instructions for Form 1120Department of the TreasuryInternal Revenue ServiceU.S. Corporation Income Tax ReturnSection references are to the Internal RevenueCode unless otherwise noted.ContentsFuture Developments . . . . . . . . .What’s New . . . . . . . . . . . . . . .Photographs of Missing Children .The Taxpayer Advocate Service . .Direct Deposit of Refund . . . . . . .How To Make a Contribution ToReduce Debt Held by thePublic . . . . . . . . . . . . . . . .How To Get Forms andPublications . . . . . . . . . . . .General Instructions . . . . . . . . . .Purpose of Form . . . . . . . . . . . .Who Must File . . . . . . . . . . . . .When To File . . . . . . . . . . . . . .Where To File . . . . . . . . . . . . . .Who Must Sign . . . . . . . . . . . . .Paid Preparer Authorization . . . . .Assembling the Return . . . . . . . .Tax Payments . . . . . . . . . . . . .Estimated Tax Payments . . . . . .Interest and Penalties . . . . . . . . .Accounting Methods . . . . . . . . .Accounting Period . . . . . . . . . . .Rounding Off to Whole Dollars . . .Recordkeeping . . . . . . . . . . . . .Other Forms and Statements ThatMay Be Required . . . . . . . .Specific Instructions . . . . . . . . . .Period Covered . . . . . . . . . . . .Name and Address . . . . . . . . . .Identifying Information . . . . . . . .Employer Identification Number(EIN) . . . . . . . . . . . . . . . .Total Assets . . . . . . . . . . . . . . .Initial Return, Final Return, NameChange, or Address Change .Income . . . . . . . . . . . . . . . . . .Deductions . . . . . . . . . . . . . . .Schedule C. Dividends, Inclusions,and Special Deductions . . . .Schedule J. Tax Computation andPayment . . . . . . . . . . . . . .Schedule K. Other Information . . .Schedule L. Balance Sheets perBooks . . . . . . . . . . . . . . . .Schedule M-1. Reconciliation ofIncome (Loss) per Books WithIncome per Return . . . . . . . .Principal Business Activity Codes .Index . . . . . . . . . . . . . . . . . . .Page. 1. 1. 1. 1. 2. 2.2222343344455666.67777. 8. 8. 8. 8. . 10. . 16. . 19. . 21. . 24. . 24. . 27. . 30Future DevelopmentsFor the latest information aboutdevelopments related to Form 1120 andits instructions, such as legislationFeb 08, 2021enacted after they were published, go toIRS.gov/Form1120.What’s NewNew payroll credit for required paidsick leave or family leave. Under theFamilies First Coronavirus Response Act(FFCRA), as amended, an eligibleemployer can take a credit against payrolltaxes owed for amounts paid for qualifiedsick leave or family leave if incurred duringthe allowed period. However, there is nodouble tax benefit allowed and theamounts claimed are reportable asincome on line 10. See the instructions forline 10.New employee retention credit. TheCoronavirus Aid, Relief, and EconomicSecurity Act (CARES Act) allows a newemployee retention credit for qualifiedwages. Any qualified wages for which aneligible employer claims against payrolltaxes for the new employee retentioncredit may not be taken into account forpurposes of determining other credits.Temporary suspension of limitationson certain contributions. Under theCARES Act, a corporation may elect todeduct certain qualified cash contributionsmade in 2020 and 2021 without regard tothe 10% taxable income limit. The totalamount of the contribution claimed cannotexceed 25% of the excess of thecorporation's taxable income over all otherallowable charitable contributions. See theinstructions for line 19.Disaster relief charitable contributions. The 10% limit on the deduction forcharitable contributions does not apply tocontributions made after December 31,2019, and before February 26, 2021, tocertain charitable organizations for relief inqualified disaster areas. See Temporarysuspension of 10% limitation for certaindisaster-related contributions, later.Increase in limits on contributions offood inventory. For any charitablecontribution of food during 2020 and 2021to which section 170(e)(3)(C) applies, acorporation can deduct qualifiedcontributions of up to 25% of theiraggregate net income from all trades orbusinesses from which the contributionswere made or up to 25% of their taxableincome. See the instructions for line 19.Temporary allowance of 100% forbusiness meals. A corporation isCat. No. 11455Tallowed a 100% deduction for certainbusiness meal expenses paid or incurredin 2021 and 2022. See Travel, meals, andentertainment.Modifications to net operating losses.Losses that occurred in 2018, 2019, or2020 generally can be carried back up to 5tax years preceding the year of the loss.Special rules apply to farming losses. Seethe instructions for line 30.Photographs ofMissing ChildrenThe Internal Revenue Service is a proudpartner with the National Center forMissing & Exploited Children (NCMEC).Photographs of missing children selectedby the Center may appear in instructionson pages that would otherwise be blank.You can help bring these children homeby looking at the photographs and calling1-800-THE-LOST (1-800-843-5678) if yourecognize a child.The Taxpayer AdvocateServiceThe Taxpayer Advocate