1120 Instructions for Form 1120

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2022

Instructions for Form 1120

Department of the Treasury
Internal Revenue Service

U.S. Corporation Income Tax Return

Future Developments

DRAFT AS OF
December 8, 2022

Section references are to the Internal Revenue
Code unless otherwise noted.

Contents
Future Developments . . . . . . . . .
What’s New . . . . . . . . . . . . . . .
Photographs of Missing Children .
The Taxpayer Advocate Service . .
Direct Deposit of Refund . . . . . . .
How To Make a Contribution To
Reduce Debt Held by the
Public . . . . . . . . . . . . . . . .
How To Get Forms and
Publications . . . . . . . . . . . .
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 That
May Be Required . . . . . . . .
Specific Instructions . . . . . . . . . .
Period Covered . . . . . . . . . . . .
Name and Address . . . . . . . . . .
Identifying Information . . . . . . . .
Employer Identification Number
(EIN) . . . . . . . . . . . . . . . .
Total Assets . . . . . . . . . . . . . . .
Initial Return, Final Return, Name
Change, or Address Change .
Income . . . . . . . . . . . . . . . . . .
Deductions . . . . . . . . . . . . . . .
Schedule C. Dividends, Inclusions,
and Special Deductions . . . .
Schedule J. Tax Computation and
Payment . . . . . . . . . . . . . .
Schedule K. Other Information . . .
Schedule L. Balance Sheets per
Books . . . . . . . . . . . . . . . .
Schedule M-1. Reconciliation of
Income (Loss) per Books With
Income per Return . . . . . . . .
Schedule M-2. Analysis of
Unappropriated Retained
Earnings per Books . . . . . . .
Principal Business Activity Codes .
Index . . . . . . . . . . . . . . . . . . .

Dec 1, 2022

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For the latest information about
developments related to Form 1120 and
its instructions, such as legislation
enacted after they were published, go to
IRS.gov/Form1120.

What’s New

COVID-19 related credit for qualified
sick and family leave. Generally, the
credit for qualified sick and family leave
wages as enacted under the Families First
Coronavirus Response Act (FFCRA) and
amended and extended by the
COVID-related Tax Relief Act of 2020 and
the credit for qualified sick and family
leave wages as enacted under the
American Rescue Plan Act of 2021 (the
ARP), have expired. However, employers
that paid qualified sick and family leave
wages in 2022 for leave taken after March
31, 2020, and before October 1, 2021,
may be eligible to claim a credit for
qualified sick and family leave wages in
2022. See the March 2022 revision of the
Instructions for Form 941and the 2022
Instructions for Form 944 for more
information. The no double benefit rules
continue to apply.
Increase in penalty for failure to file.
For tax years beginning in 2022, the
maximum penalty for failure to file a tax
return that is more than 60 days late has
increased to the smaller of the tax due or
$450. See Late filing of return, later.

Form 1120-W now historical. Form
1120-W, Estimated Tax for Corporations,
and the Instructions for Form 1120-W are
now historical. The 2022 Form 1120-W
(released in 2021) and the 2022
Instructions for Form 1120-W (released in
2021) will be the last revision of both the
form and its instructions. Prior versions will
be available on IRS.gov.
Alternative minimum tax. For tax years
beginning after December 31, 2022, the
Inflation Reduction Act of 2022 (IRA)
imposes a corporate alternative minimum
tax (AMT). Applicable corporations (within
the meaning of section 59(k)) may be
required to pay this AMT. Short-period
filers with a tax year beginning after
December 31, 2022, and ending before
December 31, 2023, see section 55 and
the instructions for Schedule J, line 9g,
later.

Cat. No. 11455T

Advanced manufacturing investment
credit. An eligible corporation that claims
the advanced manufacturing investment
credit for tax years ending after December
31, 2022, can make a deemed payment
election under section 48D. If the election
is made, the corporation is treated as
making a payment against tax by the
amount of the credit. See section 48D and
the Instructions for Form 3468.
Principal business activity codes. We
updated the list of principal business
activity (PBA) codes. See Principal
Business Activity Codes.

Photographs of
Missing Children

The Internal Revenue Service is a proud
partner with the National Center for
Missing & Exploited Children® (NCMEC).
Photographs of missing children selected
by the Center may appear in instructions
on pages that would otherwise be blank.
You can help bring these children home
by looking at the photographs and calling
800-THE-LOST (800-843-5678) if you
recognize a child.

The Taxpayer Advocate
Service

The Taxpayer Advocate Service (TAS) is
an independent organization within the
IRS that helps taxpayers and protects
taxpayer rights. TAS's job is to ensure that
every taxpayer is treated fairly and knows
and understands their rights under the
Taxpayer Bill of Rights.
As a taxpayer, the corporation has
rights that the IRS must abide by in its
dealings with the corporation. TAS can
help the corporation if:
• A problem is causing financial difficulty
for the business;
• The business is facing an immediate
threat of adverse action; or
• The corporation has tried repeatedly to
contact the IRS but no one has
responded, or the IRS hasn't responded
by the date promised.
TAS has offices in every state, the
District of Columbia, and Puerto Rico.
Local advocates' numbers are in their
local directories and at
TaxpayerAdvocate.IRS.gov. The
corporation can also call TAS at
877-777-4778.
TAS also works to resolve large-scale
or systemic problems that affect many

taxpayers. If the corporation knows of one
of these broad issues, please report it to
TAS through the Systemic Advocacy
Management System at IRS.gov/SAMS.
For more information, go to IRS.gov/
Advocate.

Direct Deposit of Refund

General Instructions
Purpose of Form

Use Form 1120, U.S. Corporation Income
Tax Return, to report the income, gains,
losses, deductions, credits, and to figure
the income tax liability of a corporation.

rules apply, it must report all items of
income, gain, deductions, losses, and
credits on the corporation's income tax
return (except as provided in section
860H). Show a breakdown of the items on
an attached statement. For more
information, see sections 860H and 860L
(repealed with certain exceptions).

DRAFT AS OF
December 8, 2022

To request a direct deposit of the
corporation's income tax refund into an
account at a U.S. bank or other financial
institution, attach Form 8050, Direct
Deposit of Corporate Tax Refund. See the
instructions for line 37.

How To Make a
Contribution To Reduce
Debt Held by the Public

To help reduce debt held by the public,
make a check payable to “Bureau of the
Fiscal Service.” Send it to:
Bureau of the Fiscal Service
Attn: Dept G
P.O. Box 2188
Parkersburg, WV 26106-2188

Or, enclose the check with the
corporation's income tax return. In the
memo section of the check, make a note
that it is a gift to reduce the debt held by
the public. For information on how to make
this type of contribution online, go to
www.treasurydirect.gov and click on “How
to Make a Contribution to Reduce the
Debt.”
Do not add the contributions to any tax
the corporation may owe. See the
instructions for line 35 for details on how to
pay any tax the corporation owes.
Contributions to reduce debt held by the
public are deductible subject to the rules
and limitations for charitable contributions.

How To Get Forms
and Publications
Internet. You can access the IRS website
24 hours a day, 7 days a week, at IRS.gov
to:
• Download forms, instructions, and
publications;
• Order IRS products online;
• Research your tax questions online;
• Search publications online by topic or
keyword;
• View Internal Revenue Bulletins (IRBs)
published in recent years; and
• Sign up to receive local and national tax
news by email.
Tax forms and publications. The
corporation can view, print, or download
all of the forms and publications it may
need on IRS.gov/FormsPubs. Otherwise,
the corporation can go to IRS.gov/
OrderForms to place an order and have
forms mailed to it.

Who Must File

Unless exempt under section 501, all
domestic corporations (including
corporations in bankruptcy) must file an
income tax return whether or not they
have taxable income. Domestic
corporations must file Form 1120, unless
they are required, or elect to file a special
return. See Special Returns for Certain
Organizations, later.

Entities electing to be taxed as corporations. A domestic entity electing to be
classified as an association taxable as a
corporation must file Form 1120, unless it
is required to or elects to file a special
return listed under Special Returns for
Certain Organizations. The entity must
also file Form 8832, Entity Classification
Election, and attach a copy of Form 8832
to Form 1120 (or the applicable return) for
the year of the election. For more
information, see Form 8832 and its
instructions.

Limited liability companies (LLC). If an
entity with more than one owner was
formed as an LLC under state law, it is
generally treated as a partnership for
federal income tax purposes and files
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. For more information about
LLCs, see Pub. 3402, Taxation of Limited
Liability Companies.
Corporations engaged in farming. A
corporation (other than a corporation that
is a subchapter T cooperative) that
engages in farming should use Form 1120
to report the income (loss) from such
activities. Enter the income and
deductions of the corporation according to
the instructions for lines 1 through 10 and
12 through 29.
Ownership interest in a Financial Asset Securitization Investment Trust
(FASIT). Special rules apply to a FASIT in
existence on October 22, 2004, to the
extent that regular interests issued by the
FASIT before October 22, 2004, continue
to remain outstanding in accordance with
their original terms.
If a corporation holds an ownership
interest in a FASIT to which these special
-2-

Foreign-owned domestic disregarded
entities. If a foreign person, including a
foreign corporation, wholly owns a
domestic disregarded entity (DE), the
domestic DE is treated as a domestic
corporation separate from its owner (the
foreign corporation) for the limited
purposes of the requirements under
section 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 these
rules is required to file a pro forma Form
1120 with Form 5472 attached by the due
date (including extensions) of the return.
See the Instructions for Form 5472 for
additional information and coordination
with Form 5472 reporting by the domestic
DE.
Qualified opportunity fund. To certify
as a qualified opportunity fund (QOF), the
corporation must file Form 1120 and
attach Form 8996, even if the corporation
had no income or expenses to report. See
Schedule K, Question 25, later. Also, see
the Instructions for Form 8996.
Qualified opportunity investment. If
the corporation held a qualified investment
in a QOF at any time during the year, the
corporation must file its return with Form
8997 attached. See the instructions for
Form 8997.

Special Returns for
Certain Organizations
Instead of filing Form 1120, certain organizations,
as shown below, file special returns.
If the organization is a:
▼

File Form
▼

Exempt organization
with unrelated trade or
business income

990-T

Religious or apostolic
organization exempt
under section 501(d)

1065

Entity formed as a
limited liability company
under state law and
treated as a partnership
for federal income tax
purposes

1065

Instructions for Form 1120

Subchapter T
cooperative association
(including a farmers'
cooperative)
Entity that elects to be
treated as a real estate
mortgage investment
conduit (REMIC) under
section 860D

1120-C

1066

does not, however, apply to certain
returns.
Certain corporations with total assets of
$10 million or more that file at least 250
returns a year are required to e-file Form
1120. See Regulations section
301.6011-5. However, these corporations
can request a waiver of the electronic filing
requirements.

If the due date falls on a Saturday,
Sunday, or legal holiday, the corporation
can file on the next business day.

Private Delivery Services

Corporations can use certain private
delivery services (PDS) designated by the
IRS to meet the “timely mailing as timely
filing” rule for tax returns. Go to IRS.gov/
PDS.

DRAFT AS OF
December 8, 2022
Electronic Filing Waiver

Interest charge domestic
international sales
corporation (section 992)

1120-IC-DISC

Foreign corporation
(other than life or
property and casualty
insurance company filing
Form 1120-L or Form
1120-PC)

1120-F

Foreign sales
corporation (section 922)

1120-FSC

Condominium
management, residential
real estate
management, or
timeshare association
that elects to be treated
as a homeowners
association under
section 528

1120-H

Life insurance company
(section 801)

1120-L

Fund set up to pay for
nuclear
decommissioning costs
(section 468A)

1120-ND

Property and casualty
insurance company
(section 831)

1120-PC

Political organization
(section 527)

1120-POL

Real estate investment
trust (section 856)

1120-REIT

Regulated investment
company (section 851)

1120-RIC

S corporation (section
1361)
Settlement fund
(section 468B)

Electronic Filing

1120-S
1120-SF

Corporations can generally electronically
file (e-file) Form 1120, related forms,
schedules, and attachments; Form 7004
(automatic extension of time to file); and
Forms 940, 941, and 944 (employment tax
returns). If there is a balance due, the
corporation can authorize an electronic
funds withdrawal while e-filing. Form 1099
and other information returns can also be
electronically filed. The option to e-file

Instructions for Form 1120

The IRS may waive the electronic filing
rules if the corporation demonstrates that
a hardship would result if it were required
to file its return electronically. A
corporation interested in requesting a
waiver of the mandatory electronic filing
requirement must file a written request,
and request one in the manner prescribed
by the Ogden Submission Processing
Center. All written requests for waivers
should be mailed to:
Internal Revenue Service
Ogden Submission Processing
Center
Attn: Form 1120 e-file Waiver
Request
Mail Stop 1057
Ogden, UT 84201
If using a delivery service, requests for
waivers should be mailed to:
Internal Revenue Service
Ogden Submission Processing
Center
Attn: Form 1120 e-file Waiver
Request
Mail Stop 1057
1973 N. Rulon White Blvd.
Ogden, UT 84404

Waiver requests can also be faxed to
877-477-0575. Contact the e-Help Desk at
866-255-0654 for questions regarding the
waiver procedures or process.
For more information, visit IRS.gov/
Corporations.

When To File

Generally, a corporation must file its
income tax return by the 15th day of the
4th month after the end of its tax year. A
new corporation filing a short-period return
must generally file by the 15th day of the
4th month after the short period ends. A
corporation that has dissolved must
generally file by the 15th day of the 4th
month after the date it dissolved.
However, a corporation with a fiscal tax
year ending June 30 must file by the 15th
day of the 3rd month after the end of its
tax year. A corporation with a short tax
year ending anytime in June will be
treated as if the short year ended on June
30, and must file by the 15th day of the 3rd
month after the end of its tax year.
-3-

The PDS can tell you how to get written
proof of the mailing date.
For the IRS mailing address to use if
you’re using a PDS, go to IRS.gov/
PDSstreetAddresses.

Private delivery services can't
deliver items to P.O. boxes. You
CAUTION must use the U.S. Postal Service
to mail any item to an IRS P.O. box
address.

!

Extension of Time To File

File Form 7004, Application for Automatic
Extension of Time To File Certain
Business Income Tax, Information, and
Other Returns, to request an extension of
time to file. Generally, the corporation
must file Form 7004 by the regular due
date of the return. See the Instructions for
Form 7004.

Who Must Sign

The return must be signed and dated by:
• The president, vice president, treasurer,
assistant treasurer, chief accounting
officer; or
• Any other corporate officer (such as tax
officer) authorized to sign.
If a return is filed on behalf of a
corporation by a receiver, trustee, or
assignee, the fiduciary must sign the
return, instead of the corporate officer.
Returns and forms signed by a receiver or
trustee in bankruptcy on behalf of a
corporation must be accompanied by a
copy of the order or instructions of the
court authorizing signing of the return or
form.
Paid Preparer Use Only section. If an
employee of the corporation completes
Form 1120, the paid preparer section
should remain blank. Anyone who
prepares Form 1120 but does not charge
the corporation should not complete that
section. Generally, anyone who is paid to
prepare the return must sign and complete
the section.
The paid preparer must complete the
required preparer information and:
• Sign the return in the space provided
for the preparer's signature, and
• Give a copy of the return to the
taxpayer.

A paid preparer may sign original

TIP or amended returns by rubber

stamp, mechanical device, or
computer software program.

Paid Preparer
Authorization

If the corporation wants to allow the IRS to
discuss its 2022 tax return with the paid
preparer who signed it, check the “Yes”
box in the signature area of the return.
This authorization applies only to the
individual whose signature appears in the
“Paid Preparer Use Only” section of the
return. It does not apply to the firm, if any,
shown in that section.

Where To File
File the corporation's return at the applicable IRS address listed below.
If the corporation's principal And the total assets at
business, office, or agency the end of the tax year
is located in:
are:
Connecticut, Delaware, District
Less than $10 million
of Columbia, Georgia, Illinois,
and Schedule M-3 is not
Indiana, Kentucky, Maine,
filed
Maryland, Massachusetts,
$10 million or more, or
Michigan, New Hampshire,
less than $10 million and
New Jersey, New York, North
Schedule M-3 is filed
Carolina, Ohio, Pennsylvania,
Rhode Island, South Carolina,
Tennessee, Vermont, Virginia,
West Virginia, Wisconsin

Use the following address:
Department of the Treasury
Internal Revenue Service Center
Kansas City, MO 64999-0012

DRAFT AS OF
December 8, 2022

If the “Yes” box is checked, the
corporation is authorizing the IRS to call
the paid preparer to answer any questions
that may arise during the processing of its
return. The corporation is also authorizing
the paid preparer to:
• Give the IRS any information that is
missing from the return;
• Call the IRS for information about the
processing of the return or the status of
any related refund or payment(s); and
• Respond to certain IRS notices about
math errors, offsets, and return
preparation.

The corporation is not authorizing the
paid preparer to receive any refund check,
bind the corporation to anything (including
any additional tax liability), or otherwise
represent the corporation before the IRS.
The authorization will automatically end
no later than the due date (excluding
extensions) for filing the corporation's
2023 tax return. If the corporation wants to
expand the paid preparer's authorization
or revoke the authorization before it ends,
see Pub. 947, Practice Before the IRS and
Power of Attorney.

Assembling the Return

To ensure that the corporation's tax return
is correctly processed, attach all
schedules and other forms after page 6 of
Form 1120 in the following order.
1. Schedule N (Form 1120).
2. Schedule D (Form 1120).
3. Form 4797.
4. Form 8949.
5. Form 8996.
6. Form 8050.
7. Form 1125-A.
8. Form 4136.
9. Form 8978.
10. Form 965-B.
11. Form 8941.
12. Form 3800.
13. Form 6252.
14. Form 8997.

Alabama, Alaska, Arizona,
Arkansas, California,
Colorado, Florida, Hawaii,
Idaho, Iowa, Kansas,
Louisiana, Minnesota,
Mississippi, Missouri,
Montana, Nebraska, Nevada,
New Mexico, North Dakota,
Oklahoma, Oregon, South
Dakota, Texas, Utah,
Washington, Wyoming
A foreign country or U.S.
possession

Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201-0012

Any amount

Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201-0012

Any amount

Internal Revenue Service Center
P.O. Box 409101
Ogden, UT 84409

A group of corporations with members located in more than one service center area will often
keep all the books and records at the principal office of the managing corporation. In this case,
the tax returns of the corporations may be filed with the service center for the area in which the
principal office of the managing corporation is located.

15. Additional schedules in
alphabetical order.
16. Additional forms in numerical order.
17. Supporting statements and
attachments.
Complete every applicable entry space
on Form 1120. Do not enter “See
Attached” or “Available Upon Request”
instead of completing the entry spaces. If
more space is needed on the forms or
schedules, attach separate sheets using
the same size and format as the printed
forms.
If there are supporting statements and
attachments, arrange them in the same
order as the schedules or forms they
support and attach them last. Show the
totals on the printed forms. Enter the
corporation's name and EIN on each
supporting statement or attachment.
Note. If the corporation had tax withheld
under Chapter 3 or 4 of the Internal
Revenue Code and received a Form
1042-S, Form 8805, or Form 8288-A
showing the amount of income tax
withheld, attach such form(s) to the
corporation’s income tax return to claim a
withholding credit. The corporation should
-4-

report the tax withheld on Schedule J, Part
III, line 20d. See the instructions for
Schedule J, Part III, line 20d.

Tax Payments

Generally, the corporation must pay any
tax due in full no later than the due date for
filing its tax return (not including
extensions). See the instructions for
line 35. If the due date falls on a Saturday,
Sunday, or legal holiday, the payment is
due on the next day that isn't a Saturday,
Sunday, or legal holiday.

Electronic Deposit
Requirement

Corporations must use electronic funds
transfer to make all federal tax deposits
(such as deposits of employment, excise,
and corporate income tax). Generally,
electronic funds transfers are made using
the Electronic Federal Tax Payment
System (EFTPS). However, if the
corporation does not want to use EFTPS,
it can arrange for its tax professional,
financial institution, payroll service, or
other trusted third party to make deposits
on its behalf. Also, it may arrange for its
financial institution to submit a same-day
payment (discussed below) on its behalf.
Instructions for Form 1120

EFTPS is a free service provided by the
Department of the Treasury. Services
provided by a tax professional, financial
institution, payroll service, or other third
party may have a fee.
To get more information about EFTPS
or to enroll in EFTPS, visit EFTPS.gov or
call 800-555-4477. To contact EFTPS
using the Telecommunications Relay
Services (TRS), for people who are deaf,
hard of hearing, or have a speech
disability, dial 711 and provide the TRS
assistant the 800-555-4477 number above
or 800-733-4829.

for Quick Refund of Overpayment of
Estimated Tax. See the instructions for
Schedule J, Part III, line 15, later.
See section 6655 for more information
on how to figure estimated taxes.
Estimated tax penalty. A corporation
that does not make estimated tax
payments when due may be subject to an
underpayment penalty for the period of
underpayment. Generally, a corporation is
subject to the penalty if its tax liability is
$500 or more and it did not timely pay at
least the smaller of:
• Its tax liability for the current year, or
• Its prior year's tax.
Use Form 2220, Underpayment of
Estimated Tax by Corporations, to see if
the corporation owes a penalty and to
figure the amount of the penalty. If Form
2220 is completed, enter the penalty on
line 34. See the instructions for line 34.

taxes are not paid. These taxes are
generally reported on:
• Form 720, Quarterly Federal Excise
Tax Return;
• Form 941, Employer's QUARTERLY
Federal Tax Return;
• Form 943, Employer's Annual Federal
Tax Return for Agricultural Employees;
• Form 944, Employer's ANNUAL
Federal Tax Return; or
• Form 945, Annual Return of Withheld
Federal Income Tax.
The trust fund recovery penalty may be
imposed on all persons who are
determined by the IRS to have been
responsible for collecting, accounting for,
or paying over these taxes, and who acted
willfully in not doing so. The penalty is
equal to the full amount of the unpaid trust
fund tax. See the Instructions for Form
720, Pub. 15 (Circular E), Employer's Tax
Guide, or Pub. 51 (Circular A), Agricultural
Employer's Tax Guide, for details,
including the definition of responsible
persons.

