QuickTips Index

Preparing IRS Form 1120S
Tips on how to prepare IRS Form 1120S, U.S. Tax Return for an S Corporation.

What is an S Corporation?
Definition of an S Corporation: a corporation that has between 1 and 100 shareholders and that passes-through net income or losses to shareholders. Covers eligibility criteria for electing S Corp status.

Preparing IRS Form 1040 Schedule E
Shareholders receiving a Schedule K-1 must report the amounts on IRS Form 1040 Schedule E, page 2. Generally speaking, ordinary net business income or loss is reported on Schedule E. Other income items are reported in the appropriate part of the 1040 tax return.

Tax Tips & Audit Strategies for S-Corporation Shareholders
The number one audit risk for S-Corporations is salary and wages paid to officers of the corporation. S-Corporations are also subject to hobby-loss rules. Together these are the two most significant audit risks facing S-Corporations right now.

Self-Employment & Payroll Taxes for S-Corporation Shareholders
Shareholders of S-Corporations do not pay Self-Employment Tax if they are actively engaged as a shareholder-employee of the S-Corporation. Instead, shareholder-employees are paid a salary, with their wages reported on a W-2 and with Social Security and Medicare taxes already withheld.

Issuing IRS Schedule K-1 to Shareholders
Schedule K-1 of Form 1120S is used to report each shareholder's pro-rated share of net income or loss from an S-Corporation, along with various separately stated income and deduction items. Schedule K-1 can also be used to summarize a shareholder's beginning and ending stock basis for the year.

S Corporation Taxation
S Corporations are generally exempt from federal income taxes. Discusses the difference between S Corp and C Corp taxation.