Service (TAS) isan independent organization within theIRS that helps taxpayers and protectstaxpayer rights. TAS's job is to ensure thatevery taxpayer is treated fairly and knowsand understands their rights under theTaxpayer Bill of Rights.As a taxpayer, the corporation hasrights that the IRS must abide by in itsdealings with the corporation. TAS canhelp the corporation if: A problem is causing financial difficultyfor the business; The business is facing an immediatethreat of adverse action; or The corporation has tried repeatedly tocontact the IRS but no one hasresponded, or the IRS hasn't respondedby the date promised.TAS has offices in every state, theDistrict of Columbia, and Puerto Rico.Local advocates' numbers are in theirlocal directories and atTaxpayerAdvocate.IRS.gov. Thecorporation can also call TAS at1-877-777-4778.TAS also works to resolve large-scaleor systemic problems that affect manytaxpayers. If the corporation knows of oneof these broad issues, please report it to

TAS through the Systemic AdvocacyManagement System at IRS.gov/SAMS.General InstructionsFor more information, go to IRS.gov/Advocate.Purpose of FormDirect Deposit of RefundTo request a direct deposit of thecorporation's income tax refund into anaccount at a U.S. bank or other financialinstitution, attach Form 8050, DirectDeposit of Corporate Tax Refund. See theinstructions for line 37.How To Make aContribution To ReduceDebt Held by the PublicTo help reduce debt held by the public,make a check payable to “Bureau of theFiscal Service.” Send it to:Bureau of the Fiscal ServiceAttn: Dept GP.O. Box 2188Parkersburg, WV 26106-2188Or, enclose the check with thecorporation's income tax return. In thememo section of the check, make a notethat it is a gift to reduce the debt held bythe public. For information on how to makethis type of contribution online, go towww.treasurydirect.gov and click on “Howto Make a Contribution to Reduce theDebt.”Do not add the contributions to any taxthe corporation may owe. See theinstructions for line 35 for details on how topay any tax the corporation owes.Contributions to reduce debt held by thepublic are deductible subject to the rulesand limitations for charitable contributions.How To Get Formsand PublicationsInternet. You can access the IRS website24 hours a day, 7 days a week, at IRS.govto: Download forms, instructions, andpublications; Order IRS products online; Research your tax questions online; Search publications online by topic orkeyword; View Internal Revenue Bulletins (IRBs)published in recent years; and Sign up to receive local and national taxnews by email.Tax forms and publications. Thecorporation can download or print all of theforms and publications it may need onIRS.gov/FormsPubs. Otherwise, thecorporation can go to IRS.gov/OrderForms to place an order and haveforms mailed to it. The IRS will processyour order for forms and publications assoon as possible.Use Form 1120, U.S. Corporation IncomeTax Return, to report the income, gains,losses, deductions, credits, and to figurethe income tax liability of a corporation.Who Must FileUnless exempt under section 501, alldomestic corporations (includingcorporations in bankruptcy) must file anincome tax return whether or not theyhave taxable income. Domesticcorporations must file Form 1120, unlessthey are required, or elect to file a specialreturn. See Special Returns for CertainOrganizations below.Entities electing to be taxed as corporations. A domestic entity electing to beclassified as an association taxable as acorporation must file Form 1120, unless itis required to or elects to file a specialreturn listed under Special Returns forCertain Organizations below. The entitymust also file Form 8832, EntityClassification Election, and attach a copyof Form 8832 to Form 1120 (or theapplicable return) for the year of theelection. For more information, see Form8832 and its instructions.Limited liability companies (LLC). If anentity with more than one owner wasformed as an LLC under state law, it isgenerally treated as a partnership forfederal income tax purposes and filesForm 1065, U.S. Return of PartnershipIncome. Generally, a single-member LLCis disregarded as an entity separate fromits owner and reports its income anddeductions on its owner's federal incometax return. The LLC can file a Form 1120only if it has filed Form 8832 to elect to betreated as an association taxable as acorporation. For more information aboutLLCs, see Pub. 3402, Taxation of LimitedLiability Companies.Corporations engaged in farming. Acorporation (other than a corporation thatis a subchapter T cooperative) thatengages in farming should use Form 1120to report the income (loss) from suchactivities. Enter the income anddeductions of the corporation according tothe instructions for lines 1 through 10 and12 through 29.Ownership interest in a Financial Asset Securitization Investment Trust(FASIT). Special rules apply to a FASIT inexistence on October 22, 2004, to theextent that regular interests issued by theFASIT before October 22, 2004, continueto remain