DRAFT AS OF
December 8, 2022

Depositing on time. For any deposit
made by EFTPS to be on time, the
corporation must submit the deposit by 8
p.m. Eastern time the day before the date
the deposit is due. If the corporation uses
a third party to make deposits on its
behalf, they may have different cutoff
times.

Same-day wire payment option. If the
corporation fails to submit a deposit
transaction on EFTPS by 8 p.m. Eastern
time the day before the date a deposit is
due, it can still make its deposit on time by
using the Federal Tax Collection Service
(FTCS). To use the same-day wire
payment method, the corporation will need
to make arrangements with its financial
institution ahead of time regarding
availability, deadlines, and costs.
Financial institutions may charge a fee for
payments made this way. To learn more
about the information the corporation will
need to provide to its financial institution to
make a same-day wire payment, go to
IRS.gov/SameDayWire.

Estimated Tax Payments
Generally, the following rules apply to the
corporation's payments of estimated tax.
• The corporation must make installment
payments of estimated tax if it expects its
total tax for the year (less applicable
credits) to be $500 or more.
• The installments are due by the 15th
day of the 4th, 6th, 9th, and 12th months
of the tax year. If any date falls on a
Saturday, Sunday, or legal holiday, the
installment is due on the next regular
business day.
• The corporation must use electronic
funds transfer to make installment
payments of estimated tax.
• If, after the corporation figures and
deposits estimated tax, it finds that its tax
liability for the year will be more or less
than originally estimated, it may have to
refigure its required installments. If earlier
installments were underpaid, the
corporation may owe a penalty. See
Estimated tax penalty, later.
• If the corporation overpaid estimated
tax, it may be able to get a quick refund by
filing Form 4466, Corporation Application
Instructions for Form 1120

Interest and Penalties
If the corporation receives a notice
about penalties after it files its
CAUTION return, send the IRS an
explanation and we will determine if the
corporation meets reasonable-cause
criteria. Do not attach an explanation
when the corporation's return is filed.

!

Interest. Interest is charged on taxes
paid late even if an extension of time to file
is granted. Interest is also charged on
penalties imposed for failure to file,
negligence, fraud, substantial valuation
misstatements, substantial
understatements of tax, and reportable
transaction understatements from the due
date (including extensions) to the date of
payment. The interest charge is figured at
a rate determined under section 6621.
Late filing of return. A corporation that
does not file its tax return by the due date,
including extensions, may be penalized
5% of the unpaid tax for each month or
part of a month the return is late, up to a
maximum of 25% of the unpaid tax. The
minimum penalty for a return that is more
than 60 days late is the smaller of the tax
due or $450. The penalty will not be
imposed if the corporation can show that
the failure to file on time was due to
reasonable cause. See Caution, earlier.
Late payment of tax. A corporation that
does not pay the tax when due may
generally be penalized 1/2 of 1% of the
unpaid tax for each month or part of a
month the tax is not paid, up to a
maximum of 25% of the unpaid tax. See
Caution, earlier.
Trust fund recovery penalty. This
penalty may apply if certain excise,
income, social security, and Medicare
taxes that must be collected or withheld
are not collected or withheld, or these
-5-

Note. The trust fund recovery penalty will
not apply to any amount of trust fund taxes
an employer holds back in anticipation of
the credit for qualified sick and family
leave wages or the employee retention
credit that they are entitled to. See Pub. 15
or Pub. 51 for more information.
Other penalties. Other penalties can be
imposed for negligence, substantial
understatement of tax, reportable
transaction understatements, and fraud.
See sections 6662, 6662A, and 6663.

Accounting Methods

Figure taxable income using the method of
accounting regularly used in keeping the
corporation's books and records. In all
cases, the method used must clearly show
taxable income. Permissible methods
include cash, accrual, or any other method
authorized by the Internal Revenue Code.
Generally, the following rules apply. For
more information, see Pub. 538,
Accounting Periods and Methods.
• A corporation, or a partnership that has
a corporation as a partner, cannot use the
cash method of accounting unless it is a
small business taxpayer (defined later). A
tax shelter (defined in section 448(d)(3))
may never use the cash method. See
sections 448(a)(1) through (a)(3).
However, see Nonaccrual experience
method for service providers in the
instructions for line 1a.
• Unless it is a small business taxpayer
(defined below), a corporation must use
an accrual method for sales and
purchases of inventory items. See the
instructions for Form 1125-A.

• A corporation engaged in farming must
use an accrual method. For exceptions,
see section 447 and Pub. 225.
• Special rules apply to long-term
contracts. See section 460.
• Dealers in securities must use the
mark-to-market accounting method.
Dealers in commodities and traders in
securities and commodities can elect to
use the mark-to-market accounting
method. See section 475.

Exceptions to the general section
481(a) adjustment period may apply. Also,
in some cases, a corporation can elect to
modify the section 481(a) adjustment
period. The corporation may have to
complete the appropriate lines of Form
3115 to make an election. See the
Instructions for Form 3115 for more
information and exceptions.
If the net section 481(a) adjustment is
positive, report the ratable portion on Form
1120, line 10, as other income. If the net
section 481(a) adjustment is negative,
report the ratable portion on line 26 as a
deduction.

for as long as they are needed to figure
the basis of the original or replacement
property.
The corporation should keep copies of
all filed returns. They help in preparing
future and amended returns and in the
calculation of earnings and profits.

Other Forms and
Statements That May Be
Required

DRAFT AS OF
December 8, 2022

Small business taxpayer. For tax years
beginning in 2022, a corporation qualifies
as a small business taxpayer if (a) it has
average annual gross receipts of $27
million or less for the 3 prior tax years, and
(b) it is not a tax shelter (as defined in
section 448(d)(3)).
A small business taxpayer can account
for inventory by (a) treating the inventory
as non-incidental materials and supplies,
or (b) conforming to its treatment of
inventory in an applicable financial
statement (as defined in section 451(b)
(3)). If it does not have an applicable
financial statement, it can use the method
of accounting used in its books and
records prepared according to its
accounting procedures.

Change in accounting method.
Generally, the corporation must get IRS
consent to change either an overall
method of accounting or the accounting
treatment of any material item for income
tax purposes. To obtain consent, the
corporation must generally file Form 3115,
Application for Change in Accounting
Method, during the tax year for which the
change is requested. See the Instructions
for Form 3115 and Pub. 538 for more
information and exceptions. Also see the
Instructions for Form 3115 for procedures
that may apply for obtaining automatic
consent to change certain methods of
accounting, non-automatic change
procedures, and reduced Form 3115 filing
requirements.
Section 481(a) adjustment. If the
corporation's taxable income for the
current tax year is figured under a method
of accounting different from the method
used in the preceding tax year, the
corporation may have to make an
adjustment under section 481(a) to
prevent amounts of income or expense
from being duplicated or omitted. The
section 481(a) adjustment period is
generally 1 year for a net negative
adjustment and 4 years for a net positive
adjustment. For an eligible terminated S
corporation, the section 481(a) adjustment
period is generally 6 years for a negative
or positive adjustment that is attributable
to the S corporation's revocation of its
election under section 1362(a) after
December 21, 2017, and before
December 22, 2019. See section 481(d).
Also, see the instructions for Form 3115.

Accounting Period

A corporation must figure its taxable
income on the basis of a tax year. A tax
year is the annual accounting period a
corporation uses to keep its records and
report its income and expenses.
Generally, corporations can use a
calendar year or a fiscal year. Personal
service corporations, however, must use a
calendar year unless they meet one of the
exceptions discussed later under Personal
Service Corporation.

Change of tax year. Generally, a
corporation, including a personal service
corporation, must get the consent of the
IRS before changing its tax year by filing
Form 1128, Application To Adopt,
Change, or Retain a Tax Year. However,
exceptions may apply. See the
Instructions for Form 1128 and Pub. 538
for more information.

Rounding Off to
Whole Dollars

The corporation may enter decimal points
and cents when completing its return.
However, the corporation should round off
cents to whole dollars on its return, forms,
and schedules to make completing its
return easier. The corporation must either
round off all amounts on its return to whole
dollars, or use cents for all amounts. To
round, drop amounts under 50 cents and
increase amounts from 50 to 99 cents to
the next dollar. For example, $8.40 rounds
to $8 and $8.50 rounds to $9.
If two or more amounts must be added
to figure the amount to enter on a line,
include cents when adding the amounts
and round off only the total.

Recordkeeping

Keep the corporation's records for as long
as they may be needed for the
administration of any provision of the
Internal Revenue Code. Usually, records
that support an item of income, deduction,
or credit on the return must be kept for 3
years from the date the return is due or
filed, whichever is later. Keep records that
verify the corporation's basis in property
-6-

Amended return. Use Form 1120-X,
Amended U.S. Corporation Income Tax
Return, to correct a previously filed Form
1120.
Reportable transaction disclosure
statement. Disclose information for each
reportable transaction in which the
corporation participated. Form 8886,
Reportable Transaction Disclosure
Statement, must be filed for each tax year
that the federal income tax liability of the
corporation is affected by its participation
in the transaction. The following are
reportable transactions.
1. Any listed transaction, which is a
transaction that is the same as or
substantially similar to one of the types of
transactions that the IRS has determined
to be a tax avoidance transaction and
identified by notice, regulation, or other
published guidance as a listed
transaction.
2. Any transaction offered under
conditions of confidentiality for which the
corporation (or a related party) paid an
advisor a fee of at least $250,000.
3. Certain transactions for which the
corporation (or a related party) has
contractual protection against
disallowance of the tax benefits.
4. Certain transactions resulting in a
loss of at least $10 million in any single
year or $20 million in any combination of
years.
5. Any transaction identified by the
IRS by notice, regulation, or other
published guidance as a “transaction of
interest.”
For more information, see Regulations
section 1.6011-4. Also, see the
Instructions for Form 8886.
Penalties. The corporation may have
to pay a penalty if it is required to disclose
a reportable transaction under section
6011 and fails to properly complete and
file Form 8886. Penalties may also apply
under section 6707A if the corporation
fails to file Form 8886 with its corporate
return, fails to provide a copy of Form
8886 to the Office of Tax Shelter Analysis
(OTSA), or files a form that fails to include
all the information required (or includes
incorrect information). Other penalties,
such as an accuracy-related penalty under
Instructions for Form 1120

section 6662A, may also apply. See the
Instructions for Form 8886 for details on
these and other penalties.
Reportable transactions by material
advisors. Material advisors to any
reportable transaction must disclose
certain information about the reportable
transaction by filing Form 8918 with the
IRS. For details, see the Instructions for
Form 8918.

reducing the acquiring corporation's basis
in the property transferred. Once made,
the election is irrevocable. For more
information, see section 362(e)(2) and
Regulations section 1.362-4. If an election
is made, a statement must be filed in
accordance with Regulations section
1.362-4(d)(3).

3. The amount of tax-exempt income
from forgiveness of the PPP loan that the
corporation is treating as received or
accrued and for which tax year; and
4. Whether forgiveness of the PPP
loan has been granted as of the date the
return is filed.
A corporation that reported tax-exempt
income from the forgiveness of a PPP loan
on its 2020 return, the timing of which
corresponds to one of the options
presented in Rev. Proc. 2021-48, need not
file an amended return solely to attach the
statement that is described in these
instructions.
If a corporation treats tax-exempt
income resulting from a PPP loan as
received or accrued prior to when
forgiveness of the PPP loan is granted and
the amount of forgiveness granted is less
than the amount of tax-exempt income
that was previously treated as received or
accrued, the corporation should make a
prior period adjustment on Schedule M-2
for the tax year in which the corporation
receives notice that the PPP loan was not
fully forgiven. See the instructions for
Schedule M-2 for more details.

DRAFT AS OF
December 8, 2022

Transfers to a corporation controlled
by the transferor. Every significant
transferor (as defined in Regulations
section 1.351-3(d)) that receives stock of
a corporation in exchange for property in a
nonrecognition event must include the
statement required by Regulations section
1.351-3(a) on or with the transferor's tax
return for the tax year of the exchange.
The transferee corporation must include
the statement required by Regulations
section 1.351-3(b) on or with its return for
the tax year of the exchange, unless all the
required information is included in any
statement(s) provided by a significant
transferor that is attached to the same
return for the same section 351 exchange.
If the transferor or transferee corporation
is a controlled foreign corporation, each
U.S. shareholder (within the meaning of
section 951(b)) must include the required
statement on or with its return.
Distributions under section 355. Every
corporation that makes a distribution of
stock or securities of a controlled
corporation, as described in section 355
(or so much of section 356 as it relates to
section 355), must include the statement
required by Regulations section
1.355-5(a) on or with its return for the year
of the distribution. A significant distributee
(as defined in Regulations section
1.355-5(c)) that receives stock or
securities of a controlled corporation must
include the statement required by
Regulations section 1.355-5(b) on or with
its return for the year of receipt. If the
distributing or distributee corporation is a
controlled foreign corporation, each U.S.
shareholder (within the meaning of section
951(b)) must include the statement on or
with its return.
Dual consolidated losses. If a domestic
corporation incurs a dual consolidated
loss (as defined in Regulations section
1.1503(d)-1(b)(5)), the corporation (or
consolidated group) may need to attach a
domestic use agreement and/or an annual
certification, as provided in Regulations
section 1.1503(d)-6(d) and (g).
Election to reduce basis under section
362(e)(2)(C). If property is transferred to
a corporation subject to section 362(e)(2),
the transferor and the acquiring
corporation may elect, under section
362(e)(2)(C), to reduce the transferor's
basis in the stock received instead of
Instructions for Form 1120

Annual information reporting by specified domestic entities under section
6038D. Certain domestic corporations
that are formed or availed of to hold
specified foreign financial assets
(“specified domestic entities”) must file
Form 8938. Form 8938 must be filed each
year the value of the corporation's
specified foreign financial assets is more
than $50,000 on the last day of the tax
year or more than $75,000 at any time
during the tax year. For more information
on domestic corporations that are
specified domestic entities and the types
of foreign financial assets that must be
reported, see the Instructions for Form
8938, generally, and in particular, Who
Must File, Specified Domestic Entity,
Specified Foreign Financial Assets,
Interests in Specified Foreign Financial
Assets, Assets Not Required To Be
Reported, and Exceptions to Reporting.
In addition, a domestic corporation
required to file Form 8938 with its Form
1120 for the taxable year should check
“Yes” to Schedule N (Form 1120),
Question 8, and also include that schedule
with its Form 1120.
Form 8975. Certain U.S. persons that are
the ultimate parent entity of a U.S.
multinational enterprise group with annual
revenue for the preceding reporting period
of $850 million or more are required to file
Form 8975, Country-by-Country Report.
Form 8975 and Schedule A (Form 8975)
must be filed with the income tax return of
the ultimate parent entity of a U.S.
multinational enterprise group for the tax
year in or within which the reporting period
covered by Form 8975 ends. For more
information, see Form 8975, Schedule A
(Form 8975) and the Instructions for Form
8975, and Schedule A (Form 8975).
Paycheck Protection Program (PPP)
loans. A corporation that has tax-exempt
income resulting from the forgiveness of a
PPP loan should attach a statement to its
return reporting each tax year for which
the corporation is applying Rev. Proc.
2021-48, sections 3.01(1), (2), or (3). Any
statement for the current tax year should
include the following information, for each
PPP loan:
1. The corporation's name, address,
and EIN;
2. A statement that the corporation is
applying or applied section 3.01(1), (2), or
(3) of Rev. Proc. 2021-48, and for what tax
year, as applicable;
-7-

Other forms and statements. See Pub.
542, Corporations, for a list of other forms
and statements a corporation may need to
file in addition to the forms and statements
discussed throughout these instructions.

Specific Instructions
Period Covered

File the 2022 return for calendar year 2022
and fiscal years that begin in 2022 and
end in 2023. For a fiscal or short tax year
return, fill in the tax year space at the top
of the form.
if:

The 2022 Form 1120 can also be used

• The corporation has a tax year of less
than 12 months that begins and ends in
2023, and
• The 2023 Form 1120 is not available at
the time the corporation is required to file
its return.
The corporation must show its 2023 tax
year on the 2022 Form 1120 and take into
account any tax law changes that are
effective for tax years beginning after
December 31, 2022.

Name and Address

Enter the corporation's true name (as set
forth in the charter or other legal document
creating it), address, and EIN on the
appropriate lines. Enter the address of the
corporation's principal office or place of
business. Include the suite, room, or other
unit number after the street address. If the
post office does not deliver mail to the

street address and the corporation has a
P.O. box, show the box number instead.
Note. Do not use the address of the
registered agent for the state in which the
corporation is incorporated. For example,
if a business is incorporated in Delaware
or Nevada and the corporation's principal
office is located in Little Rock, Arkansas,
the corporation should enter the Little
Rock address.

The corporation does not have to

TIP provide the information requested

in (3), (4), and (5), above, if its
total receipts (line 1a plus lines 4 through
10 on page 1 of the return) and its total
assets at the end of the tax year
(Schedule L, line 15(d)) are less than
$250,000. See Schedule K, Question 13.

If a section 444 election is terminated
and the termination results in a short tax
year, type or print at the top of the first
page of Form 1120 for the short tax year
“SECTION 444 ELECTION
TERMINATED.”

Schedule M-3 (Form 1120)

A corporation with total assets
(nonconsolidated or consolidated for all
corporations included within a
consolidated tax group) of $10 million or
more on the last day of the tax year must
file Schedule M-3 (Form 1120) instead of
Schedule M-1. A corporation filing Form
1120 that is not required to file
Schedule M-3 may voluntarily file
Schedule M-3 instead of Schedule M-1.

DRAFT AS OF
December 8, 2022

If the corporation receives its mail in
care of a third party (such as an
accountant or an attorney), enter on the
street address line “C/O” followed by the
third party's name and street address or
P.O. box.

If the corporation has a foreign
address, include the city or town, state or
province, country, and foreign postal
code. Do not abbreviate the country
name. Follow the country's practice for
entering the name of the state or province
and postal code.

Item A. Identifying
Information
Consolidated Return

Corporations filing a consolidated return
must check Item A, box 1a, and attach
Form 851, Affiliations Schedule, and other
supporting statements to the return. Also,
for the first year a subsidiary corporation is
being included in a consolidated return,
attach Form 1122 to the parent's
consolidated return. Attach a separate
Form 1122 for each new subsidiary being
included in the consolidated return.
File supporting statements for each
corporation included in the consolidated
return. Do not use Form 1120 as a
supporting statement. On the supporting
statement, use columns to show the
following, both before and after
adjustments.
1. Items of gross income and
deductions.
2. A computation of taxable income.
3. Balance sheets, as of the beginning
and end of the tax year.
4. A reconciliation of income per
books with income per return.
5. A reconciliation of retained
earnings.
Enter on Form 1120 the totals for each
item of income, gain, loss, expense, or
deduction, net of eliminating entries for
intercompany transactions between
corporations within the consolidated
group. Attach consolidated balance
sheets and a reconciliation of
consolidated retained earnings.

For more information on consolidated
returns, see the regulations under section
1502.

Life-Nonlife Consolidated
Return

If Item A, box 1a, is checked and the
corporation is the common parent of a
consolidated group that includes a life
insurance company, also check box 1b.
See Regulations section 1.1502-47(m) for
the requirements for filing a consolidated
tax return for a life-nonlife consolidated
group.

Personal Holding Company

A personal holding company must check
Item A, box 2, and attach Schedule PH
(Form 1120), U.S. Personal Holding
Company (PHC) Tax. See the Instructions
for Schedule PH (Form 1120) for details.

Personal Service Corporation

If the corporation is a personal service
corporation, check Item A, box 3. A
personal service corporation is a
corporation whose principal activity for the
testing period is the performance of
personal services. The testing period for a
tax year is generally the prior tax year
unless the corporation has just been
formed. Personal services include any
activity performed in the fields of
accounting, actuarial science,
architecture, consulting, engineering,
health, law, and the performing arts. The
services must be substantially performed
by employee-owners.
A personal service corporation must
use a calendar tax year unless:
• It elects to use a 52-53-week tax year
that ends with reference to the calendar
year or tax year elected under section
444;
• It can establish a business purpose for
a different tax year and obtains the
approval of the IRS (see the Instructions
for Form 1128 and Pub. 538); or
• It elects under section 444 to have a tax
year other than a calendar year. To make
the election, use Form 8716, Election To
Have a Tax Year Other Than a Required
Tax Year.
If a corporation makes the section 444
election, its deduction for certain amounts
paid to employee-owners may be limited.
See Schedule H (Form 1120), Section
280H Limitations for a Personal Service
Corporation (PSC), to figure the maximum
deduction.
-8-

Corporations that (a) are required to file
Schedule M-3 (Form 1120) and have less
than $50 million total assets at the end of
the tax year, or (b) are not required to file
Schedule M-3 (Form 1120) and voluntarily
file Schedule M-3 (Form 1120), must
either (i) complete Schedule M-3 (Form
1120) entirely, or (ii) complete
Schedule M-3 (Form 1120) through Part I,
and complete Form 1120, Schedule M-1,
instead of completing Parts II and III of
Schedule M-3 (Form 1120). If the
corporation chooses to complete
Schedule M-1 instead of completing Parts
II and III of Schedule M-3, the amount on
Schedule M-1, line 1, must equal the
amount on Schedule M-3, Part I, line 11.
See the Instructions for Schedule M-3
(Form 1120) for more details. Also, see
the instructions for Schedule M-1, later.
If you are filing Schedule M-3, check
Item A, box 4, to indicate that
Schedule M-3 is attached.

Item B. Employer
Identification Number
(EIN)

Enter the corporation's EIN. If the
corporation does not have an EIN, it must
apply for one. An EIN can be applied for:
• Online—Go to IRS.gov/EIN. The EIN is
issued immediately once the application
information is validated.
• By faxing or mailing Form SS-4,
Application for Employer Identification
Number.
Corporations located in the United
States or U.S. possessions can
CAUTION use the online application. Foreign
corporations should call 267-941-1099
(not a toll free number) for more
information on obtaining an EIN. See the
Instructions for Form SS-4.

!

EIN applied for, but not received. If the
corporation has not received its EIN by the
time the return is due, enter “Applied For”
and the date the corporation applied in the
space for the EIN. However, if the
Instructions for Form 1120

corporation is filing its return electronically,
an EIN is required at the time the return is
filed. An exception applies to subsidiaries
of corporations whose returns are filed
with the parent's electronically filed
consolidated Form 1120. These
subsidiaries should enter “Applied For” in
the space for the EIN on their returns. The
subsidiaries' returns are identified under
the parent corporation's EIN.

defined in section 1353) at the highest
corporate tax rate. If the election is made,
the corporation generally may not claim
any loss, deduction, or credit with respect
to qualifying shipping activities. A
corporation making this election may also
elect to defer gain on the disposition of a
qualifying vessel.
Use Form 8902, Alternative Tax on
Qualifying Shipping Activities, to figure the
tax. Include the alternative tax on
Schedule J, Part I, line 9e.

gross profits, (d) percentage of gross
profits to gross sales, (e) amount
collected, and (f) gross profit on the
amount collected.
For sales of timeshares and residential
lots reported under the installment
method, if the corporation elects to pay
interest under section 453(I)(3), the
corporation's income tax is increased by
the interest payable under section 453(l)
(3). Report this addition to the tax on
Schedule J, Part I, line 9f.

Line 1. Gross Receipts or Sales

Nonaccrual experience method for
service providers. Accrual method
corporations are not required to accrue
certain amounts to be received from the
performance of services that, based on
their experience, will not be collected, if:
• The services are in the fields of health,
law, engineering, architecture, accounting,
actuarial science, performing arts or
consulting; or
• The corporation meets the section
448(c) gross receipts test for all prior
years.
This provision does not apply to any
amount if interest is required to be paid on
the amount or if there is any penalty for
failure to timely pay the amount. See
Regulations section 1.448-3 for more
information on the nonaccrual experience
method, including information on safe
harbor methods.
For information on a book safe harbor
method of accounting for corporations that
use the nonaccrual experience method of
accounting, see Rev. Proc. 2011-46,
2011-42 I.R.B. 518 available at
IRS.gov/irb/2011-42_IRB#RP-2011-46, or
any successor. Also, see the Instructions
for Form 3115 for procedures to obtain
automatic consent to change to this
method or make certain changes within
this method.
Corporations that qualify to use the
nonaccrual experience method should
attach a statement showing total gross
receipts, the amount not accrued because
of the application of section 448(d)(5), and
the net amount accrued. Enter the net
amount on line 1a.

DRAFT AS OF
December 8, 2022

For more information, see the
Instructions for Form SS-4.

Item D. Total Assets

Enter the corporation's total assets (as
determined by the accounting method
regularly used in keeping the corporation's
books and records) at the end of the tax
year. If there are no assets at the end of
the tax year, enter -0-.
If the corporation is required to
complete Schedule L, enter the total
assets from Schedule L, line 15, column
(d), on page 1, Item D. If filing a
consolidated return, report total
consolidated assets for all corporations
joining in the return.

Item E. Initial Return, Final
Return, Name Change, or
Address Change

• If this is the corporation's first return,
check the “Initial return” box.
• If this is the corporation's final return
and it will no longer exist, check the “Final
return” box.
• If the corporation changed its name
since it last filed a return, check the “Name
change” box. Generally, a corporation
must also have amended its articles of
incorporation and filed the amendment
with the state in which it was incorporated.
• If the corporation has changed its
address since it last filed a return
(including a change to an “in care of”
address), check the “Address change”
box.
Note. If a change in address or
responsible party occurs after the return is
filed, use Form 8822-B, Change of
Address or Responsible Party—
Business, to notify the IRS. See the
instructions for Form 8822-B for details.

Income

Except as otherwise provided in the
Internal Revenue Code, gross income
includes all income from whatever source
derived.

Exception for income from qualifying
shipping activities. Gross income does
not include income from qualifying
shipping activities if the corporation makes
an election under section 1354 to be taxed
on its notional shipping income (as
Instructions for Form 1120

Line 1a. Gross receipts or sales. Enter
on line 1a gross receipts or sales from all
business operations, except for amounts
that must be reported on lines 4 through
10.
Special rules apply to certain income,
as discussed below.

Advance payments. In general,
advance payments are reported in the
year of receipt. For exceptions to this
general rule for corporations that use the
accrual method of accounting, see the
following.
• To report income from long-term
contracts, see section 460.
• For rules that allow a limited deferral of
advance payments beyond the current tax
year, see section 451(c). Also, see
Regulations sections 1.451-8(c), (d), and
(e).
• For information on adopting or
changing to a permissible method for
reporting advance payments for services
and certain goods by an accrual method
corporation, see the Instructions for Form
3115.
Installment sales. Generally, the
installment method cannot be used for
dealer dispositions of property. A “dealer
disposition” is any disposition of (a)
personal property by a person who
regularly sells or otherwise disposes of
personal property of the same type on the
installment plan, or (b) real property held
for sale to customers in the ordinary
course of the taxpayer's trade or business.
The restrictions on using the
installment method do not apply to the
following.
• Dispositions of property used or
produced in the trade or business of
farming.
• Certain dispositions of timeshares and
residential lots reported under the
installment method for which the
corporation elects to pay interest under
section 453(I)(3).
Enter on line 1a (and carry to line 3) the
gross profit on collections from these
installment sales. Attach a statement
showing the following information for the
current and the 3 preceding years: (a)
gross sales, (b) cost of goods sold, (c)
-9-

Line 1b. Returns and allowances.
Enter cash and credit refunds the
corporation made to customers for
returned merchandise, rebates, and other
allowances made on gross receipts or
sales.

Line 2. Cost of Goods Sold

Complete and attach Form 1125-A, Cost
of Goods Sold, if applicable. Enter on
Form 1120, line 2, the amount from Form
1125-A, line 8. See Form 1125-A and its
instructions.

Line 4. Dividends and
Inclusions

See the instructions for Schedule C, later.
Complete Schedule C and enter on line 4
the amount from Schedule C, line 23,
column (a).

Line 5. Interest

substantially all the assets of a foreign
branch are transferred to a specified 10%
owned foreign corporation (as defined in
section 245A(b)) with respect to which the
corporation was a U.S. shareholder
immediately after the transfer. See section
91.
• Any LIFO recapture amount under
section 1363(d). The corporation may
have to include a LIFO recapture amount
in income if it:
1. Used the LIFO inventory method
for its last tax year before the first tax year
for which it elected to become an S
corporation, or
2. Transferred LIFO inventory assets
to an S corporation in a nonrecognition
transaction in which those assets were
transferred basis property.

sick and family leave wages in gross
income for the tax year that includes the
last day of any calendar quarter in which
the credit is allowed.
Note. A credit is available only if the leave
was taken after March 31, 2020, and
before October 1, 2021, and only after the
qualified leave wages were paid, which
might, under certain circumstances, not
occur until a quarter after September 30,
2021, including quarters in 2022.

DRAFT AS OF
December 8, 2022

Enter taxable interest on U.S. obligations
and on loans, notes, mortgages, bonds,
bank deposits, corporate bonds, tax
refunds, etc. Do not offset interest
expense against interest income. Special
rules apply to interest income from certain
below-market-rate loans. See section
7872 for details.
Note. Report tax-exempt interest on
Schedule K, item 9. Also, if required,
include the same amount on
Schedule M-1, line 7, or Schedule M-3
(Form 1120), Part II, line 13, if applicable.

Line 6. Gross Rents

Enter the gross amount received for the
rental of property. Deduct expenses such
as repairs, interest, taxes, and
depreciation on the proper lines for
deductions. A rental activity held by a
closely held corporation or a personal
service corporation may be subject to the
passive activity loss rules. See Passive
activity limitations, later.

Line 10. Other Income

Enter any other taxable income not
reported on lines 1 through 9. List the type
and amount of income on an attached
statement. If the corporation has only one
item of other income, describe it in
parentheses on line 10.
Examples of other income to report on
line 10 include the following.
• Recoveries of bad debts deducted in
prior years under the specific charge-off
method.
• The amount included in income from
Form 6478, Biofuel Producer Credit.
• The amount included in income from
Form 8864, Biodiesel, Renewable Diesel,
or Sustainable Aviation Fuels Credit.
• Refunds of taxes deducted in prior
years to the extent they reduced the
amount of tax imposed. See section 111
and the related regulations. Do not offset
current year taxes against tax refunds.
• Ordinary income from trade or business
activities of a partnership (from
Schedule K-1 (Form 1065)). Do not offset
ordinary losses against ordinary income.
Instead, include the losses on line 26.
Show the partnership's name, address,
and EIN on a separate statement attached
to this return. If the amount entered is from
more than one partnership, identify the
amount from each partnership.
• The transferred loss amount identified
as “Section 91 Transferred Loss Amount,”
which is required to be recognized when

The LIFO recapture amount is the
amount by which the C corporation's
inventory under the FIFO method exceeds
the inventory amount under the LIFO
method at the close of the corporation's
last tax year as a C corporation (or for the
year of the transfer, if (2) above applies).
Also, see the instructions for Schedule J,
Part I, line 11.
• The ratable portion of any net positive
section 481(a) adjustment. See Section
481(a) adjustment, earlier.
• Part or all of the proceeds received
from certain corporate-owned life
insurance contracts issued after August
17, 2006. Corporations that own one or
more employer-owned life insurance
contracts issued after this date must file
Form 8925, Report of Employer-Owned
Life Insurance Contracts. See Form 8925.
• Income from cancellation of debt (COD)
from the repurchase of a debt instrument
for less than its adjusted issue price.
• The corporation's share of the following
income from Form 8621, Information
Return by a Shareholder of a Passive
Foreign Investment Company or Qualified
Electing Fund.
1. Ordinary earnings of a qualified
electing fund.
2. Gain or loss from marking passive
foreign investment company (PFIC) stock
to market.
3. Gain or loss from sale or other
disposition of section 1296 stock.
4. Excess distributions from a section
1291 fund allocated to the current year
and pre-PFIC years, if any.
See Form 8621 and the Instructions for
Form 8621 for details.
• The amount of payroll tax credit taken
by an employer on its 2022 employment
tax returns (Forms 941, 943, and 944) for
qualified paid sick and qualified paid
family leave under FFCRA and ARP (both
the nonrefundable and refundable
portions). The corporation must include
the full amount of the credit for qualified
-10-

Deductions

Limitations on Deductions

Uniform capitalization rules. The
uniform capitalization rules of section
263A require corporations to capitalize
certain costs to inventory or other
property. Corporations subject to the
section 263A uniform capitalization rules
are required to capitalize:
1. Direct costs of assets produced or
acquired for resale, and
2. Certain indirect costs (including
taxes) that are properly allocable to
property produced or property acquired for
resale.
The corporation cannot deduct the
costs required to be capitalized under
section 263A until it sells, uses, or
otherwise disposes of the property (to
which the costs relate). The corporation
recovers these costs through
depreciation, amortization, or cost of
goods sold.
A small business taxpayer (defined
earlier) is not required to capitalize costs
under section 263A. A small business
taxpayer that wants to discontinue
capitalizing costs under section 263A
must change its method of accounting.
See section 263A(i) and Regulations
section 1.263A-1(j). Also, see the
Instructions for Form 3115.
For more information on the uniform
capitalization rules, see Pub. 538. Also,
see Regulations sections 1.263A-1
through 1.263A-3. See section 263A(d),
Regulations section 1.263A-4, and Pub.
225 for rules for property produced in a
farming business.
Transactions between related taxpayers. Generally, an accrual basis taxpayer
can only deduct business expenses and
interest owed to a related party in the year
the payment is included in the income of
the related party. See sections 163(e)(3)
and 267(a)(2) for limitations on deductions
for unpaid interest and expenses.
Limitations on business interest expense. Business interest expense may
be limited. See section 163(j) and Form
8990. Also, see Limitation on deduction in
the instructions for line 18 and
Instructions for Form 1120

Schedule K, Question 23 and Question
24, later.
Section 291 limitations. Corporations
may be required to adjust deductions for
depletion of iron ore and coal, intangible
drilling and exploration and development
costs, certain deductions for financial
institutions, and the amortizable basis of
pollution control facilities. See section 291
to determine the amount of the
adjustment.

Generally, the two kinds of passive
activities are:
• Trade or business activities in which the
corporation did not materially participate
for the tax year; and
• Rental activities, regardless of its
participation.
For exceptions, see Form 8810, Corporate
Passive Activity Loss and Credit
Limitations.
Corporations subject to the passive
activity limitations must complete Form
8810 to compute their allowable passive
activity loss and credit. Before completing
Form 8810, see Temporary Regulations
section 1.163-8T, which provides rules for
allocating interest expense among
activities. If a passive activity is also
subject to the at-risk rules of section 465
or the tax-exempt use loss rules of section
470, those rules apply before the passive
loss rules.
For more information, see section 469,
the related regulations, and Pub. 925,
Passive Activity and At-Risk Rules.

• Credit for small employer health
insurance premiums (Form 8941).
• Employer credit for paid family and
medical leave (Form 8994).
If the corporation has any of the credits
listed above, figure the current year credit
before figuring the deduction for expenses
on which the credit is based. If the
corporation capitalized any costs on which
it figured the credit, it may need to reduce
the amount capitalized by the credit
attributable to these costs.
See the instructions for the form used
to figure the applicable credit for more
details.

DRAFT AS OF
December 8, 2022

Election to deduct business start-up
and organizational costs. A corporation
can elect to deduct a limited amount of
start-up and organizational costs it paid or
incurred. Any remaining costs must
generally be amortized over a 180-month
period. See sections 195 and 248 and the
related regulations.

Time for making an election. The
corporation generally elects to deduct
start-up or organizational costs by
claiming the deduction on its income tax
return filed by the due date (including
extensions) for the tax year in which the
active trade or business begins. For more
details, including special rules for costs
paid or incurred before September 9,
2008, see the Instructions for Form 4562.
Also, see Pub. 535, Business Expenses.
If the corporation timely filed its return
for the year without making an election, it
can still make an election by filing an
amended return within 6 months of the
due date of the return (excluding
extensions). Clearly indicate the election
on the amended return and write “Filed
pursuant to section 301.9100-2” at the top
of the amended return. File the amended
return at the same address the corporation
filed its original return. The election
applies when figuring taxable income for
the current tax year and all subsequent
years.
The corporation can choose to forgo
the elections above by affirmatively
electing to capitalize its start-up or
organizational costs on its income tax
return filed by the due date (including
extensions) for the tax year in which the
active trade or business begins.
Note. The election to either amortize or
capitalize start-up costs is irrevocable and
applies to all start-up costs that are related
to the trade or business.
Report the deductible amount of
start-up and organizational costs and any
amortization on line 26. For amortization
that begins during the current tax year,
complete and attach Form 4562,
Depreciation and Amortization.
Passive activity limitations. Limitations
on passive activity losses and credits
under section 469 apply to personal
service corporations (defined earlier) and
closely held corporations (defined later).
Instructions for Form 1120

Closely held corporations. A
corporation is a closely held corporation if:
• At any time during the last half of the tax
year more than 50% in value of its
outstanding stock is directly or indirectly
owned by or for not more than five
individuals, and
• The corporation is not a personal
service corporation.
Certain organizations are treated as
individuals for purposes of this test. See
section 542(a)(2). For rules for
determining stock ownership, see section
544 (as modified by section 465(a)(3)).
Reducing certain expenses for which
credits are allowable. If the corporation
claims certain credits, it may need to
reduce the otherwise allowable
deductions for expenses used to figure the
credit. This applies to credits such as the
following.
• Work opportunity credit (Form 5884).
• Credit for increasing research activities
(Form 6765).
• Orphan drug credit (Form 8820).
• Disabled access credit (Form 8826).
• Empowerment zone employment credit
(Form 8844).
• Indian employment credit (Form 8845).
• Credit for employer social security and
Medicare taxes paid on certain employee
tips (Form 8846).
• Credit for small employer pension plan
start-up costs (Form 8881).
• Credit for employer-provided childcare
facilities and services (Form 8882).
• Low sulfur diesel fuel production credit
(Form 8896).
• Mine rescue team training credit (Form
8923).
• Credit for employer differential wage
payments (Form 8932).
-11-

Limitations on deductions related to
property leased to tax-exempt entities.
If a corporation leases property to a
governmental or other tax-exempt entity,
the corporation cannot claim deductions
related to the property to the extent that
they exceed the corporation's income from
the lease payments. This disallowed
tax-exempt use loss can be carried over to
the next tax year and treated as a
deduction with respect to the property for
that tax year. See section 470(d) for
exceptions.
Limitation on tax benefits for remuneration under the Patient Protection and
Affordable Care Act. The $1 million
compensation limit is reduced to $500,000
for remuneration for services provided by
individuals for or on behalf of certain
health insurance providers. The $500,000
limitation applies to remuneration that is
deductible in the tax year during which the
services were performed and
remuneration for services during the year
that is deductible in a future tax year
(called "deferred deduction
remuneration"). The $500,000 limitation is
reduced by any amounts disallowed as
excess parachute payments. See section
162(m)(6) and Regulations section
1.162-31 for definitions and other special
rules.

Line 12. Compensation of
Officers

Enter deductible officers' compensation
on line 12. Do not include compensation
deductible elsewhere on the return, such
as amounts included in cost of goods sold,
elective contributions to a section 401(k)
cash or deferred arrangement, or amounts
contributed under a salary reduction SEP
agreement or a SIMPLE IRA plan.
If the corporation's total receipts
(line 1a, plus lines 4 through 10) are
$500,000 or more, complete Form
1125-E, Compensation of Officers. Enter
on Form 1120, line 12, the amount from
Form 1125-E, line 4.

Line 13. Salaries and Wages

Enter the total salaries and wages paid for
the tax year. Do not include salaries and

wages deductible elsewhere on the return,
such as amounts included in officers'
compensation, cost of goods sold,
elective contributions to a section 401(k)
cash or deferred arrangement, or amounts
contributed under a salary reduction SEP
agreement or a SIMPLE IRA plan.
If the corporation provided taxable
fringe benefits to its employees, such as
personal use of a car, do not deduct as
wages the amount allocated for
depreciation and other expenses claimed
on lines 20 and 26.

an amount includible in income called the
inclusion amount. The corporation may
have an inclusion amount if:

The lease term began:

And the vehicle's
FMV on the first
day of the lease
exceeded:

• Taxes assessed against local benefits
that increase the value of the property
assessed (such as for paving, etc.).
• Taxes deducted elsewhere on the
return, such as those reflected in cost of
goods sold.
See section 164(d) for information on
apportionment of taxes on real property
between seller and purchaser.

DRAFT AS OF
December 8, 2022

If the corporation claims a credit
for any wages paid or incurred, it
CAUTION may need to reduce any
corresponding deduction for officers'
compensation and salaries and wages.
See Reducing certain expenses for which
credits are allowable, earlier.

!

Line 14. Repairs and
Maintenance

Enter the cost of repairs and maintenance
not claimed elsewhere on the return, such
as labor and supplies, that are not
payments to produce or improve tangible
or real property. See Regulations
1.263(a)-1. For example, amounts are
paid for improvements if they are for
betterments to the property, restorations
of the property (such as the replacements
of major components or substantial
structural parts), or if they adapt the
property to a new or different use.
Amounts paid to produce or improve
property must be capitalized. See
Regulations sections 1.263(a)-2 and (a)-3.
The corporation can deduct repair and
maintenance expenses only to the extent
they relate to a trade or business activity.
See Regulations section 1.162-4. The
corporation may elect to capitalize certain
repair and maintenance costs consistent
with its books and records. See
Regulations section 1.263(a)-3(n) for
information on how to make the election.

Line 15. Bad Debts

Enter the total debts that became
worthless in whole or in part during the tax
year. A small bank or thrift institution using
the reserve method of section 585 should
attach a statement showing how it figured
the current year's provision. A corporation
that uses the cash method of accounting
cannot claim a bad debt deduction unless
the amount was previously included in
income.

Line 16. Rents

If the corporation rented or leased a
vehicle, enter the total annual rent or lease
expense paid or incurred during the year.
Also, complete Part V of Form 4562. If the
corporation leased a vehicle for a term of
30 days or more, the deduction for vehicle
lease expense may have to be reduced by

Cars (excluding trucks
and vans)

Do not reduce the corporation's
deduction for social security and
CAUTION Medicare taxes by the
nonrefundable and refundable portions of
the FFCRA and ARP credits for qualified
sick and family leave wages claimed on its
employment tax returns. Instead, report
this amount as income on line 10.

!

After 12/31/21 but before
1/1/23 . . . . . . . . . .

$56,000

After 12/31/20 but before
1/1/22 . . . . . . . . . .