outstanding in accordance withtheir original terms.If a corporation holds an ownershipinterest in a FASIT to which these special-2-rules apply, it must report all items ofincome, gain, deductions, losses, andcredits on the corporation's income taxreturn (except as provided in section860H). Show a breakdown of the items onan attached statement. For moreinformation, see sections 860H and 860L(repealed with certain exceptions).Foreign-owned domestic disregardedentities. If a foreign person, including aforeign corporation, wholly owns adomestic disregarded entity (DE), thedomestic DE is treated as a domesticcorporation separate from its owner (theforeign corporation) for the limitedpurposes of the requirements undersection 6038A that apply to 25%foreign-owned domestic corporations.While a DE is not required to file a U.S.income tax return, a DE covered by theserules may be required to file a pro formaForm 1120 with Form 5472 attached bythe due date (including extensions) of thereturn. See the Instructions for Form 5472for additional information and coordinationwith Form 5472 reporting by the domesticDE.Qualified opportunity fund. To becertified as a qualified opportunity fund(QOF), the corporation must file Form1120 and attach Form 8996, even if thecorporation had no income or expenses toreport. See Schedule K, Question 25.Also, see the Instructions for Form 8996.Qualified opportunity investment. Ifthe corporation held a qualified investmentin a QOF at any time during the year, thecorporation must file its return with Form8997, Initial and Annual Statement ofQualified Opportunity Fund Investmentsattached. See the instructions for Form8997.Special Returns forCertain OrganizationsInstead of filing Form 1120, certain organizations,as shown below, file special returns.If the organization is a: File Form Exempt organizationwith unrelated trade orbusiness income990-TReligious or apostolicorganization exemptunder section 501(d)1065Entity formed as alimited liability companyunder state law andtreated as a partnershipfor federal income taxpurposes1065Instructions for Form 1120

Subchapter Tcooperative association(including a farmers'cooperative)Entity that elects to betreated as a real estatemortgage investmentconduit (REMIC) undersection 860DInterest charge domesticinternational salescorporation (section 992)1120-C10661120-IC-DISCForeign corporation(other than life orproperty and casualtyinsurance company filingForm 1120-L or Form1120-PC)1120-FForeign salescorporation (section 922)1120-FSCCondominiummanagement, residentialreal estatemanagement, ortimeshare associationthat elects to be treatedas a homeownersassociation undersection 528Life insurance company(section 801)Fund set up to pay fornucleardecommissioning costs(section 468A)Property and casualtyinsurance company(section 831)1120-H1120-L1120-ND1120-PCReal estate investmenttrust (section 856)1120-REITRegulated investmentcompany (section 851)1120-RICElectronic FilingFor more information, visit IRS.gov/Businesses.Generally, a corporation must file itsincome tax return by the 15th day of the4th month after the end of its tax year. Anew corporation filing a short-period returnmust generally file by the 15th day of the4th month after the short period ends. Acorporation that has dissolved mustgenerally file by the 15th day of the 4thmonth after the date it dissolved.However, a corporation with a fiscal taxyear ending June 30 must file by the 15thday of the 3rd month after the end of itstax year. A corporation with a short taxyear ending anytime in June will betreated as if the short year ended on June30, and must file by the 15th day of the 3rdmonth after the end of its tax year.If the due date falls on a Saturday,Sunday, or legal holiday, the corporationcan file on the next business day.Private Delivery Services1120-POLSettlement fund(section 468B)Certain corporations with total assets of 10 million or more that file at least 250returns a year are required to e-file Form1120. See Regulations section301.6011-5. However, these corporationscan request a waiver of the electronic filingrequirements. See Notice 2010-13,2010-4 I.R.B. 327.When To FilePolitical organization(section 527)S corporation (section1361)does not, however, apply to certainreturns.1120-S1120-SFCorporations can generally electronicallyfile (e-file) Form 1120, related forms,schedules, and attachments; Form 7004(automatic extension of time to file); andForms 940, 941, and 944 (employment taxreturns). If there is a balance due, thecorporation can authorize an electronicfunds withdrawal while e-filing. Form 1099and other information returns can also beelectronically filed. The option to e-fileCorporations can use certain privatedelivery services (PDS) designated by theIRS to meet the “timely mailing as timelyfiling” rule for tax returns. Go to IRS.gov/PDS.The PDS can tell you how to get writtenproof of the mailing date.For the IRS mailing address to use ifyou’re using a PDS, go to IRS.gov/PDSstreetAddresses.Private delivery services can'tdeliver items to P.O. boxes. YouCAUTION