$51,000

After 12/31/17 but before
1/1/21 . . . . . . . . . .

$50,000

After 12/31/12 but before
1/1/18 . . . . . . . . . .

$19,000

After 12/31/07 but before
1/1/13 . . . . . . . . . .

Line 18. Interest

$18,500

Note. Do not offset interest income
against interest expense.
The corporation must make an interest
allocation if the proceeds of a loan were
used for more than one purpose (for
example, to purchase a portfolio
investment and to acquire an interest in a
passive activity). See Temporary
Regulations section 1.163-8T for the
interest allocation rules.

Trucks and vans
After 12/31/21 but before
1/1/23 . . . . . . . . . .

$56,000

After 12/31/20 but before
1/1/22 . . . . . . . . . .

$51,000

After 12/31/17 but before
1/1/21 . . . . . . . . . .

$50,000

After 12/31/13 but before
1/1/18 . . . . . . . . . .

$19,500

After 12/31/09 but before
1/1/14 . . . . . . . . . .

$19,000

After 12/31/08 but before
1/1/10 . . . . . . . . . .

$18,500

After 12/31/07 but before
1/1/09 . . . . . . . . . .

$19,000

See Pub. 463, Travel, Gift, and Car
Expenses, for instructions on figuring the
inclusion amount.
Note. The inclusion amount for lease
terms beginning in 2023 will be published
in the Internal Revenue Bulletin in early
2023.

Line 17. Taxes and Licenses

Enter taxes paid or accrued during the tax
year, but do not include the following.
• Federal income taxes.
• Foreign or U.S. possession income
taxes if a foreign tax credit is claimed.
• Taxes not imposed on the corporation.
• Taxes, including state or local sales
taxes, that are paid or incurred in
connection with an acquisition or
disposition of property (these taxes must
be treated as a part of the cost of the
acquired property or, in the case of a
disposition, as a reduction in the amount
realized on the disposition).
-12-

Mutual savings banks, building and
loan associations, and cooperative banks
can deduct the amounts paid or credited
to the accounts of depositors as
dividends, interest, or earnings. See
section 591.
Do not deduct the following interest.

• Interest on indebtedness incurred or

continued to purchase or carry obligations
if the interest is wholly exempt from
income tax. See section 265(b) for special
rules and exceptions for financial
institutions. Also, see section 265(b)(7) for
a de minimis exception for financial
institutions for certain tax-exempt bonds
issued in 2009 and 2010.
• For cash basis taxpayers, prepaid
interest allocable to years following the
current tax year. For example, a cash
basis calendar year taxpayer who in 2022
prepaid interest allocable to any period
after 2022 can deduct only the amount
allocable to 2022.
• Interest and carrying charges on
straddles. Generally, these amounts must
be capitalized. See section 263(g).
• Interest on debt allocable to the
production of designated property by a
corporation for its own use or for sale. The
corporation must capitalize this interest.
Also, capitalize any interest on debt
allocable to an asset used to produce the
property. See section 263A(f) and
Regulations sections 1.263A-8 through
1.263A-15 for definitions and more
information.
• Interest paid or incurred on any portion
of an underpayment of tax that is
Instructions for Form 1120

attributable to an understatement arising
from an undisclosed listed transaction or
an undisclosed reportable avoidance
transaction (other than a listed
transaction) entered into in tax years
beginning after October 22, 2004.
Special rules apply to:

• Forgone interest on certain

date the resolution was adopted. See
section 170(a)(2)(B).
Limitation on deduction. Generally, the
total amount claimed cannot be more than
10% of taxable income (line 30) computed
without regard to the following.
• Any deduction for contributions.
• The special deductions on line 29b.
• The limitation under section 249 on the
deduction for bond premium.
• Any net operating loss (NOL) carryback
to the tax year under section 172.
• Any capital loss carryback to the tax
year under section 1212(a)(1).
• Deduction for income attributable to
domestic production activities of specified
agricultural or horticultural cooperatives.

communication from the donee
organization indicating the name of the
organization, the date of the contribution,
and the amount of the contribution.
Contributions of $250 or more. A
corporation can deduct a contribution of
$250 or more only if it gets a written
acknowledgment from the donee
organization that shows the amount of
cash contributed, describes any property
contributed (but not its value), and either
gives a description and a good faith
estimate of the value of any goods or
services provided in return for the
contribution or states that no goods or
services were provided in return for the
contribution. The acknowledgment must
be obtained by the due date (including
extensions) of the corporation's return, or,
if earlier, the date the return is filed. Do not
attach the acknowledgment to the tax
return, but keep it with the corporation's
records.

DRAFT AS OF
December 8, 2022

below-market-rate loans (see section
7872).
• Original issue discount (OID) on certain
high yield discount obligations. See
section 163(e)(5) to determine the amount
of the deduction for OID that is deferred
and the amount that is disallowed on a
high yield discount obligation. The rules
under section 163(e)(5) do not apply to
certain high yield discount obligations
issued after August 31, 2008, and before
January 1, 2011. See section 163(e)(5)
(F).
• Interest which is allocable to
unborrowed policy cash values of life
insurance, endowment, or annuity
contracts issued after June 8, 1997. See
section 264(f). Attach a statement
showing the computation of the deduction.
Limitation on deduction. Under section
163(j), business interest expense is
generally limited to the sum of business
interest income, 30% of the adjusted
taxable income, and floor plan financing
interest. The amount of any business
interest expense that is not allowed as a
deduction for the tax year is carried
forward to the following year. If section
163(j) applies, use Form 8990 to figure the
amount of business interest expense the
corporation can deduct for the current tax
year and the amount that can be carried
forward to the next year. See the
Instructions for Form 8990. Also see
Schedule K, Question 23 and Question
24, later.

Line 19. Charitable
Contributions

Enter contributions or gifts actually paid
within the tax year to or for the use of
charitable and governmental
organizations described in section 170(c)
and any unused contributions carried over
from prior years. Special rules and limits
apply to contributions to organizations
conducting lobbying activities. See section
170(f)(9).
Corporations reporting taxable income
on the accrual method can elect to treat as
paid during the tax year any contributions
paid by the due date for filing the
corporation’s tax return (not including
extensions), if the contributions were
authorized by the board of directors during
the tax year. Attach a declaration to the
return stating that the resolution
authorizing the contributions was adopted
by the board of directors during the tax
year. The declaration must include the
Instructions for Form 1120

Carryover. Charitable contributions over
the 10% limitation cannot be deducted for
the tax year but can be carried over to the
next 5 tax years. See the exception below
for farmers and ranchers and certain
Native Corporations.
Special rules apply if the corporation
has an NOL carryover to the tax year. In
figuring the charitable contributions
deduction for the current tax year, the 10%
limit is applied using the taxable income
after taking into account any deduction for
the NOL.
To figure the amount of any remaining
NOL carryover to later years, taxable
income must be modified (see section
172(b)). To the extent that contributions
are used to reduce taxable income for this
purpose and increase an NOL carryover, a
contributions carryover is not allowed. See
section 170(d)(2)(B).

Suspension of 10% limitation for farmers and ranchers and certain Native
Corporations. Certain corporations can
deduct contributions of qualified
conservation property without regard to
the general 10% limit. This applies to:
• A qualified farmer or rancher (as
defined in section 170(b)(1)(E)(v)) that
does not have publicly traded stock; and
• A Native Corporation (as defined in
section 170(b)(2)(C)(iii)) that contributes
property which was land conveyed under
the Alaska Native Claims Settlement Act.
The total amount of the contribution
claimed for the qualified conservation
property cannot exceed 100% of the
excess of the corporation's taxable
income (as computed above substituting
“100%” for “10%” ) over all other allowable
charitable contributions. Any excess
qualified conservation contributions can
be carried over to the next 15 years,
subject to the 100% limitation. See
sections 170(b)(2)(B) and (C).
Cash contributions. For contributions of
cash, check, or other monetary gifts
(regardless of the amount), the
corporation must maintain a bank record,
or a receipt, letter, or other written
-13-

Contributions of property other than
cash. If a corporation (other than a
closely held or personal service
corporation) contributes property other
than cash and claims over a $500
deduction for the property, it must attach a
statement to the return describing the kind
of property contributed and the method
used to determine its FMV. Closely held
corporations and personal service
corporations must complete Form 8283,
Noncash Charitable Contributions, and
attach it to their returns. All other
corporations must generally complete and
attach Form 8283 to their returns for
contributions of property (other than
money) if the total claimed deduction for
all property contributed was more than
$5,000. Special rules apply to the
contribution of certain property. See the
Instructions for Form 8283.
Qualified conservation
contributions. Special rules apply to
qualified conservation contributions,
including contributions of certain
easements on buildings located in a
registered historic district. See section
170(h) and Pub. 526, Charitable
Contributions.
Other special rules. The corporation
must reduce its deduction for contributions
of certain capital gain property. See
sections 170(e)(1) and 170(e)(5).
A larger deduction is allowed for certain
contributions including:
• Inventory and other property to certain
organizations for use in the care of the ill,
needy, or infants (see section 170(e)(3)),
including qualified contributions of
“apparently wholesome food”; and
• Scientific equipment used for research
to institutions of higher learning or to
certain scientific research organizations
(other than by personal holding

companies and service organizations).
See section 170(e)(4).
For more information on charitable
contributions, including substantiation and
recordkeeping requirements, see section
170 and the related regulations and Pub.
526. For other special rules that apply to
corporations, see Pub. 542.

computerized ERISA Filing Acceptance
System (EFAST2). For more information,
see the EFAST2 website at
www.EFAST.dol.gov.
Form 5500-EZ, Annual Return of A
One-Participant (Owners/Partners and
Their Spouses) Retirement Plan or A
Foreign Plan. File this form for a plan that
only covers the owner (or the owner and
spouse) or a foreign plan that is required
to file an annual return and does not file
the annual return electronically on Form
5500-SF. See the Instructions for Form
5500-EZ.

• Insurance premiums.
• Legal and professional fees.
• Supplies used and consumed in the

business.
• Travel, meals, and entertainment
expenses. Special rules apply (discussed
later).
• Utilities.
• Ordinary losses from trade or business
activities of a partnership (from
Schedule K-1 (Form 1065)). Do not offset
ordinary income against ordinary losses.
Instead, include the income on line 10.
Show the partnership's name, address,
and EIN on a separate statement attached
to this return. If the amount is from more
than one partnership, identify the amount
from each partnership.
• Any extraterritorial income exclusion
(from Form 8873).
• Any net negative section 481(a)
adjustment, or in the case of an eligible
terminated S corporation, the ratable
portion of any negative section 481(a)
adjustment. See Section 481(a)
adjustment, earlier.
• Dividends paid in cash on stock held by
an employee stock ownership plan.
However, a deduction may be taken for
these dividends only if, according to the
plan, the dividends are:
1. Paid in cash directly to the plan
participants or beneficiaries;
2. Paid to the plan, which distributes
them in cash to the plan participants or
their beneficiaries no later than 90 days
after the end of the plan year in which the
dividends are paid;
3. At the election of such participants
or their beneficiaries (a) payable as
provided under (1) or (2) above, or (b)
paid to the plan and reinvested in
qualifying employer securities; or
4. Used to make payments on a loan
described in section 404(a)(9).

DRAFT AS OF
December 8, 2022

Line 20. Depreciation

Include on line 20 depreciation and the
cost of certain property that the
corporation elected to expense under
section 179 from Form 4562. Include
amounts not claimed on Form 1125-A or
elsewhere on the return. See Form 4562
and the Instructions for Form 4562.

Line 21. Depletion

See sections 613 and 613A for
percentage depletion rates applicable to
natural deposits. Also, see section 291 for
the limitation on the depletion deduction
for iron ore and coal (including lignite).
Attach Form T (Timber), Forest
Activities Schedule, if a deduction for
depletion of timber is taken.

Foreign intangible drilling costs and
foreign exploration and development costs
must either be added to the corporation's
basis for cost depletion purposes or be
deducted ratably over a 10-year period.
See sections 263(i), 616, and 617 for
details.
See Pub. 535 for more information on
depletion.

Line 23. Pension,
Profit-Sharing, etc., Plans

Enter the deduction for contributions to
qualified pension, profit-sharing, or other
funded deferred compensation plans.
Employers who maintain such a plan must
generally file one of the forms listed below
unless exempt from filing under
regulations or other applicable guidance,
even if the plan is not a qualified plan
under the Internal Revenue Code. The
filing requirement applies even if the
corporation does not claim a deduction for
the current tax year. There are penalties
for failure to file these forms on time and
for overstating the pension plan deduction.
See sections 6652(e) and 6662(f). Also,
see the instructions for the applicable
form.
Form 5500, Annual Return/Report of
Employee Benefit Plan.
Form 5500-SF, Short Form Annual
Return/Report of Small Employee Benefit
Plan. File this form instead of Form 5500
generally if there were under 100
participants at the beginning of the plan
year.
Note. Form 5500 and Form 5500-SF
must be filed electronically under the

Line 24. Employee Benefit
Programs

Enter contributions to employee benefit
programs not claimed elsewhere on the
return (for example, insurance or health
and welfare programs) that are not an
incidental part of a pension, profit-sharing,
etc., plan included on line 23.

Line 26. Other Deductions

Attach a statement, listing by type and
amount, all allowable deductions that are
not deductible elsewhere on Form 1120.
Enter the total on line 26.

Examples of other deductions include
the following. See Pub. 535 for details on
other deductions that may apply to
corporations.
• Amortization. See Part VI of Form 4562.
• Any applicable deduction under section
179D for costs of energy efficient
commercial building property placed in
service during the tax year. Complete and
attach new Form 7205.
• Certain costs of a qualified film,
television, or live theatrical production
commencing before January 1, 2026 (after
December 31, 2015, and before January
1, 2026, for a live theatrical production).
This deduction does not apply to any
portion of the aggregate cost of the
production above $15 million. There is a
higher allowance for production in certain
areas. See section 181 and the related
regulations.
Note. Certain film, television, or live
theatrical productions acquired and
placed in service after September 27,
2017 (for which a deduction would have
been allowable under section 181 without
regard to the dollar limitation), are
qualified property eligible for the special
depreciation allowance under section
168(k). See the Instructions for Form
4562.
• Certain business start-up and
organizational costs (discussed earlier,
under Limitations on Deductions).
• Reforestation costs. The corporation
can elect to deduct up to $10,000 of
qualifying reforestation expenses for each
qualified timber property. The corporation
can elect to amortize over 84 months any
amount not deducted. See Pub. 535.
-14-

See section 404(k) for more details and
the limitation on certain dividends.
Do not deduct expenses such as the
following.
• Amounts paid or incurred to, or at the
direction of, a government or
governmental entity for the violation, or
investigation or inquiry into the potential
violation, of a law. However, see Fines or
similar penalties, later.
• Any amount that is allocable to a class
of exempt income. See section 265(b) for
exceptions.
• Lobbying expenses. However, see
exceptions discussed later.
• Amounts paid or incurred for any
settlement, payout, or attorney fees
related to sexual harassment or sexual
abuse, if such payments are subject to a
nondisclosure agreement. See section
162(q).

Instructions for Form 1120

Travel, meals, and entertainment.
Subject to limitations and restrictions
discussed below, a corporation can
deduct ordinary and necessary travel,
meal, and non-entertainment expenses
paid or incurred in its trade or business.
Generally, entertainment expenses,
membership dues, and facilities used in
connection with these activities cannot be
deducted. In addition, no deduction is
generally allowed for qualified
transportation fringe benefits. Special
rules apply to deductions for gifts, luxury
water travel, and convention expenses.
See section 274, Pub. 463, and Pub. 535
for details.

membership dues in civic or public service
organizations, professional organizations
(such as bar and medical associations),
business leagues, trade associations,
chambers of commerce, boards of trade,
and real estate boards. However, no
deduction is allowed if a principal purpose
of the organization is to entertain or
provide entertainment facilities for
members or their guests. In addition,
corporations cannot deduct membership
dues in any club organized for business,
pleasure, recreation, or other social
purpose. This includes country clubs, golf
and athletic clubs, airline and hotel clubs,
and clubs operated to provide meals
under conditions favorable to business
discussion.

Lobbying expenses. Generally,
lobbying expenses are not deductible.
These expenses include:
• Amounts paid or incurred in connection
with influencing federal, state, or local
legislation; or
• Amounts paid or incurred in connection
with any communication with certain
federal executive branch officials in an
attempt to influence the official actions or
positions of the officials. See Regulations
section 1.162-29 for the definition of
“influencing legislation.”
Dues and other similar amounts paid to
certain tax-exempt organizations may not
be deductible. If certain in-house lobbying
expenditures do not exceed $2,000, they
are deductible.

DRAFT AS OF
December 8, 2022

Travel. The corporation cannot deduct
travel expenses of any individual
accompanying a corporate officer or
employee, including a spouse or
dependent of the officer or employee,
unless:
• That individual is an employee of the
corporation, and
• That individual’s travel is for a bona fide
business purpose and would otherwise be
deductible by that individual.

Meals. Generally, the corporation can
deduct only 50% of the amount otherwise
allowable for non-entertainment related
meal expenses paid or incurred in its trade
or business. However, the corporation can
deduct 100% of business meal expenses
if the meals are food and beverages
provided by a restaurant. This applies only
to amounts paid or incurred after
December 31, 2020, and before January
1, 2023.
Meals not separately stated from
entertainment are generally not
deductible. In addition (subject to
exceptions under section 274(k)(2)):
• Meals must not be lavish or
extravagant, and
• An employee of the corporation must
be present at the meal.
See section 274(n)(3) for a special rule
that applies to expenses for meals
consumed by individuals subject to the
hours of service limits of the Department
of Transportation.
Qualified transportation fringes
(QTFs). Generally, no deduction is
allowed under section 274(a)(4) for QTFs
provided by employers to their employees.
QTFs are defined in section 132(f)(1) and
include:
• Transportation in a commuter highway
vehicle between the employee's residence
and place of employment,
• Any transit pass, and
• Qualified parking.
See section 274, Pub. 15-B and Pub.
535 for details.

Entertainment facilities. Generally,
the corporation cannot deduct an expense
paid or incurred for a facility (such as a
yacht or hunting lodge) used for an activity
usually considered entertainment,
amusement, or recreation.
Amounts treated as compensation.
Generally, the corporation may be able to
deduct otherwise nondeductible
entertainment, amusement, or recreation
expenses if the amounts are treated as
compensation to the recipient and
reported on Form W-2 for an employee or
on Form 1099-NEC for an independent
contractor.
However, if the recipient is an officer,
director, beneficial owner (directly or
indirectly), or other “specified individual”
(as defined in section 274(e)(2)(B) and
Regulations section 1.274-9(b)), special
rules apply.

Fines or similar penalties. Generally,
no deduction is allowed for fines or similar
penalties paid or incurred to, or at the
direction of, a government or
governmental entity for violating any law,
or for the investigation or inquiry into the
potential violation of a law, except:
• Amounts that constitute restitution or
remediation of property,
• Amounts paid to come into compliance
with the law,
• Amounts paid or incurred as the result
of orders or agreements in which no
government or governmental entity is a
party, and
• Amounts paid or incurred for taxes due.
No deduction is allowed unless the
amounts are specifically identified in the
order or agreement and the corporation
establishes that the amounts were paid for
that purpose. Also, any amount paid or
incurred as reimbursement to the
government for the costs of any
investigation or litigation are not eligible for
the exceptions and are nondeductible.
See section 162(f).

Membership dues. The corporation
can deduct amounts paid or incurred for
Instructions for Form 1120

-15-

Line 28. Taxable Income Before
NOL Deduction and Special
Deductions

At-risk rules. Generally, special at-risk
rules under section 465 apply to closely
held corporations (see Passive activity
limitations, earlier) engaged in any activity
as a trade or business or for the
production of income. These corporations
may have to adjust the amount on line 28.
(See below.)
The at-risk rules do not apply to:
• Holding real property placed in service
by the taxpayer before 1987;
• Equipment leasing under sections
465(c)(4), (5), and (6); or
• Any qualifying business of a qualified
corporation under section 465(c)(7).
However, the at-risk rules do apply to
the holding of mineral property.
If the at-risk rules apply, adjust the
amount on this line for any section 465(d)
losses. These losses are limited to the
amount for which the corporation is at risk
for each separate activity at the close of
the tax year. If the corporation is involved
in one or more activities, any of which
incurs a loss for the year, report the losses
for each activity separately. Attach Form
6198, At-Risk Limitations, showing the
amount at risk and gross income and
deductions for the activities with the
losses.
If the corporation sells or otherwise
disposes of an asset or its interest (either
total or partial) in an activity to which the
at-risk rules apply, determine the net profit
or loss from the activity by combining the
gain or loss on the sale or disposition with
the profit or loss from the activity. If the
corporation has a net loss, it may be
limited because of the at-risk rules.
Treat any loss from an activity not
allowed for the tax year as a deduction
allocable to the activity in the next tax
year.

Line 29a. Net Operating Loss
Deduction

A corporation can use the NOL incurred in
1 tax year to reduce its taxable income in
another tax year. Enter on line 29a the
total NOL carryovers from other tax years,
but do not enter more than the
corporation's taxable income (after special
deductions). Attach a statement showing
the computation of the NOL deduction.
Complete item 12 on Schedule K.

• The inversion gain of the corporation for
the tax year, if the corporation is an
expatriated entity or a partner in an
expatriated entity. See section 7874(a).
• The sum of the corporation's excess
inclusions from its residual interest in a
REMIC from Schedules Q (Form 1066),
line 2c, and the corporation's taxable
income determined solely with respect to
its ownership and high-yield interests in
FASITs. See sections 860E(a) and 860J
(repealed).

Line 34. Estimated Tax Penalty

Generally, the corporation does not have
to file Form 2220 because the IRS can
figure the penalty amount, if any, and bill
the corporation. However, even if the
corporation does not owe the penalty, it
must complete and attach Form 2220 if:
• The annualized income or adjusted
method is used, or
• The corporation is a large corporation
(as defined in the Instructions for Form
2220) computing its first required
installment based on the prior year's tax.

DRAFT AS OF
December 8, 2022
The following special rules apply.

• If an ownership change (described in

section 382(g)) occurs, the amount of the
taxable income of a loss corporation that
may be offset by the pre-change NOL
carryovers may be limited. See section
382 and the related regulations. A loss
corporation must include the information
statement as provided in Regulations
section 1.382-11(a) with its income tax
return for each tax year that it is a loss
corporation in which an ownership shift,
equity structure shift, or other transaction
described in Temporary Regulations
section 1.382-2T(a)(2)(i) occurs. If the
corporation makes the
closing-of-the-books election, see
Regulations section 1.382-6(b).
The limitations under section 382 do
not apply to certain ownership changes
after February 17, 2009, made pursuant to
a restructuring plan under the Emergency
Economic Stabilization Act of 2008. See
section 382(n).
For guidance in applying section 382 to
loss corporations whose instruments were
acquired by Treasury under certain
programs under the Emergency Economic
Stabilization Act of 2008, see Notice
2010-2, 2010-2 I.R.B. 251.
• If a corporation acquires control of
another corporation (or acquires its assets
in a reorganization), the amount of
pre-acquisition losses that may offset
recognized built-in gain may be limited
(see section 384).
• If a corporation elects the alternative tax
on qualifying shipping activities under
section 1354, no deduction is allowed for
an NOL attributable to the qualifying
shipping activities to the extent that the
loss is carried forward from a tax year
preceding the first tax year for which the
alternative tax election was made. See
section 1358(b)(2).

For more details on the NOL deduction,
see section 172 and the Instructions for
Form 1139.

Line 29b. Special Deductions

See the instructions for Schedule C.

Line 30. Taxable Income
Minimum taxable income. The
corporation's taxable income cannot be
less than the largest of the following
amounts.

Net operating loss (NOL). If line 30
(figured without regard to the items listed
above under minimum taxable income) is
zero or less, the corporation may have an
NOL that can be carried back or forward
as a deduction to other tax years.
For losses incurred in tax years
beginning in 2022, only farming losses
and losses of an insurance company
(other than a life insurance company) can
be carried back. The carryback period for
these losses is 2 years. For NOLs that can
be carried back, the corporation can elect
to waive the carryback period and instead
carry the NOL forward to future tax years.
See the instructions for Schedule K,
Item 11 for information on making the
election to waive the entire carryback
period for 2022. See the Instructions for
Form 1139 for other special rules and
elections.
For tax years beginning in 2022, the
NOL deduction for the year cannot exceed
the aggregate amount of NOLs arising in
tax years beginning before January 1,
2018, carried to such year plus the lesser
of:
1. The aggregate amount of NOLs
arising in tax years beginning after
December 31, 2017, carried to such tax
year; or
2. 80% of the excess, if any, of
taxable income determined without any
NOL deduction, section 199A deduction,
or section 250 deduction, over any NOL
carryover to the tax year from tax years
beginning before January 1, 2018.
An exception applies for NOLs of
insurance companies other than life
insurance companies. The 80% taxable
income limit does not apply to these
entities. See sections 172(b) and (f).
Merchant Marine capital construction
fund. To take a deduction for amounts
contributed to a capital construction fund
(CCF), reduce the amount that would
otherwise be entered on line 30 by the
amount of the deduction. On the dotted
line next to the entry space, enter “CCF”
and the amount of the deduction. For
more information, see section 7518.

Line 32.

If Form 2220 is attached, check the box
on line 34, and enter any penalty on this
line.

Line 35. Amount Owed

If the corporation cannot pay the full
amount of tax owed, it can apply for an
installment agreement online. The
corporation can apply for an installment
agreement online if:
• It cannot pay the full amount shown on
line 35,
• The total amount owed is $25,000 or
less, and
• The corporation can pay the liability in
full in 24 months.
To apply using the Online Payment
Agreement Application, go to IRS.gov/
OPA.
Under an installment agreement, the
corporation can pay what it owes in
monthly installments. There are certain
conditions that must be met to enter into
and maintain an installment agreement,
such as paying the liability within 24
months and making all required deposits
and timely filing tax returns during the
length of the agreement.
If the installment agreement is
accepted, the corporation will be charged
a fee and it will be subject to penalties and
interest on the amount of tax not paid by
the due date of the return.

Line 37

Enter the amount of any overpayment that
should be refunded or applied to next
year's estimated tax.
Note. This election to apply some or all of
the overpayment amount to the
corporation's 2023 estimated tax cannot
be changed at a later date.
Direct deposit of refund. If the
corporation wants its refund directly
deposited into its checking or savings
account at any U.S. bank or other financial
institution instead of having a check sent
to the corporation, complete Form 8050,
Direct Deposit of Corporate Tax Refund,
and attach it to the corporation's tax
return.

Reserved for future use.
-16-

Instructions for Form 1120

Schedule C. Dividends,
Inclusions, and Special
Deductions

For purposes of the 20% ownership test
on lines 1 through 7, the percentage of
stock owned by the corporation is based
on voting power and value of the stock.
Preferred stock described in section
1504(a)(4) is not taken into account.

Line 3, Column (a)

Enter the following.
• Dividends received on certain
debt-financed stock acquired after July 18,
1984, from domestic and foreign
corporations subject to income tax that
would otherwise be subject to the
dividends-received deduction under
section 243(a)(1), 243(c), or 245(a).
Generally, debt-financed stock is stock
that the corporation acquired by incurring
a debt (for example, it borrowed money to
buy the stock).
• Dividends received from a RIC on
debt-financed stock. The amount of
dividends eligible for the
dividends-received deduction is limited by
section 854(b). The corporation should
receive a notice from the RIC specifying
the amount of dividends that qualify for the
deduction.

Also, include dividends received from a
less-than-20%-owned FSC that:
• Are attributable to income treated as
effectively connected with the conduct of a
trade or business within the United States
(excluding foreign trade income), and
• Qualify for the 50% deduction under
section 245(c)(1)(B).

DRAFT AS OF
December 8, 2022

Consolidated returns. Corporations
filing a consolidated return should see
Regulations sections 1.1502-13,
1.1502-26, and 1.1502-27 before
completing Schedule C.
Corporations filing a consolidated
return must not report as dividends on
Schedule C any amounts received from
corporations within the consolidated
group. Such dividends are eliminated in
consolidation rather than offset by the
dividends-received deduction.

Line 1, Column (a)

Enter dividends (except those received on
certain debt-financed stock acquired after
July 18, 1984—see section 246A) that
are:
• Received from less-than-20%-owned
domestic corporations subject to income
tax, and
• Qualified for the 50% deduction under
section 243(a)(1).
Also, include on line 1 the following.

• Taxable distributions from an IC-DISC

or former DISC that are designated as
eligible for the 50% deduction and certain
dividends of Federal Home Loan Banks.
See section 246(a)(2).
• Dividends (except those received on
certain debt-financed stock acquired after
July 18, 1984) from a regulated
investment company (RIC). The amount of
dividends eligible for the
dividends-received deduction under
section 243 is limited by section 854(b).
The corporation should receive a notice
from the RIC specifying the amount of
dividends that qualify for the deduction.
Report so-called dividends or earnings
received from mutual savings banks, etc.,
as interest. Do not treat them as
dividends.

Line 2, Column (a)

Enter on line 2:
• Dividends (except those received on
certain debt-financed stock acquired after
July 18, 1984) that are received from
20%-or-more-owned domestic
corporations subject to income tax and
that are subject to the 65% deduction
under section 243(c), and
• Taxable distributions from an IC-DISC
or former DISC that are considered
eligible for the 65% deduction.
Instructions for Form 1120

Line 3, Columns (b) and (c)

Dividends received on certain
debt-financed stock acquired after July 18,
1984, are not entitled to the full 50% or
65% dividends-received deduction under
section 243 or 245(a). The 50% or 65%
deduction is reduced by a percentage that
is related to the amount of debt incurred to
acquire the stock. See section 246A. Also,
see section 245(a) before making this
computation for an additional limitation
that applies to certain dividends received
from foreign corporations. Attach a
statement to Form 1120 showing how the
amount on line 3, column (c), was figured.

Line 4, Column (a)

Enter dividends received on preferred
stock of a less-than-20%-owned public
utility that is subject to income tax and is
allowed the 23.3% deduction provided in
sections 244 and 247 (as affected by
P.L.113-295, Div. A, section 221(a)(41)
(A), Dec. 19, 2014, 128 Stat. 4043) for
dividends paid.

Line 5, Column (a)

Enter dividends received on preferred
stock of a 20%-or-more-owned public
utility that is subject to income tax and is
allowed the 26.7% deduction provided in
sections 244 and 247 (as affected by
P.L.113-295, Div. A, section 221(a)(41)
(A), Dec. 19, 2014, 128 Stat. 4043) for
dividends paid.

Line 6, Column (a)

Enter the U.S.-source portion of dividends
that:
• Are received from
less-than-20%-owned foreign
corporations, and
• Qualify for the 50% deduction under
section 245(a). To qualify for the 50%
deduction, the corporation must own at
least 10% of the stock of the foreign
corporation by vote and value.
-17-

Line 7, Column (a)

Enter the U.S.-source portion of dividends
that:
• Are received from 20%-or-more-owned
foreign corporations, and
• Qualify for the 65% deduction under
sections 243 and 245(a).
Also, include dividends received from a
20%-or-more-owned FSC that:

• Are attributable to income treated as
effectively connected with the conduct of a
trade or business within the United States
(excluding foreign trade income), and
• Qualify for the 65% deduction under
section 245(c)(1)(B).

Line 8, Column (a)

Enter dividends received from wholly
owned foreign subsidiaries that are
eligible for the 100% deduction under
section 245(b).

In general, the deduction under section
245(b) applies to dividends paid out of the
earnings and profits of a foreign
corporation for a tax year during which:
• All of its outstanding stock is directly or
indirectly owned by the domestic
corporation receiving the dividends, and
• All of its gross income from all sources
is effectively connected with the conduct
of a trade or business within the United
States.

Line 9, Column (c)

Generally, line 9, column (c), cannot
exceed the amount from the Worksheet
for Schedule C, line 9. However, in a year
in which an NOL occurs, this limitation
does not apply even if the loss is created
by the dividends-received deduction. See
sections 172(d) and 246(b).

Line 10, Columns (a) and (c)

Small business investment companies
operating under the Small Business
Investment Act of 1958 must enter
dividends that are received from domestic
corporations subject to income tax even
though a deduction is allowed for the
entire amount of those dividends. To claim
the 100% deduction on line 10, column
(c), the company must file with its return a
statement that it was a federal licensee
under the Small Business Investment Act
of 1958 at the time it received the
dividends.

Line 11, Columns (a) and (c)

Enter only dividends that qualify under
section 243(b) for the 100%

Line 16c, Column (a)
Worksheet for Schedule C, line 9

Keep for Your Records

1. Refigure Form 1120, page 1, line 28, without any adjustment under
section 1059 and without any capital loss carryback to the tax year under
section 1212(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.

2. Complete lines 10, 11, 12, and 13, column (c), and enter the total
here . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.

3. Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.

4. Multiply line 3 by 65% (0.65) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.

5. Add lines 2, 5, 7, and 8, column (c), and the part of the deduction on
line 3, column (c), that is attributable to dividends from
20%-or-more-owned corporations . . . . . . . . . . . . . . . . . . . . . . . . .

5.

6. Enter the smaller of line 4 or line 5. If line 5 is greater than line 4, stop
here; enter the amount from line 6 on line 9, column (c), and do not
complete the rest of this worksheet . . . . . . . . . . . . . . . . . . . . . . . .

6.

Enter all other amounts included in income
under section 951. This should equal the
U.S. shareholder's pro rata share of the
sum of the amounts reported on Form
5471, Schedule I, lines 1(c) through 1(h),
2, and 4.

Line 17, Column (a)

DRAFT AS OF
December 8, 2022
7. Enter the total amount of dividends from 20%-or-more-owned
corporations that are included on lines 2, 3, 5, 7, and 8, column
(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7.

8. Subtract line 7 from line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8.

9. Multiply line 8 by 50% (0.50) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9.

10. Subtract line 5 from line 9, column (c) . . . . . . . . . . . . . . . . . . . . . . .

10.

11. Enter the smaller of line 9 or line 10 . . . . . . . . . . . . . . . . . . . . . . . .

11.

12. Dividends-received deduction after limitation (sec. 246(b)). Add
lines 6 and 11. Enter the result here and on line 9, column (c) . . . . . . .

12.

dividends-received deduction described in
section 243(a)(3). Corporations taking this
deduction are subject to the provisions of
section 1561.
The 100% deduction does not apply to
affiliated group members that are joining in
the filing of a consolidated return.

Line 12, Column (a)

Enter dividends from FSCs that are
attributable to foreign trade income and
that are eligible for the 100% deduction
provided in section 245(c)(1)(A).

Line 13, Column (a)

Enter the foreign-source portion of
dividends that:
• Are received from specified
10%-owned foreign corporations (as
defined in section 245A(b)), including, for
example, gain from the sale of stock of a
foreign corporation that is treated as a
dividend under sections 1248(a) and (j);
and
• Qualify for the section 245A deduction.

Line 14, Column (a)

Enter the foreign dividends not reportable
on line 3, 6, 7, 8, 11, 12, or 13 of column
(a).
Include on line 14 the foreign-source
portion of any dividend that does not
qualify for the section 245A deduction (for
example, hybrid dividends within the
meaning of section 245A(e), ineligible
amounts of dividends within the meaning
of Regulations section 1.245A-5(b),
dividends that fail to meet the holding
period requirement under section 246(c)
(5), etc.).

Also, include on line 14 the
corporation's share of distributions from a
section 1291 fund from Form 8621, to the
extent that the amounts are taxed as
dividends under section 301. See Form
8621 and the Instructions for Form 8621.
Attach a statement identifying the
amount of each dividend reported on
line 14 and the provision pursuant to
which a deduction is not allowed with
respect to such dividend.

Line 15, Column (a)
Reserved for future use.

Line 15, Column (c)
Reserved for future use.

Line 16a, Column (a)

Enter the foreign-source portion of any
subpart F inclusions attributable to the
sale or exchange by a controlled foreign
corporation (CFC) of stock in another
foreign corporation described in section
964(e)(4). This should equal the U.S.
shareholder's pro rata share of the amount
reported on Form(s) 5471, Schedule I,
line 1a. (Do not include on line 16a any
portion of such subpart F inclusion that is
not eligible for the section 245A deduction
pursuant to Regulation section
1.245A-5(g)(2). Include such amounts on
line 16c.)

Line 16b, Column (a)

Enter the total subpart F inclusions
attributable to tiered hybrid dividends. This
should equal the sum of the amounts
reported by the U.S. shareholder on
Form(s) 5471, Schedule I, line 1b.
-18-

Enter amounts included in income under
section 951A. See Form 8992, Part II,
line 5, and the Instructions for Form 8992.
Also, if applicable, attach Form(s) 5471.
Note. Consider the applicability of section
951A with respect to CFCs owned by
domestic partnerships in which the
corporation has an interest.

Line 18, Column (a)

Include gross-up for taxes deemed paid
under section 960.

Line 19, Column (a)

Enter taxable distributions from an
IC-DISC or former DISC that are
designated as not eligible for a
dividends-received deduction.

No deduction is allowed under section
243 for a dividend from an IC-DISC or
former DISC (as defined in section 992(a))
to the extent the dividend:
• Is paid out of the corporation's
accumulated IC-DISC income or
previously taxed income, or
• Is a deemed distribution under section
995(b)(1).

Line 20, Column (a)

Include the following.
1. Dividends (other than capital gain
distributions reported on Schedule D
(Form 1120) and exempt-interest
dividends) that are received from RICs
and that are not subject to the 50%
deduction.
2. Dividends from tax-exempt
organizations.
3. Dividends (other than capital gain
distributions) received from a REIT that,
for the tax year of the trust in which the
dividends are paid, qualifies under
sections 856 through 860.
4. Dividends not eligible for a
dividends-received deduction, which
include the following.
a. Dividends received on any share of
stock held for less than 46 days during the
91-day period beginning 45 days before
the ex-dividend date. When counting the
number of days the corporation held the
stock, you cannot count certain days
during which the corporation's risk of loss
was diminished. See section 246(c)(4)
and Regulations section 1.246-5 for more
details.
b. Dividends received on any share of
preferred stock which are attributable to
Instructions for Form 1120

periods totaling more than 366 days if
such stock was held for less than 91 days
during the 181-day period that began 90
days before the ex-dividend date. When
counting the number of days the
corporation held the stock, you cannot
count certain days during which the
corporation's risk of loss was diminished.
See section 246(c)(4) and Regulations
section 1.246-5 for more details. Preferred
dividends attributable to periods totaling
less than 367 days are subject to the
46-day holding period rule discussed
above.
c. Dividends on any share of stock to
the extent the corporation is under an
obligation (including a short sale) to make
related payments with respect to positions
in substantially similar or related property.
5. Any other taxable dividend income
not properly reported elsewhere on
Schedule C.

Line 2
Multiply taxable income (page 1, line 30)
by 21%. Enter this amount on line 2.
Mutual savings bank conducting life
insurance business. The tax under
section 594 consists of the sum of (a) a
partial tax computed on Form 1120 on the
taxable income of the bank, determined
without regard to income or deductions
allocable to the life insurance department,
and (b) a partial tax on the taxable income
computed on Form 1120-L of the life
insurance department. Enter the
combined tax on line 2. Attach Form
1120-L as a schedule (and identify it as
such), together with the annual statements
and schedules required to be filed with
Form 1120-L. See Regulations section
1.6012-2(c)(1)(ii).

intangible under the related person
exception to the anti-churning rules should
include any additional tax due in the total
for line 2. On the dotted line next to line 2,
enter “Section 197” and the amount. See
section 197(f)(9)(B)(ii).

Line 3

DRAFT AS OF
December 8, 2022

If patronage dividends or per-unit retain
allocations are included on line 20, identify
the total of these amounts in a statement
attached to Form 1120.

Line 21, Column (c)

Section 247 (as affected by P.L.113-295,
Div. A, section 221(a)(41)(A), Dec. 19,
2014, 128 Stat. 4043) allows public
utilities a deduction of 40% of the smaller
of (a) dividends paid on their preferred
stock during the tax year, or (b) taxable
income computed without regard to this
deduction. In a year in which an NOL
occurs, compute the deduction without
regard to section 247(a)(1)(B).

Line 22, Column (c)

Enter the section 250 deduction claimed
for foreign-derived intangible income
(FDII) and global intangible low-taxed
income (GILTI). This should equal the sum
of the amounts on Form 8993, Part III,
lines 28 and 29.

Schedule J.
Tax Computation and
Payment
Part I—Tax Computation
Line 1
If the corporation is a member of a
controlled group, check the box on line 1.
Complete and attach Schedule O (Form
1120), Consent Plan and Apportionment
Schedule for a Controlled Group.
Component members of a controlled
group must use Schedule O to report the
apportionment of certain tax benefits
between the members of the group. See
Schedule O and the Instructions for
Schedule O for more information.

Instructions for Form 1120

Exception for insurance companies
filing their federal income tax returns
electronically. If an insurance company
files its income tax return electronically, it
should not include the annual statements
and schedules required to be filed with
Form 1120-L. However, such statements
must be available at all times for
inspection by the IRS and retained for so
long as such statements may be material
in the administration of any Internal
Revenue law.

Deferred tax under section 1291. If the
corporation was a shareholder in a PFIC
and received an excess distribution or
disposed of its investment in the PFIC
during the year, it must include the
increase in taxes due under section
1291(c)(2) (from Form 8621) in the total
for line 2. On the dotted line next to line 2,
enter “Section 1291” and the amount.
Do not include on line 2 any interest
due under section 1291(c)(3). Instead,
include the amount of interest owed on
Schedule J, Part I, line 9f.
For more information on reporting the
deferred tax and interest, see the
Instructions for Form 8621.
Increase in tax attributable to partner's
audit liability under section 6226. If the
corporation is filing Form 8978 to report
adjustments shown on Form 8986 they
received from partnerships that have been
audited and have elected to push out
imputed underpayments to their partners,
include any increase in taxes due from
Form 8978, line 14, in the total for Form
1120, Schedule J, line 2. On the dotted
line next to line 2, enter "FROM FORM
8978" and the amount. Attach Form 8978.
If Form 8978, line 14, shows a decrease in
tax, see the instructions for Schedule J,
line 6.
Additional tax under section 197(f). A
corporation that elects to recognize gain
and pay tax on the sale of a section 197
-19-

If the corporation had gross receipts of at
least $500 million in any 1 of the 3 tax
years preceding the current tax year,
complete and attach Form 8991. Enter on
line 3 the base erosion minimum tax
amount from Form 8991, Part IV, line 5e.
See section 59A and the Instructions for
Form 8991. Also, see Schedule K,
Question 22, later.