must use the U.S. Postal Serviceto mail any item to an IRS P.O. boxaddress.!Extension of Time To FileFile Form 7004, Application for AutomaticExtension of Time To File CertainBusiness Income Tax, Information, andOther Returns, to request an extension oftime to file. Generally, the corporationmust file Form 7004 by the regular duedate of the return. See the Instructions forForm 7004.Who Must SignThe return must be signed and dated by:Instructions for Form 1120-3- The president, vice president, treasurer,assistant treasurer, chief accountingofficer; or Any other corporate officer (such as taxofficer) authorized to sign.If a return is filed on behalf of acorporation by a receiver, trustee, orassignee, the fiduciary must sign thereturn, instead of the corporate officer.Returns and forms signed by a receiver ortrustee in bankruptcy on behalf of acorporation must be accompanied by acopy of the order or instructions of thecourt authorizing signing of the return orform.If an employee of the corporationcompletes Form 1120, the paid preparerspace should remain blank. Anyone whoprepares Form 1120 but does not chargethe corporation should not complete thatsection. Generally, anyone who is paid toprepare the return must sign it and fill inthe “Paid Preparer Use Only” area.The paid preparer must complete therequired preparer information and: Sign the return in the space providedfor the preparer's signature, and Give a copy of the return to thetaxpayer.A paid preparer may sign originalTIP or amended returns by rubberstamp, mechanical device, orcomputer software program.Paid PreparerAuthorizationIf the corporation wants to allow the IRS todiscuss its 2020 tax return with the paidpreparer who signed it, check the “Yes”box in the signature area of the return.This authorization applies only to theindividual whose signature appears in the“Paid Preparer Use Only” section of thereturn. It does not apply to the firm, if any,shown in that section.If the “Yes” box is checked, thecorporation is authorizing the IRS to callthe paid preparer to answer any questionsthat may arise during the processing of itsreturn. The corporation is also authorizingthe paid preparer to: Give the IRS any information that ismissing from the return; Call the IRS for information about theprocessing of the return or the status ofany related refund or payment(s); and Respond to certain IRS notices aboutmath errors, offsets, and returnpreparation.The corporation is not authorizing thepaid preparer to receive any refund check,bind the corporation to anything (includingany additional tax liability), or otherwiserepresent the corporation before the IRS.The authorization will automatically endno later than the due date (excluding

extensions) for filing the corporation's2021 tax return. If the corporation wants toexpand the paid preparer's authorizationor revoke the authorization before it ends,see Pub. 947, Practice Before the IRS andPower of Attorney.Assembling the ReturnTo ensure that the corporation's tax returnis correctly processed, attach allschedules and other forms after page 6 ofForm 1120 in the following order.1. Schedule N (Form 1120).2. Schedule D (Form 1120).3. Form 8949.4. Form 8996.5. Form 8050.6. Form 1125-A.7. Form 4136.8. Form 8978.9. Form 965-B.10. Form 8941.11. Form 3800.12. Form 6252.13. Additional schedules inalphabetical order.14. Additional forms in numerical order.15. Supporting statements andattachments.Complete every applicable entry spaceon Form 1120. Do not enter “SeeAttached” or “Available Upon Request”instead of completing the entry spaces. Ifmore space is needed on the forms orschedules, attach separate sheets usingthe same size and format as the printedforms.If there are supporting statements andattachments, arrange them in the sameorder as the schedules or forms theysupport and attach them last. Show thetotals on the printed forms. Enter thecorporation's name and EIN on eachsupporting statement or attachment.Note. If the corporation had tax withheldunder Chapter 3 or 4 of the InternalRevenue Code and received a Form1042-S, Form 8805, or Form 8288-Ashowing the amount of income taxwithheld, attach such form(s) to thecorporation’s income tax return to claim awithholding credit. The corporation shouldreport the tax withheld on Schedule J, PartIII, line 20d. See the instructions forSchedule J, Part III, line 20d.Tax PaymentsGenerally, the corporation must pay anytax due in full no later than the due date forfiling its tax return (not includingextensions). See the instructions forline 35. If the due date falls on a Saturday,Sunday, or legal holiday, the payment isWhere To FileFile the corporation's return at the ap

Form 1065, U.S. Return of Partnership Income. Generally, a single-member LLC is disregarded as an entity separate from its owner and reports its income and deductions on its owner's federal income tax return. The LLC can file a Form 1120 only if it has filed Form 8832 to elect to be treated as an association taxable as a corporation.

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