Line 5

Line 5a. To find out when a corporation
can take the credit for payment of income
tax to a foreign country or U.S.
possession, see Form 1118, Foreign Tax
Credit—Corporations.
Line 5b. Enter any qualified electric
vehicle passive activity credits from prior
years allowed for the current tax year from
Form 8834, Qualified Electric Vehicle
Credit, line 7. Attach Form 8834. If
applicable, include on line 5b any credits
from Form 5735, American Samoa
Economic Development Credit. See the
Instructions for Form 5735. Attach Form
5735.
Line 5c. Enter on line 5c the allowable
credit from Form 3800, Part II, line 38.
The corporation is required to file Form
3800, General Business Credit, to claim
any of the business credits. See the
Instructions for Form 3800 for exceptions.
For a list of allowable credits, see Form
3800. Also, see the applicable credit form
and its instructions.
Line 5d. Enter any allowable credit from
Form 8827, Credit for Prior Year Minimum
Tax—Corporations. Complete and attach
Form 8827.
Line 5e. Enter the allowable credits from
Form 8912, Credit to Holders of Tax Credit
Bonds, line 12.

Line 6
Add lines 5a through 5e. Enter the total on
line 6.
Decrease attributable to partner's audit liability under section 6226. If the
corporation is filing Form 8978 to report
adjustments shown on Form 8986 they
received from partnerships that have been
audited and have elected to push out
imputed underpayments to their partners,
include any decrease in taxes due
(negative amount) from Form 8978,

line 14, in the total for Form 1120,
Schedule J, line 6. On the dotted line next
to line 6, enter "FROM FORM 8978" and
the amount. Attach Form 8978. If Form
8978, line 14, shows an increase in tax,
see the instructions for Schedule J, line 2.

Line 8

or to be refunded. See the Instructions for
Form 8866. Include any interest due on
line 9d.
Line 9e. Alternative tax on qualifying
shipping activities. Enter any alternative
tax on qualifying shipping activities from
Form 8902.
Line 9f. Interest/tax due under section
453A(c) and/or section 453(l). Include
any interest on deferred tax attributable to
certain nondealer installment obligations
(section 453A(c)) and dealer installment
obligations (section 453(l)).

• Deferred tax on the corporation's share
of undistributed earnings of a qualified
electing fund. See the Instructions for
Form 8621.
• Deferred LIFO recapture tax (section
1363(d)). This tax is the part of the LIFO
recapture tax that will be deferred and
paid with Form 1120-S in the future. To
figure the deferred tax, first figure the total
LIFO recapture tax. Follow the steps
below to figure the total LIFO recapture tax
and the deferred amount. Also, see
Line 10. Other Income, earlier.

DRAFT AS OF
December 8, 2022

A corporation is taxed as a personal
holding company under section 542 if:
• At least 60% of its adjusted ordinary
gross income for the tax year is personal
holding company income, and
• At any time during the last half of the tax
year more than 50% in value of its
outstanding stock is directly or indirectly
owned by five or fewer individuals.
See Schedule PH (Form 1120) for
definitions and details on how to figure the
tax.

Line 9
Include any of the following taxes and
interest.
Line 9a. Recapture of investment credit. If the corporation disposed of
investment credit property or changed its
use before the end of its useful life or
recovery period, or is required to
recapture a qualifying therapeutic
discovery project grant, enter the increase
in tax from Form 4255, Recapture of
Investment Credit. See the Instructions for
Form 4255.
Line 9b. Recapture of low-income
housing credit. If the corporation
disposed of property (or there was a
reduction in the qualified basis of the
property) for which it took the low-income
housing credit, and the corporation did not
follow the procedures that would have
prevented recapture of the credit, it may
owe a tax. See Form 8611, Recapture of
Low-Income Housing Credit.
Line 9c. Interest due under the
look-back method—completed
long-term contracts. If the corporation
used the percentage-of-completion
method under section 460(b) for certain
long-term contracts, figure any interest
due or to be refunded using the look-back
method, described in section 460(b)(2).
Use Form 8697 to figure any interest due
or to be refunded. See the Instructions for
Form 8697. Include any interest due on
line 9c.
Line 9d. Interest due under the
look-back method—income forecast
method. If the corporation used the
income forecast method to depreciate
property, it must figure any interest due or
to be refunded using the look-back
method, described in section 167(g)(2).
Use Form 8866 to figure any interest due

Line 9g. Other. Include on line 9g
additional taxes and interest such as the
following. Attach a statement showing the
computation of each item included in the
total for line 9g and identify the applicable
Code section and the type of tax or
interest.
• Recapture of Indian employment credit.
Generally, if an employer terminates the
employment of a qualified employee less
than 1 year after the date of initial
employment, any Indian employment
credit allowed for a prior tax year because
of wages paid or incurred to that employee
must be recaptured. For details, see Form
8845 and section 45A.
• Recapture of new markets credit (see
Form 8874, New Markets Credit, and
Form 8874-B, Notice of Recapture Event
for New Markets Credit).
• Recapture of employer-provided
childcare facilities and services credit (see
Form 8882).
• Tax and interest on a nonqualified
withdrawal from a capital construction
fund (section 7518(g)).
• Interest due on deferred gain (section
1260(b)).
• Interest due under section 1291(c)(3).
See Form 8621 and the Instructions for
Form 8621.
Alternative minimum tax. Applicable
corporations filing a return for a short tax
year that begins in 2023 and ends in 2023,
include on line 9g any corporate AMT
imposed under section 55 by the Inflation
Reduction Act of 2022. On the dotted line
next to line 9g, enter “CAMT” and the AMT
amount. Attach a detailed statement
showing the computation of the AMT.
Include a computation of adjusted
financial statement income. Label the
statement “CAMT.”

Line 11
Include any deferred tax on the
termination of a section 1294 election
applicable to shareholders in a qualified
electing fund in the amount entered on
line 11.

Step 1. Figure the tax on the
corporation's income including the LIFO
recapture amount. Complete Schedule J,
Part I, lines 1 through 10.
Step 2. Using a separate worksheet,
complete Schedule J again, but do not
include the LIFO recapture amount in the
corporation's taxable income.
Step 3. Compare the tax in Step 2 to
the tax in Step 1. The difference between
the two is the LIFO recapture tax.
Step 4. Multiply the amount figured in
Step 3 by 75% (0.75). The result is the
deferred LIFO recapture tax.

How to report. Attach a statement
showing the computation of each item
included in, or subtracted from, the total
for line 11. On the dotted line next to
line 11, specify (a) the applicable Code
section, (b) the type of tax, and (c) enter
the amount of tax. For example, if the
corporation is deferring a $100 LIFO
recapture tax, subtract this amount from
the total on line 11, then enter “Section
1363—Deferred Tax—$100” on the dotted
line next to line 11.

Part II—Reserved For Future
Use
Line 12
Reserved for future use.

Part III—Payments and
Refundable Credits
Line 14
Enter any estimated tax payments the
corporation made for the tax year.
Beneficiaries of trusts. If the
corporation is the beneficiary of a trust,
and the trust makes a section 643(g)
election to credit its estimated tax
payments to its beneficiaries, include the
corporation's share of the payment in the
total for line 14. Enter “T” and the amount
on the dotted line next to the entry space.

Subtract the following amounts from
the total for line 11.
-20-

Instructions for Form 1120

Line 15
If the corporation overpaid estimated tax, it
may be able to get a quick refund by filing
Form 4466. The overpayment must be at
least 10% of the corporation's expected
income tax liability and at least $500. File
Form 4466 after the end of the
corporation's tax year, and no later than
the due date for filing the corporation’s tax
return (not including extensions). Form
4466 must be filed before the corporation
files its tax return. See the instructions for
Form 4466.

Schedule K.
Other Information

Complete all items that apply to the
corporation.

Question 2

See the list of Principal Business Activity
Codes later in the instructions. Using the
list of codes and activities, determine from
which activity the corporation derives the
highest percentage of its total receipts.
Enter on lines 2a, 2b, and 2c the principal
business activity code number, the
corporation's business activity, and a
description of the principal product or
service of the corporation. For nonstore
retailers, select the PBA code by the
primary product that your establishment
sells. For example, establishments
primarily selling prescription and
non-prescription drugs, select PBA code
456110 Pharmacies & Drug Retailers.

For this purpose, the term “stock”
generally does not include any stock that
(a) is nonvoting, (b) is nonconvertible,
(c) is limited and preferred as to dividends
and does not participate significantly in
corporate growth, and (d) has redemption
and liquidation rights that do not exceed
the issue price of the stock (except for a
reasonable redemption or liquidation
premium). See section 1504(a)(4).

DRAFT AS OF
December 8, 2022

Line 18

If the corporation had federal income tax
withheld from any payments it received
because, for example, it failed to give the
payer its correct EIN or was otherwise
subjected to back-up withholding, include
the amount withheld in the total for line 18.

Line 20. Refundable Credits
Line 20a. Credit from Form 2439. Enter
any credit from Form 2439, Notice to
Shareholder of Undistributed Long-Term
Capital Gains, for the corporation's share
of the tax paid by a regulated investment
company (RIC) or a real estate investment
trust (REIT) on undistributed long-term
capital gains included in the corporation's
income. Attach Form 2439.
Line 20b. Credit for federal tax on
fuels. Enter the total income tax credit
claimed on Form 4136, Credit for Federal
Tax Paid on Fuels. Attach Form 4136.
Line 20c. Reserved for future use.
Line 20d. Other. Include on line 20d any
other refundable credit the corporation is
claiming, including the following. Attach a
statement listing the type of credit and the
amount of the credit.
• Credit for tax withheld under Chapter 3
or 4 of the Internal Revenue Code that is
shown on Form 1042-S, Form 8805, or
Form 8288-A. Attach the applicable form.
• Credit for tax on ozone-depleting
chemicals. See section 4682(g)(2).
• Credit under section 960(c) (section
960(b) for pre-2018 taxable years of
foreign corporations). If an increase in the
limitation under section 960(c) (section
960(b) (pre-2018)) exceeds the total tax
on Schedule J, Part I, line 11, for the tax
year, the amount of the excess is deemed
an overpayment of tax for the tax year.
See section 960(c) (section 960(b)
(pre-2018)) for more information regarding
the circumstances under which such an
excess arises.

Line 22
Reserved for future use.
Instructions for Form 1120

Question 3

Check the “Yes” box for question 3 if:
• The corporation is a subsidiary in an
affiliated group (defined below), but is not
filing a consolidated return for the tax year
with that group; or
• The corporation is a subsidiary in a
parent–subsidiary controlled group. For a
definition of a parent–subsidiary controlled
group, see the Instructions for Schedule O
(Form 1120).
Any corporation that meets either of the
requirements above should check the
“Yes” box. This applies even if the
corporation is a subsidiary member of one
group and the parent corporation of
another.
Note. If the corporation is an “excluded
member” of a controlled group (see
definition in the Instructions for
Schedule O (Form 1120)), it is still
considered a member of a controlled
group for this purpose.
Affiliated group. An affiliated group is
one or more chains of includible
corporations (section 1504(a)) connected
through stock ownership with a common
parent corporation. The common parent
must be an includible corporation and the
following requirements must be met.
1. The common parent must own
directly stock that represents at least 80%
of the total voting power and at least 80%
of the total value of the stock of at least
one of the other includible corporations.
2. Stock that represents at least 80%
of the total voting power and at least 80%
of the total value of the stock of each of
the other corporations (except for the
common parent) must be owned directly
by one or more of the other includible
corporations.
-21-

Question 4. Constructive
Ownership of the Corporation

For purposes of question 4, the
constructive ownership rules of section
267(c) (excluding section 267(c)(3)) apply
to ownership of interests in corporate
stock and ownership of interests in the
profit, loss, or capital of a partnership. If
the corporation checked “Yes” to question
4a or 4b, complete and attach Schedule G
(Form 1120), Information on Certain
Persons Owning the Corporation's Voting
Stock.

Question 5. Constructive
Ownership of Other Entities

For purposes of determining the
corporation's constructive ownership of
other entities, the constructive ownership
rules of section 267(c) (excluding section
267(c)(3)) apply to ownership of interests
in partnerships and trusts as well as
corporate stock. Generally, if an entity (a
corporation, partnership, or trust) is
owned, directly or indirectly, by or for
another entity (corporation, partnership,
estate, or trust), the owned entity is
considered to be owned proportionately
by or for the owners (shareholders,
partners, or beneficiaries) of the owning
entity.

Question 5a
List each foreign or domestic corporation
not included on Form 851, Affiliations
Schedule, in which the corporation, at the
end of the tax year, owned directly 20% or
more, or owned, directly or indirectly, 50%
or more of the total voting power of all
classes of stock entitled to vote. Indicate
the name of the corporation, EIN (if any),
country of incorporation, and the
percentage interest owned, directly or
indirectly, in the total voting power. List the
parent corporation of an affiliated group of
corporations filing a consolidated tax
return rather than the subsidiary members
except for subsidiary members in which
an interest is owned, directly or indirectly,
independent of the interest owned, directly
or indirectly, in the parent corporation. List
a corporation owned through a
disregarded entity rather than the
disregarded entity.

Question 5b
List each foreign or domestic partnership
in which the corporation, at the end of the
tax year, owned directly an interest of 20%
or more, or owned, directly or indirectly, an
interest of 50% or more in the profit, loss,
or capital of the partnership. List each trust
in which the corporation, at the end of the
tax year, owned directly an interest of 20%
or more, or owned, directly or indirectly, an
interest of 50% or more in the trust
beneficial interest. Indicate the name, EIN
(if any), country of organization, and the
maximum percentage interest owned,
directly or indirectly, in the profit, loss, or
capital of the partnership at the end of the
partnership tax year, or, for a trust, the
percentage interest owned in the trust
beneficial interest. List a partnership or
trust owned through a disregarded entity
rather than the disregarded entity.

Corporation A reports in its answer to
question 5a that it owns, directly or
indirectly, 50% of the voting stock of
Corporation D. Corporation A reports in its
answer to question 5b that it owns,
directly, an interest of 50% in the profit,
loss, or capital of Partnership B and owns,
directly or indirectly, 50% of the profit,
loss, or capital of Partnership C.

for Form 5472, for filing instructions and
penalties for failure to file.

Item 9

Show any tax-exempt interest received or
accrued. Include any exempt-interest
dividends received as a shareholder in a
mutual fund or other RIC. Also, if required,
include the same amount on
Schedule M-1, line 7 (or Schedule M-3
(Form 1120), Part II, line 13, if applicable).

DRAFT AS OF
December 8, 2022

Maximum percentage owned in partnership profit, loss, or capital. For the
purposes of question 5b, the term
“maximum percentage owned” means the
highest percentage of interest in a
partnership's profit, loss, or capital as of
the end of the partnership's tax year, as
determined under the partnership
agreement, when taking into account the
constructive ownership rules earlier. If the
partnership agreement does not express
the partner's share of profit, loss, and
capital as fixed percentages, use a
reasonable method in arriving at the
percentage items for the purposes of
completing question 5b. Such method
must be consistent with the partnership
agreement. The method used to compute
a percentage share of profit, loss, and
capital must be applied consistently from
year to year. Maintain records to support
the determination of the share of profits,
losses, and capital.
Example. Corporation A owns,
directly, a 50% interest in the profit, loss,
or capital of Partnership B. Corporation A
also owns, directly, a 15% interest in the
profit, loss, or capital of Partnership C and
owns, directly, 15% of the voting stock of
Corporation D. Partnership B owns,
directly, a 70% interest in the profit, loss,
or capital of Partnership C and owns,
directly, 70% of the voting stock of
Corporation D. Corporation A owns,
indirectly, through Partnership B, a 35%
interest (50% of 70%) in the profit, loss, or
capital of Partnership C and owns,
indirectly, 35% of the voting stock of
Corporation D. Corporation A owns,
directly or indirectly, a 50% interest in the
profit, loss, or capital of Partnership C
(15% directly and 35% indirectly), and
owns, directly or indirectly, 50% of the
voting stock of Corporation D (15%
directly and 35% indirectly).

Question 7

Check the “Yes” box if one foreign person
owned at least 25% of the total voting
power of all classes of stock of the
corporation entitled to vote or at least 25%
of the total value of all classes of stock of
the corporation.

The constructive ownership rules of
section 318 apply in determining if a
corporation is foreign owned. See section
6038A(c)(5) and the related regulations.

Enter on line 7a the percentage owned
by the foreign person specified in question
7. On line 7b, enter the name of the
owner’s country.
Note. If there is more than one
25%-or-more foreign owner, complete
question 7 for the foreign person with the
highest percentage of ownership.
Foreign person. The term “foreign
person” means:
• An individual who is not a citizen or
resident of the United States;
• An individual who is a citizen or resident
of a U.S. possession who is not otherwise
a citizen or resident of the United States;
• Any partnership, association, company,
or corporation that is not created or
organized in the United States;
• Any foreign estate or trust within the
meaning of section 7701(a)(31); or
• A foreign government (or one of its
agencies or instrumentalities) to the extent
that it is engaged in the conduct of a
commercial activity, as described in
section 892.
However, the term "foreign person"
does not include any foreign person who
consents to the filing of a joint U.S. income
tax return.
Owner's country. For individuals, the
term “owner's country” means the country
of residence. For all others, it is the
country where incorporated, organized,
created, or administered.
Requirement to file Form 5472. If the
corporation checked “Yes,” it may have to
file Form 5472, Information Return of a
25% Foreign-Owned U.S. Corporation or
a Foreign Corporation Engaged in a U.S.
Trade or Business. Generally, a 25%
foreign-owned corporation that had a
reportable transaction with a foreign or
domestic related party during the tax year
must file Form 5472. See the Instructions
-22-

Item 11

Generally, if the corporation has an NOL
for 2022, it can generally elect to waive the
entire carryback period for the NOL and
instead carry the NOL forward to future tax
years. To do so, check the box on line 11
and file the tax return by its due date,
including extensions. Do not attach the
statement described in Temporary
Regulations section 301.9100-12T.
Generally, once made, the election is
irrevocable.
If the corporation timely filed its return
for the loss year without making the
election, it can make the election on an
amended return filed within 6 months of
the due date of the loss year return
(excluding extensions). Attach the election
to the amended return and write "Filed
pursuant to section 301.9100-2" on the
election statement. See the Instructions
for Form 1139.
Corporations filing a consolidated
return that elect to waive the entire
carryback period for the group must also
attach the statement required by
Regulations section 1.1502-21(b)(3) or the
election will not be valid.

Item 12

Enter the amount of the NOL carryover to
the tax year from prior years, even if some
of the loss is used to offset income on this
return. The amount to enter is the total of
all NOLs generated in prior years but not
used to offset income (either as a
carryback or carryover) to a tax year prior
to 2022. Do not reduce the amount by any
NOL deduction reported on line 29a.

Question 14

A corporation that files Form 1120 must
file Schedule UTP (Form 1120), Uncertain
Tax Position Statement, with its 2022
income tax return if:
• For 2022, the corporation's total assets
equal or exceed $10 million;
• The corporation or a related party
issued audited financial statements
reporting all or a portion of the
corporation's operations for all or a portion
of the corporation's tax year; and
• The corporation has one or more tax
positions that must be reported on
Schedule UTP.
Attach Schedule UTP to the
corporation's income tax return. Do not file
Instructions for Form 1120

it separately. A taxpayer that files a
protective Form 1120 must also file
Schedule UTP if it satisfies the
requirements set forth above.
For details, see the Instructions for
Schedule UTP.

Questions 15a and 15b

rule under Regulations section
1.267A-5(b)(6).

see section 163(j) and the Instructions for
Form 8990.

Extent to which deduction is disallowed. When section 267A applies to
interest or royalties paid or accrued
pursuant to a hybrid arrangement, it
generally disallows a deduction for the
amount to the extent that, under the
foreign tax law, there is not a
corresponding income inclusion (including
long-term deferral). However, the
deduction is not disallowed to the extent
the amount is directly or indirectly included
in income in the United States, such as if
the amount is taken into account with
respect to a U.S. shareholder under
section 951(a) or section 951A. For
additional information, see Regulations
sections 1.267A-2 through 1.267A-4. For
examples illustrating the application of
section 267A, see Regulations section
1.267A-6.

Question 24

Generally, a taxpayer with a trade or
business must file Form 8990 to claim a
deduction for business interest. In
addition, Form 8990 must be filed by any
taxpayer that owns an interest in a
partnership with current year, or prior year
carryover, excess business interest
expense allocated from the partnership.

DRAFT AS OF
December 8, 2022

If the corporation made any payment in
2022 that would require the corporation to
file any Form(s) 1099, check the “Yes” box
for question 15a and answer question
15b. Otherwise, check the “No” box for
question 15a and skip question 15b. See
Am I Required to File a Form 1099 or
Other Information Return? on IRS.gov.

Question 19

If the corporation made any payments in
2022 that would require the corporation to
file any Forms 1042 and 1042‐S, check
the “Yes” box. See the Instructions for
Form 1042 and Instructions for Form
1042‐S for information regarding who is
required to file Forms 1042 and 1042‐S
and what types of payments are subject to
reporting on Forms 1042 and 1042‐S.

Question 21

If the corporation paid or accrued
(including through a partnership) any
interest or royalty for which a deduction is
not allowed under section 267A, check
"Yes" for question 21 and enter the total
amount for which a deduction is not
allowed.
Payments to which section 267A applies. Interest or royalty paid or accrued
by a domestic corporation (including, in
the case of a domestic corporation that is
a partner in a partnership, the domestic
corporation's allocable share of interest or
royalty paid or accrued by the partnership)
is subject to section 267A. Section 267A
generally applies to interest or royalty paid
or accrued according to a hybrid
arrangement (such as, for example, a
payment according to a hybrid instrument,
or a payment to a reverse hybrid),
provided that the payment or accrual is to
a related party (or according to a
structured arrangement). In addition,
under an imported mismatch rule, section
267A generally applies to interest or
royalties paid or accrued according to a
non-hybrid arrangement where the income
attributable to that payment or accrual is
directly or indirectly offset by certain
deductions involving hybridity incurred by
a related party or according to a structured
arrangement. However, section 267A
does not apply if a de minimis exception is
satisfied. See Regulations section
1.267A-1(c). For purposes of section
267A, interest and royalties are defined
broadly. For additional information about
arrangements subject to section 267A,
see Regulations sections 1.267A-2 and
1.267A-4. Also, see the anti-avoidance
Instructions for Form 1120

Question 22

If the corporation had gross receipts of at
least $500 million in any 1 of the 3
preceding tax years, complete and attach
Form 8991. For this purpose, the
corporation's gross receipts include the
gross receipts of all persons aggregated
with the corporation, as specified in
section 59A(e)(3). See the Instructions for
Form 8991 to determine if the corporation
is subject to the base erosion minimum
tax.

Question 23

The limitation on business interest
expense applies to every taxpayer with a
trade or business, unless the taxpayer
meets certain specified exceptions. A
taxpayer may elect out of the limitation for
certain businesses otherwise subject to
the business interest expense limitation.
See Question 24. Also, see the
Instructions for Form 8990.
Certain real property trades or
businesses and farming businesses
qualify to make an election not to limit
business interest expense. This is an
irrevocable election. If you make this
election, you are required to use the
alternative depreciation system to
depreciate any nonresidential real
property, residential rental property, and
qualified improvement property for an
electing real property trade or business,
and any property with a recovery period of
10 years or more for an electing farming
business. See section 168(g)(1)(F). Also,
you are not entitled to the special
depreciation allowance for that property.
For a taxpayer with more than one
qualifying business, the election is made
with respect to each business.
Check “Yes” if the corporation has an
election in effect to exclude a real property
trade or business or a farming business
from section 163(j). For more information,
-23-

Exclusions from filing. A taxpayer is not
required to file Form 8990 if the taxpayer
is a small business taxpayer (defined
below) and does not have excess
business interest expense from a
partnership. A taxpayer also is not
required to file Form 8990 if the taxpayer
only has business interest expense from
these excepted trades or businesses:
• An electing real property trade or
business,
• An electing farming business, or
• Certain utility businesses.
Small business taxpayer. A small
business taxpayer is not subject to the
business interest expense limitation and is
not required to file Form 8990. A small
business taxpayer is a taxpayer that (a) is
not a tax shelter (as defined in section
448(d)(3)), and (b) meets the gross
receipts test of section 448(c), discussed
next.

Gross receipts test. For 2022, a
taxpayer meets the gross receipts test if
the taxpayer has average annual gross
receipts of $27 million or less for the 3
prior tax years. A taxpayer's average
annual gross receipts for the 3 prior tax
years is determined by adding the gross
receipts for the 3 prior tax years and
dividing the total by 3. Gross receipts
include the aggregate gross receipts from
all persons treated as a single employer,
such as a controlled group of
corporations, commonly controlled
partnerships, or proprietorships, and
affiliated service groups. See section
448(c) and the Instructions for Form 8990
for additional information.

Question 25

To be certified as a qualified opportunity
fund, the corporation must file Form 1120
and attach Form 8996, even if the
corporation had no income or expenses to
report. If the corporation is attaching Form
8996, check the “Yes” box for question 25.
On the line following the dollar sign, enter
the amount from Form 8996, line 15.
The penalty reported on this line from
Form 8996, line 15, is not due with the
filing of this form. The IRS will separately
send to you a notice setting forth the due
date for the penalty payment and where
that payment should be sent.

Question 26

Check the “Yes” box if:
1. On or after December 22, 2017, a
foreign corporation directly or indirectly
acquired substantially all of the properties
held directly or indirectly by the
corporation; and
2. The ownership percentage with
respect to the acquisition was greater than
50% (by vote or by value).

Schedule L.
Balance Sheets per Books

The balance sheets should agree with the
corporation's books and records.
Corporations with total receipts
(page 1, line 1a plus lines 4 through 10)
and total assets at the end of the tax year
less than $250,000 are not required to
complete Schedules L, M-1, and M-2 if the
“Yes” box on Schedule K, question 13, is
checked.

• Corporations with total receipts (page 1,
line 1a plus lines 4 through 10) and total
assets at the end of the tax year less than
$250,000 are not required to complete
Schedules L, M-1, and M-2 if the “Yes”
box on Schedule K, question 13, is
checked.
• Corporations with total assets
non-consolidated (or consolidated for all
corporations included within the
consolidated tax group) of $10 million or
more on the last day of the tax year must
file Schedule M-3 (Form 1120) instead of
Schedule M-1.
• A corporation filing Form 1120 that is
not required to file Schedule M-3 may
voluntarily file Schedule M-3 instead of
Schedule M-1. See the Instructions for
Schedule M-3 (Form 1120) for more
information.
• Corporations that (a) are required to file
Schedule M-3 (Form 1120) and have less
than $50 million total assets at the end of
the tax year, or (b) are not required to file
Schedule M-3 (Form 1120) and voluntarily
file Schedule M-3 (Form 1120), must
either (i) complete Schedule M-3 (Form
1120) entirely or (ii) complete
Schedule M-3 (Form 1120) through Part I,
and complete Form 1120, Schedule M-1,
instead of completing Parts II and III of
Schedule M-3 (Form 1120). If the
corporation chooses to complete
Schedule M-1 instead of completing Parts
II and III of Schedule M-3, the amount on
Schedule M-1, line 1, must equal the
amount on Schedule M-3, Part I, line 11.
See the Instructions for Schedule M-3
(Form 1120) for more information.

DRAFT AS OF
December 8, 2022

If “Yes” is checked, also enter in the
space provided the ownership percentage
both by vote and by value. If there are
multiple acquisitions that must be
reported, enter the ownership for the most
recent acquisition. Attach a statement
reporting the ownership percentage by
vote and by value for the other
acquisitions.
Section 7874 applies in certain cases
in which a foreign corporation directly or
indirectly acquires substantially all of the
properties of a domestic corporation.
Generally, it applies when three
requirements are satisfied.
1. Pursuant to a plan or series of
related transactions, a foreign corporation
must acquire directly or indirectly
substantially all of the properties held
directly or indirectly by a domestic
corporation.
2. After the acquisition, the ownership
percentage (by vote or value) must be at
least 60%.
3. After the acquisition, the expanded
affiliated group that includes the foreign
acquiring corporation must not have
substantial business activities in the
foreign country in which the foreign
acquiring corporation is created or
organized.
When section 7874 applies, the tax
treatment of the acquisition depends on
the ownership percentage. If the
ownership percentage is at least 80%,
then the foreign acquiring corporation is
treated as a domestic corporation for all
purposes of the Internal Revenue Code.
See section 7874(b). If the ownership
percentage is at least 60% but less than
80%, then the foreign acquiring
corporation is respected as a foreign
corporation, but the domestic corporation
and certain other persons are subject to
special rules that reduce the tax benefits
of the acquisition. See section 7874(a).

See the regulations under section 7874
for rules regarding the computation of the
ownership percentage. See sections
59A(d)(4) and 965(l) for additional rules
regarding the tax treatment of certain
expatriated entities.

Corporations with total assets
non-consolidated (or consolidated for all
corporations included within the
consolidated tax group) of $10 million or
more on the last day of the tax year must
file Schedule M-3 (Form 1120) instead of
Schedule M-1. However, see the
instructions for Schedule M-1 below. See
the separate Instructions for Schedule M-3
(Form 1120) for provisions that also affect
Schedule L.
If filing a consolidated return, report
total consolidated assets, liabilities, and
shareholder's equity for all corporations
joining in the return. See Consolidated
Return, earlier.

Line 1

Include certificates of deposit as cash on
this line.

Line 5

Include on this line:
• State and local government obligations,
the interest on which is excludable from
gross income under section 103(a), and
• Stock in a mutual fund or other RIC that
distributed exempt-interest dividends
during the tax year of the corporation.

Line 26

Some examples of adjustments to report
on this line include:
• Unrealized gains and losses on
securities held “available for sale,”
• Foreign currency translation
adjustments,
• The excess of additional pension
liability over unrecognized prior service
cost,
• Guarantees of employee stock (ESOP)
debt, and
• Compensation related to employee
stock award plans.
If the total adjustment to be entered on
line 26 is a negative amount, enter the
amount in parentheses.

Schedule M-1.
Reconciliation of Income
(Loss) per Books With
Income per Return

Line 5c

Include any of the following applicable
expenses.
• Entertainment expenses not deductible
under section 274(a).
• Meal expenses not deductible under
section 274(n).
• Qualified transportation fringes not
deductible under 274(a)(4).
• Expenses for the use of an
entertainment facility.
• The part of business gifts over $25.
• Expenses of an individual over $2,000,
allocable to conventions on cruise ships.
• Employee achievement awards of
nontangible or tangible property over $400
($1,600 if part of a qualified plan).
• The cost of skyboxes.
• Nondeductible club dues.
• The part of luxury water travel expenses
not deductible under section 274(m).
• Expenses for travel as a form of
education.
• Other nondeductible travel and
entertainment expenses.
For more information, see Pub. 535.

In completing Schedule M-1, the following
apply.
-24-

Instructions for Form 1120

Line 7

Report any tax-exempt interest received
or accrued, including any exempt-interest
dividends received as a shareholder in a
mutual fund or other RIC. Also, report this
same amount on Schedule K, item 9.
The corporation should include
tax-exempt income from forgiven PPP
loans on line 7 of Schedule M-1 (if it was
included on line 1 of the Schedule M-1), or
on Part II, line 25 of Schedule M-3 (Form
1120), column (c) as a negative number (if
it was included on line 25 in column (a) as
Income per Income Statement).

Schedule M-2. Analysis of
Unappropriated Retained
Earnings per Books

If the corporation treats tax-exempt
income resulting from a PPP loan as
received or accrued prior to when
forgiveness of the PPP loan is granted and
the amount of forgiveness granted is less
than the amount of tax-exempt income
that was previously treated as received or
accrued, the corporation should include
the difference as a decrease in
tax-exempt income on Schedule M-2,
line 6, for the tax year in which the
taxpayer receives notice that the PPP loan

was not fully forgiven. The corporation
should attach a statement to
Schedule M-2 including the following
information:
1. The corporation's name, address,
and EIN;
2. A statement that the corporation is
making adjustments in accordance with
section 3.03 of Rev. Proc. 2021-48; and
3. The tax year for which tax-exempt
income was originally reported, the
amount of tax-exempt income that was
originally reported for such tax year, and
the amount of tax-exempt income being
adjusted on Schedule M-2.

DRAFT AS OF
December 8, 2022

Instructions for Form 1120

-25-

Paperwork Reduction Act Notice. We ask for the information on these forms to carry out the Internal Revenue laws of the United
States. You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to
figure and collect the right amount of tax.
You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form
displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents
may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential,
as required by section 6103.

DRAFT AS OF
December 8, 2022

Estimates of Taxpayer Burden. The following tables show burden estimates based on current statutory requirements as of
November 2022 for taxpayers filing 2022 Forms 1065, 1120, 1120-C, 1120-F, 1120-H, 1120-ND, 1120S, 1120-SF, 1120-FSC, 1120-L,
1120-PC, 1066, 1120-REIT, 1120-RIC, 1120-POL, and related attachments. Time spent and out-of-pocket costs are presented
separately. Time burden is broken out by taxpayer activity, with reporting representing the largest component. Out-of-pocket costs
include any expenses incurred by taxpayers to prepare and submit their tax returns. Examples include tax return preparation and
submission fees, postage and photocopying costs, and tax preparation software costs. While these estimates don't include burden
associated with post-filing activities, IRS operational data indicate that electronically prepared and filed returns have fewer arithmetic
errors, implying lower post-filing burden.
Reported time and cost burdens are national averages and don't necessarily reflect a “typical” case. Most taxpayers experience
lower than average burden, with taxpayer burden varying considerably by taxpayer type. For instance, the estimated average time
burden for all business entities is 93 hours, with an average cost of $3,927 per return. This average includes all associated forms and
schedules, across all preparation methods and taxpayer activities.
The average burden for partnerships filing Forms 1065 and related attachments is about 85 hours and $3,900; the average burden
for corporations filing Form 1120 and associated forms is about 140 hours and $6,100; and the average burden for Forms 1066,
1120-REIT, 1120-RIC, 1120S, and all related attachments is 80 hours and $3,100. Within each of these estimates there is significant
variation in taxpayer activity. Tax preparation fees and other out-of-pocket costs vary extensively depending on the tax situation of the
taxpayer, the type of software or professional preparer used, and the geographic location. Third-party burden hours are not included in
these estimates.

Table 1 – Taxpayer Burden for Entities Taxed as Partnerships
Forms 1065, 1066, and all attachments
Primary Form Filed or Type of
Taxpayer
All Partnerships

Total Number of Returns
(millions)

Average Time (hours)

Average Cost ($)

Average Monetized
Burden ($)
7,900

4.8

85

3,900

Small

4.5

75

2,800

5,300

Large*

0.3

245

20,600

45,900

*A large business is defined as one having end-of-year assets greater than $10 million. A large business is defined the same way for partnerships, taxable corporations, and
pass-through corporations. A small business is any business that doesn't meet the definition of a large business.

Table 2 – Taxpayer Burden for Entities Taxed as Taxable Corporations
Forms 1120, 1120-C, 1120-F, 1120-H, 1120-ND, 1120-SF, 1120-FSC, 1120-L, 1120-PC, 1120-POL, and all attachments
Primary Form Filed or Type of
Taxpayer
All Taxable Corporations

Total Number of Returns
(millions)

Average Time (hours)

Average Cost ($)

Average Monetized
Burden ($)
15,100

2.1

140

6,100

Small

2.0

90

3,100

6,400

Large*

0.1

895

49,700

142,600

*A large business is defined as one having end-of-year assets greater than $10 million. A large business is defined the same way for partnerships, taxable corporations, and
pass-through corporations. A small business is any business that doesn't meet the definition of a large business.

Table 3 – Taxpayer Burden for Entities Taxed as Pass-Through Corporations
Forms 1120-REIT, 1120-RIC, 1120-S, and all attachments
Primary Form Filed or Type of
Taxpayer
All Pass-Through Corporations

Total Number of Returns
(millions)

Average Time (hours)

Average Cost ($)

Average Monetized
Burden ($)
6,400

5.4

80

3,100

Small

5.3

80

2,800

5,800

Large*

0.1

330

24,500

58,500

*A large business is defined as one having end-of-year assets greater than $10 million. A large business is defined the same way for partnerships, taxable corporations, and
pass-through corporations. A small business is any business that doesn't meet the definition of a large business.

Comments. If you have comments concerning the accuracy of these time estimates or suggestions for making these forms
simpler, we would be happy to hear from you. You can send us comments through IRS.gov/FormComments. Or you can write to the
-26-

Instructions for Form 1120

Internal Revenue Service, Tax Forms and Publications, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not send the
tax form to this address. Instead, see Where To File, earlier, near the beginning of the instructions.

DRAFT AS OF
December 8, 2022

Instructions for Form 1120

-27-

Principal Business Activity Codes
This list of principal business activities and their
associated codes is designed to classify an enterprise
by the type of activity in which it is engaged to facilitate
the administration of the Internal Revenue Code. These
principal business activity codes are based on the North
American Industry Classification System.

largest percentage of its “total receipts.” Total receipts is
defined as the sum of gross receipts or sales (page 1,
line 1a) plus all other income (page 1, lines 4 through
10). If the company purchases raw materials and
supplies them to a subcontractor to produce the finished
product, but retains title to the product, the company is
considered a manufacturer and must use one of the
manufacturing codes (311110–339900).

Using the list of activities and codes below,
determine from which activity the company derives the

Once the principal business activity is determined,
entries must be made on Form 1120, Schedule K, lines

Agriculture, Forestry, Fishing,
and Hunting

238300

Building Finishing Contractors
(including drywall, insulation,
painting, wallcovering, flooring,
tile, & finish carpentry)
Other Specialty Trade
Contractors (including site
preparation)

2a, 2b, and 2c. On line 2a, enter the six-digit code
selected from the list below. On line 2b, enter the
company's business activity. On line 2c, enter a brief
description of the principal product or service of the
company.

Plastics and Rubber Products
Manufacturing
326100 Plastics Product Mfg
326200 Rubber Product Mfg
Nonmetallic Mineral Product
Manufacturing
327100 Clay Product & Refractory Mfg
327210 Glass & Glass Product Mfg
327300 Cement & Concrete Product Mfg
327400 Lime & Gypsum Product Mfg
327900 Other Nonmetallic Mineral
Product Mfg
Primary Metal Manufacturing
331110 Iron & Steel Mills & Ferroalloy
Mfg
331200 Steel Product Mfg from
Purchased Steel
331310 Alumina & Aluminum Production
& Processing
331400 Nonferrous Metal (except
Aluminum) Production &
Processing
331500 Foundries
Fabricated Metal Product
Manufacturing
332110 Forging & Stamping
332210 Cutlery & Handtool Mfg
332300 Architectural & Structural Metals
Mfg
332400 Boiler, Tank, & Shipping
Container Mfg
332510 Hardware Mfg
332610 Spring & Wire Product Mfg
332700 Machine Shops; Turned Product;
& Screw, Nut, & Bolt Mfg
332810 Coating, Engraving, Heat
Treating, & Allied Activities
332900 Other Fabricated Metal Product
Mfg
Machinery Manufacturing
333100 Agriculture, Construction, &
Mining Machinery Mfg
333200 Industrial Machinery Mfg
333310 Commercial & Service Industry
Machinery Mfg
333410 Ventilation, Heating,
Air-Conditioning, & Commercial
Refrigeration Equipment Mfg
333510 Metalworking Machinery Mfg
333610 Engine, Turbine & Power
Transmission Equipment Mfg
333900 Other General Purpose
Machinery Mfg
Computer and Electronic Product
Manufacturing
334110 Computer & Peripheral
Equipment Mfg
334200 Communications Equipment Mfg
334310 Audio & Video Equipment Mfg
334410 Semiconductor & Other
Electronic Component Mfg
334500 Navigational, Measuring,
Electromedical, & Control
Instruments Mfg
334610 Manufacturing & Reproducing
Magnetic & Optical Media
Electrical Equipment, Appliance, and
Component Manufacturing
335100 Electric Lighting Equipment Mfg
335200 Household Appliance Mfg
335310 Electrical Equipment Mfg
335900 Other Electrical Equipment &
Component Mfg
Transportation Equipment
Manufacturing
336100 Motor Vehicle Mfg
336210 Motor Vehicle Body & Trailer Mfg
336300 Motor Vehicle Parts Mfg
336410 Aerospace Product & Parts Mfg
336510 Railroad Rolling Stock Mfg
336610 Ship & Boat Building
336990 Other Transportation Equipment
Mfg

Furniture and Related Product
Manufacturing
337000 Furniture & Related Product
Manufacturing
Miscellaneous Manufacturing
339110 Medical Equipment & Supplies
Mfg
339900 Other Miscellaneous
Manufacturing

DRAFT AS OF
December 8, 2022

Crop Production
111100 Oilseed & Grain Farming
111210 Vegetable & Melon Farming
(including potatoes & yams)
111300 Fruit & Tree Nut Farming
111400 Greenhouse, Nursery, &
Floriculture Production
111900 Other Crop Farming (including
tobacco, cotton, sugarcane, hay,
peanut, sugar beet, & all other
crop farming)
Animal Production
112111 Beef Cattle Ranching & Farming
112112 Cattle Feedlots
112120 Dairy Cattle & Milk Production
112210 Hog & Pig Farming
112300 Poultry & Egg Production
112400 Sheep & Goat Farming
112510 Aquaculture (including shellfish &
finfish farms & hatcheries)
112900 Other Animal Production
Forestry and Logging
113110 Timber Tract Operations
113210 Forest Nurseries & Gathering of
Forest Products
113310 Logging
Fishing, Hunting, and Trapping
114110 Fishing
114210 Hunting & Trapping
Support Activities for Agriculture and
Forestry
115110 Support Activities for Crop
Production (including cotton
ginning, soil preparation,
planting, & cultivating)
115210 Support Activities for Animal
Production (including farriers)
115310 Support Activities for Forestry

Mining
211120
211130
212110
212200
212310
212320
212390
213110

Crude Petroleum Extraction
Natural Gas Extraction
Coal Mining
Metal Ore Mining
Stone Mining & Quarrying
Sand, Gravel, Clay, & Ceramic &
Refractory Minerals Mining &
Quarrying
Other Nonmetallic Mineral
Mining & Quarrying
Support Activities for Mining

Utilities
221100
221210
221300
221500

Electric Power Generation,
Transmission & Distribution
Natural Gas Distribution
Water, Sewage & Other Systems
Combination Gas & Electric

Construction

Construction of Buildings
236110 Residential Building Construction
236200 Nonresidential Building
Construction
Heavy and Civil Engineering
Construction
237100 Utility System Construction
237210 Land Subdivision
237310 Highway, Street, & Bridge
Construction
237990 Other Heavy & Civil Engineering
Construction
Specialty Trade Contractors
238100 Foundation, Structure, & Building
Exterior Contractors (including
framing carpentry, masonry,
glass, roofing, & siding)
238210 Electrical Contractors
238220 Plumbing, Heating, &
Air-Conditioning Contractors
238290 Other Building Equipment
Contractors

238900

Manufacturing

Food Manufacturing
311110 Animal Food Mfg
311200 Grain & Oilseed Milling
311300 Sugar & Confectionery Product
Mfg
311400 Fruit & Vegetable Preserving &
Specialty Food Mfg
311500 Dairy Product Mfg
311610 Animal Slaughtering and
Processing
311710 Seafood Product Preparation &
Packaging
311800 Bakeries, Tortilla & Dry Pasta
Mfg
311900 Other Food Mfg (including
coffee, tea, flavorings &
seasonings)
Beverage and Tobacco Product
Manufacturing
312110 Soft Drink & Ice Mfg
312120 Breweries
312130 Wineries
312140 Distilleries
312200 Tobacco Manufacturing
Textile Mills and Textile Product Mills
313000 Textile Mills
314000 Textile Product Mills
Apparel Manufacturing
315100 Apparel Knitting Mills
315210 Cut & Sew Apparel Contractors
315250 Cut & Sew Apparel Mfg (except
Contractors)
315990 Apparel Accessories & Other
Apparel Mfg
Leather and Allied Product
Manufacturing
316110 Leather & Hide Tanning &
Finishing
316210 Footwear Mfg (including rubber
& plastics)
316990 Other Leather & Allied Product
Mfg
Wood Product Manufacturing
321110 Sawmills & Wood Preservation
321210 Veneer, Plywood, & Engineered
Wood Product Mfg
321900 Other Wood Product Mfg
Paper Manufacturing
322100 Pulp, Paper, & Paperboard Mills
322200 Converted Paper Product Mfg
Printing and Related Support Activities
323100 Printing & Related Support
Activities
Petroleum and Coal Products
Manufacturing
324110 Petroleum Refineries (including
integrated)
324120 Asphalt Paving, Roofing, &
Saturated Materials Mfg
324190 Other Petroleum & Coal
Products Mfg
Chemical Manufacturing
325100 Basic Chemical Mfg
325200 Resin, Synthetic Rubber, &
Artificial & Synthetic Fibers &
Filaments Mfg
325300 Pesticide, Fertilizer, & Other
Agricultural Chemical Mfg
325410 Pharmaceutical & Medicine Mfg
325500 Paint, Coating, & Adhesive Mfg
325600 Soap, Cleaning Compound, &
Toilet Preparation Mfg
325900 Other Chemical Product &
Preparation Mfg

-28-

Wholesale Trade

Merchant Wholesalers, Durable Goods
423100 Motor Vehicle & Motor Vehicle
Parts & Supplies
423200 Furniture & Home Furnishings
423300 Lumber & Other Construction
Materials
423400 Professional & Commercial
Equipment & Supplies
423500 Metal & Mineral (except
Petroleum)
423600 Household Appliances and
Electrical & Electronic Goods
423700 Hardware, Plumbing, & Heating
Equipment & Supplies
423800 Machinery, Equipment, &
Supplies
423910 Sporting & Recreational Goods &
Supplies
423920 Toy & Hobby Goods & Supplies
423930 Recyclable Materials
423940 Jewelry, Watch, Precious Stone,
& Precious Metals
423990 Other Miscellaneous Durable
Goods
Merchant Wholesalers, Nondurable
Goods
424100 Paper & Paper Products
424210 Drugs & Druggists' Sundries
424300 Apparel, Piece Goods, & Notions
424400 Grocery & Related Products
424500 Farm Product Raw Materials
424600 Chemical & Allied Products
424700 Petroleum & Petroleum Products
424800 Beer, Wine, & Distilled Alcoholic
Beverages
424910 Farm Supplies
424920 Book, Periodical, & Newspapers
424930 Flower, Nursery Stock, & Florists'
Supplies
424940 Tobacco Products & Electronic
Cigarettes
424950 Paint, Varnish, & Supplies
424990 Other Miscellaneous Nondurable
Goods
WholesaleTrade Agents and Brokers
425120 Wholesale Trade Agents &
Brokers

Retail Trade

Motor Vehicle and Parts Dealers
441110 New Car Dealers
441120 Used Car Dealers
441210 Recreational Vehicle Dealers
441222 Boat Dealers
441227 Motorcycle, ATV, and All Other
Motor Vehicle Dealers
441300 Automotive Parts, Accessories,
& Tire Retailers
Furniture and Home Furnishings
Retailers
449110 Furniture Retailers
449121 Floor Covering Retailers
449122 Window Treatment Retailers
449129 All Other Home Furnishings
Retailers
Electronics and Appliance Retailers
449210 Electronics & Appliance Retailers
(including Computers)
Building Material and Garden
Equipment and Supplies Dealers
444110 Home Centers
444120 Paint & Wallpaper Retailers
444140 Hardware Retailers

Principal Business Activity Codes (Continued)
444180
444200

Other Building Material Dealers
Lawn & Garden Equipment &
Supplies Retailers
Food and Beverage Retailers
445110 Supermarkets and Other
Grocery Retailers (except
Convenience)
445131 Convenience Retailers
445132 Vending Machine Operators
445230 Fruit & Vegetable Markets
445240 Meat Retailers
445250 Fish & Seafood Retailers
445291 Baked Goods Retailers
445292 Confectionery & Nut Retailers
445298 All Other Specialty Food
Retailers
445320 Beer, Wine, & Liquor Retailers
Health and Personal Care Retailers
456110 Pharmacies & Drug Retailers
456120 Cosmetics, Beauty Supplies, &
Perfume Retailers
456130 Optical Goods Retailers
456190 Other Health & Personal Care
Retailers
Gasoline Stations & Fuel Dealers
457100 Gasoline Stations (including
convenience stores with gas)
457210 Fuel Dealers (including Heating
Oil and Liquefied Petroleum)
Clothing and Accessories Retailers
458110 Clothing and Clothing
Accessories Retailers
458210 Shoe Retailers
458310 Jewelry Retailers
458320 Luggage & Leather Goods
Retailers
Sporting Goods, Hobby, Book, Musical
Instrument and Miscellaneous Retailers
459110 Sporting Goods Retailers
459120 Hobby, Toy, & Game Retailers
459130 Sewing, Needlework, & Piece
Goods Retailers
459140 Musical Instrument & Supplies
Retailers
459210 Book Retailers & News Dealers
(including newsstands)
459310 Florists
459410 Office Supplies & Stationery
Retailers
459420 Gift, Novelty, & Souvenir
Retailers
459510 Used Merchandise Retailers
459910 Pet & Pet Supplies Retailers
459920 Art Dealers
459930 Manufactured (Mobile) Home
Dealers
459990 All Other Miscellaneous Retailers
(including tobacco, candle, &
trophy retailers)
General Merchandise Retailers
455110 Department Stores
455210 Warehouse Clubs,
Supercenters, & Other General
Merch. Retailers
Nonstore Retailers
Nonstore retailers sell all types of
merchandise using such
methods as Internet, mail-order
catalogs, interactive television, or
direct sales. These types of
Retailers should select the PBA
associated with their primary line
of products sold. For example,
establishments primarily selling
prescription and non-prescription
drugs, select PBA code 456110
Pharmacies & Drug Retailers

485320
485410

Limousine Service
School & Employee Bus
Transportation
485510 Charter Bus Industry
485990 Other Transit & Ground
Passenger Transportation
Pipeline Transportation
486000 Pipeline Transportation
Scenic & Sightseeing Transportation
487000 Scenic & Sightseeing
Transportation
Support Activities for Transportation
488100 Support Activities for Air
Transportation
488210 Support Activities for Rail
Transportation
488300 Support Activities for Water
Transportation
488410 Motor Vehicle Towing
488490 Other Support Activities for Road
Transportation
488510 Freight Transportation
Arrangement
488990 Other Support Activities for
Transportation
Couriers and Messengers
492110 Couriers & Express Delivery
Services
492210 Local Messengers & Local
Delivery
Warehousing and Storage
493100 Warehousing & Storage (except
lessors of miniwarehouses &
self-storage units)

523160

Commodity Contracts
Intermediation
Securities & Commodity
Exchanges
523900 Other Financial Investment
Activities (including portfolio
management & investment
advice)
Insurance Carriers and Related
Activities
524110 Direct Life, Health, & Medical
Insurance Carriers
524120 Direct Insurance (except Life,
Health, & Medical) Carriers
524210 Insurance Agencies &
Brokerages
524290 Other Insurance Related
Activities (including third-party
administration of insurance and
pension funds)
Funds, Trusts, and Other Financial
Vehicles
525100 Insurance & Employee Benefit
Funds
525910 Open-End Investment Funds
(Form 1120-RIC)
525920 Trusts, Estates, & Agency
Accounts
525990 Other Financial Vehicles
(including mortgage REITs &
closed-end investment funds)
“Offices of Bank Holding
Companies” and “Offices of
Other Holding Companies” are
located under Management of
Companies (Holding
Companies), later.
523210

541340
541350
541360

Drafting Services
Building Inspection Services
Geophysical Surveying &
Mapping Services
541370 Surveying & Mapping (except
Geophysical) Services
541380 Testing Laboratories & Services
Specialized Design Services
541400 Specialized Design Services
(including interior, industrial,
graphic, & fashion design)
Computer Systems Design and Related
Services
541511 Custom Computer Programming
Services
541512 Computer Systems Design
Services
541513 Computer Facilities Management
Services
541519 Other Computer Related
Services
Other Professional, Scientific, and
Technical Services
541600 Management, Scientific, &
Technical Consulting Services
541700 Scientific Research &
Development Services
541800 Advertising, Public Relations, &
Related Services
541910 Marketing Research & Public
Opinion Polling
541920 Photographic Services
541930 Translation & Interpretation
Services
541940 Veterinary Services
541990 All Other Professional, Scientific,
& Technical Services

DRAFT AS OF
December 8, 2022

Transportation and
Warehousing

Air, Rail, and Water Transportation
481000 Air Transportation
482110 Rail Transportation
483000 Water Transportation
Truck Transportation
484110 General Freight Trucking, Local
484120 General Freight Trucking,
Long-distance
484200 Specialized Freight Trucking
Transit and Ground Passenger
Transportation
485110 Urban Transit Systems
485210 Interurban & Rural Bus
Transportation
485310 Taxi and Ridesharing Services

Information

Motion Picture and Sound Recording
Industries
512100 Motion Picture & Video Industries
(except video rental)
512200 Sound Recording Industries
Publishing Industries
513110 Newspaper Publishers
513120 Periodical Publishers
513130 Book Publishers
513140 Directory & Mailing List
Publishers
513190 Other Publishers
513210 Software Publishers
Broadcasting, Content Providers, and
Telecommunications
516100 Radio & Television Broadcasting
Stations
516210 Media Streaming, Social
Networks, & Other Content
Providers
517000 Telecommunications (including
Wired, Wireless, Satellite, Cable
& Other Program Distribution,
Resellers, Agents, Other
Telecommunications, & Internet
Service Providers)
Data Processing, Web Search Portals,
& Other Information Services
518210 Computing Infrastructure
Providers, Data Processing, Web
Hosting, & Related Services
519200 Web Search Portals, Libraries,
Archives, & Other Info. Services

Finance and Insurance

Depository Credit Intermediation
522110 Commercial Banking
522130 Credit Unions
522180 Savings Institutions & Other
Depository Credit Intermediation
Nondepository Credit Intermediation
522210 Credit Card Issuing
522220 Sales Financing
522291 Consumer Lending
522292 Real Estate Credit (including
mortgage bankers & originators)
522299 Intl, Secondary Market, & Other
Nondepos. Credit Intermediation
Activities Related to Credit
Intermediation
522300 Activities Related to Credit
Intermediation (including loan
brokers, check clearing, &
money transmitting)
Securities, Commodity Contracts, and
Other Financial Investments and
Related Activities
523150 Investment Banking & Securities
Intermediation

Real Estate and Rental and
Leasing

Real Estate
531110 Lessors of Residential Buildings
& Dwellings (including equity
REITs)
531120 Lessors of Nonresidential
Buildings (except
Miniwarehouses) (including
equity REITs)
531130 Lessors of Miniwarehouses &
Self-Storage Units (including
equity REITs)
531190 Lessors of Other Real Estate
Property (including equity REITs)
531210 Offices of Real Estate Agents &
Brokers
531310 Real Estate Property Managers
531320 Offices of Real Estate Appraisers
531390 Other Activities Related to Real
Estate
Rental and Leasing Services
532100 Automotive Equipment Rental &
Leasing
532210 Consumer Electronics &
Appliances Rental
532281 Formal Wear & Costume Rental
532282 Video Tape & Disc Rental
532283 Home Health Equipment Rental
532284 Recreational Goods Rental
532289 All Other Consumer Goods
Rental
532310 General Rental Centers
532400 Commercial & Industrial
Machinery & Equipment Rental &
Leasing
Lessors of Nonfinancial Intangible
Assets (except copyrighted works)
533110 Lessors of Nonfinancial
Intangible Assets (except
copyrighted works)

Professional, Scientific, and
Technical Services

Legal Services
541110 Offices of Lawyers
541190 Other Legal Services
Accounting, Tax Preparation,
Bookkeeping, and Payroll Services
541211 Offices of Certified Public
Accountants
541213 Tax Preparation Services
541214 Payroll Services
541219 Other Accounting Services
Architectural, Engineering, and Related
Services
541310 Architectural Services
541320 Landscape Architecture Services
541330 Engineering Services

-29-

Management of Companies
(Holding Companies)
551111
551112

Offices of Bank Holding
Companies
Offices of Other Holding
Companies

Administrative and Support and
Waste Management and
Remediation Services

Administrative and Support Services
561110 Office Administrative Services
561210 Facilities Support Services
561300 Employment Services
561410 Document Preparation Services
561420 Telephone Call Centers
561430 Business Service Centers
(including private mail centers &
copy shops)
561440 Collection Agencies
561450 Credit Bureaus
561490 Other Business Support Services
(including repossession services,
court reporting, & stenotype
services)
561500 Travel Arrangement &
Reservation Services
561600 Investigation & Security Services
561710 Exterminating & Pest Control
Services
561720 Janitorial Services
561730 Landscaping Services
561740 Carpet & Upholstery Cleaning
Services
561790 Other Services to Buildings &
Dwellings
561900 Other Support Services
(including packaging & labeling
services, & convention & trade
show organizers)
Waste Management and Remediation
Services
562000 Waste Management &
Remediation Services

Educational Services
611000

Educational Services (including
schools, colleges, & universities)

Health Care and Social
Assistance

Offices of Physicians and Dentists
621111 Offices of Physicians (except
mental health specialists)
621112 Offices of Physicians, Mental
Health Specialists
621210 Offices of Dentists

Principal Business Activity Codes (Continued)
Offices of Other Health Practitioners
621310 Offices of Chiropractors
621320 Offices of Optometrists
621330 Offices of Mental Health
Practitioners (except Physicians)
621340 Offices of Physical, Occupational
& Speech Therapists, &
Audiologists
621391 Offices of Podiatrists
621399 Offices of All Other
Miscellaneous Health
Practitioners
Outpatient Care Centers
621410 Family Planning Centers
621420 Outpatient Mental Health &
Substance Abuse Centers
621491 HMO Medical Centers
621492 Kidney Dialysis Centers
621493 Freestanding Ambulatory
Surgical & Emergency Centers
621498 All Other Outpatient Care
Centers
Medical and Diagnostic Laboratories
621510 Medical & Diagnostic
Laboratories
Home Health Care Services
621610 Home Health Care Services
Other Ambulatory Health Care Services
621900 Other Ambulatory Health Care
Services (including ambulance
services & blood & organ banks)
Hospitals
622000 Hospitals
Nursing and Residential Care Facilities
623000 Nursing & Residential Care
Facilities
Social Assistance
624100 Individual & Family Services

624200
624310
624410

Community Food & Housing, &
Emergency & Other Relief
Services
Vocational Rehabilitation
Services
Childcare Services

721120
721191
721199

Arts, Entertainment, and
Recreation

Performing Arts, Spectator Sports, and
Related Industries
711100 Performing Arts Companies
711210 Spectator Sports (including
sports clubs & racetracks)
711300 Promoters of Performing Arts,
Sports, & Similar Events
711410 Agents & Managers for Artists,
Athletes, Entertainers, & Other
Public Figures
711510 Independent Artists, Writers, &
Performers
Museums, Historical Sites, and Similar
Institutions
712100 Museums, Historical Sites, &
Similar Institutions
Amusement, Gambling, and Recreation
Industries
713100 Amusement Parks & Arcades
713200 Gambling Industries
713900 Other Amusement & Recreation
Industries (including golf
courses, skiing facilities,
marinas, fitness centers, &
bowling centers)

Casino Hotels
Bed & Breakfast Inns
All Other Traveler
Accommodation
721210 RV (Recreational Vehicle) Parks
& Recreational Camps
721310 Rooming & Boarding Houses,
Dormitories, & Workers’ Camps
Food Services and Drinking Places
722300 Special Food Services (including
food service contractors &
caterers)
722410 Drinking Places (Alcoholic
Beverages)
722511 Full-Service Restaurants
722513 Limited-Service Restaurants
722514 Cafeterias, Grill Buffets, and
Buffets
722515 Snack and Non-alcoholic
Beverage Bars

811420
811430

Reupholstery & Furniture Repair
Footwear & Leather Goods
Repair
811490 Other Personal & Household
Goods Repair & Maintenance
Personal and Laundry Services
812111 Barber Shops
812112 Beauty Salons
812113 Nail Salons
812190 Other Personal Care Services
(including diet & weight reducing
centers)
812210 Funeral Homes & Funeral
Services
812220 Cemeteries & Crematories
812310 Coin-Operated Laundries &
Drycleaners
812320 Drycleaning & Laundry Services
(except Coin-Operated)
812330 Linen & Uniform Supply
812910 Pet Care (except Veterinary)
Services
812920 Photofinishing
812930 Parking Lots & Garages
812990 All Other Personal Services
Religious, Grantmaking, Civic,
Professional, and Similar Organizations
813000 Religious, Grantmaking, Civic,
Professional, & Similar
Organizations (including
condominium and homeowners
associations)
Other
999999 Unclassified Establishments
(unable to classify)

DRAFT AS OF
December 8, 2022
Accommodation and Food
Services

Accommodation
721110 Hotels (except Casino Hotels) &
Motels

Other Services

Repair and Maintenance
811110 Automotive Mechanical &
Electrical Repair & Maintenance
811120 Automotive Body, Paint, Interior,
& Glass Repair
811190 Other Automotive Repair &
Maintenance (including oil
change & lubrication shops & car
washes)
811210 Electronic & Precision
Equipment Repair &
Maintenance
811310 Commercial & Industrial
Machinery & Equipment (except
Automotive & Electronic) Repair
& Maintenance
811410 Home & Garden Equipment &
Appliance Repair & Maintenance

-30-

Index
A

E

Accounting methods 5
Accounting period (Tax Year) 6
Address change 9
Advance payments 9
Affiliated group 21
Amended return 6
Amortization 11
Assembling the return 4
At-risk rules 15

Electronic deposit
requirement 4
Electronic filing 3
Employee benefit programs 14
Employer identification number
(EIN) 8
Entities electing to be taxed as
corporations 2
Estimated tax:
Penalty 5, 16
Estimated tax payments 5
Extension of time to file 3

B

Limited liability companies 2
Lobbying expenses,
nondeductibility 15

M

Refundable credits 21
Related party transactions 10
Rents (expense) 12
Rents (income) 10
Repairs and maintenance 12

DRAFT AS OF
December 8, 2022

Backup withholding 21
Bad debts 12
Balance sheets 24
Base erosion minimum tax 19,
23
Beneficiaries of trusts 20
Business start-up expenses 11

C
Capital construction fund
(See Merchant Marine capital
construction fund)
Closely held corporations 11
Compensation of officers 11
Consolidated return 8, 22
Contributions to reduce public
debt 2
Contributions, charitable 13
Controlled group 19
Cost of goods sold 9
Credits against tax 19

D
Deductions 10
Depletion 14
Depository methods of tax
payment 4
Depreciation 14
Direct deposit of refund 2, 16
Disclosure statement 6
Dividend income 10
Dividends-received
deduction 17-19
Dues, membership and
other 15

F

Farming, corporations engaged
in 2
Final return 9
Financial asset securitization
investment trust (FASIT) 2
Foreign person (defined) 22
Foreign tax credit 19
Forms and publications, how to
get 2
Future Developments 1

G
General business credit 19
General Instructions 2
Gross receipts 9

I
Installment sales 9
Interest due
Late payment of tax 5
Look-back method 20
Interest expense 12
Interest income:
Tax-exempt 22, 25
Taxable 10

L
LIFO recapture:
Tax on 20
Limitations on deductions 10,
13

Merchant Marine capital
construction fund:
Deduction for contributions 16
Tax on nonqualified
withdrawal 20
Minimum tax:
Prior year, credit for 19
Mutual savings banks
conducting life insurance
business 19

N

Name change 9
Net operating loss 16, 22
Nonaccrual experience
method 9

O
Other deductions 14
Other income 10
Other taxes 20
Overpaid estimated tax 21

P
Partnership income (loss) 14
Passive activity limitations 11
Payments and refundable
credits 20
Penalties 5, 16
Pension, profit-sharing, etc.
plans 14
Personal holding company 8
Personal holding company
tax 20
Personal service corporation 8
Preparer, tax return 3, 4
Private delivery services 3

R
Recapture taxes 20
Reconciliation of income 24
Recordkeeping 6

-31-

S

Salaries and wages 11
Schedule:
C 17
J 19
K 21
L 24
M-1 24
M-3 8, 24
O 19
Section 263A costs 10
Shareholders' equity
adjustments 24
Signature 3
Small business taxpayer 6, 23
Specific Instructions 7

T
Tax issues, unresolved 1
Tax-exempt securities 24
Taxes and licenses 12
Total assets 9
Travel, meals, and
entertainment 15

U
Uniform capitalization rules 10

W
What’s New 1
When to file 3
Where to file 4
Who must file 2
Who must sign 3
Worksheets:
Schedule C 18