This article will assist you with understanding general information about Form 1120S in ProSeries Professional.
Report on Form 1120S, page 1, S corporation income (loss), deductions, tax due and tax payments. Form 1120S may only be filed by corporations who have elected S corporation status (by filing Form 2553) and whose election is in effect for the current tax year.
How does the program compute the number of shareholders in the corporation?
The program computes the number of shareholders in the corporation at the end of the tax year based on the number of shareholders recorded on the Schedule K-1 Worksheet. If the Final K-1 box is checked for any shareholders (on their Schedule K-1), they're included in this total.
To change the calculated number of shareholders at the end of the tax year, click the QuickZoom to the Total number of shareholders at year end line on the Schedule K-1 Worksheet and enter the correct number of shareholders.
Schedule K is a summary schedule of the shareholders' distributive share of the corporation's income, deductions, credits, etc.
The layout of Form 1120S, Schedule K allows separately stated items to be classified by type on the Schedule K-1. In most fields, all you will need to supply is the appropriate code and amount on Schedule K. In certain fields, the code will appear automatically next to an amount and is being displayed in case you wish to change it. Refer to the Schedule K-1 instructions for detailed reporting and filing information.
In a few of the tables, when you supply a code, the program won't enter a default description -you have the ability to describe what an "other" type of item is:
- Line 17d "Other items and amounts required to be reported separately to shareholders" is an expanding table, limited to 30 entries. Enter each item by code and amount on a separate line. Enter a description if the program doesn't default one for you. Entries made here carry the code entered to each shareholder's Schedule K-1.
- Line 17d of Schedule K, table I, items C through V require additional reporting information. According to the IRS instructions, if code C through V is selected on the Schedule K, the Schedule K-1 will display the code, an asterisk, and the word STMT. No amounts will appear on the Schedule K-1, Box 17.
- Code U is used to report information related to the net investment income tax. Enter the information the shareholders need on Other Items to be Reported on Schedules K-1 Smart Worksheet, line I. To provide this detailed additional information to the shareholders, use one of the following two methods:
- Method 1: Use the table below with the heading "Other Items to be Reported on Schedules K-1 Smart Worksheet" and enter the detail for the shareholders there. This method works best if you're going to attach a separate schedule or spreadsheet to the shareholder's Schedule K-1.
- Method 2: Open each shareholder's Schedule K-1 and scroll down to the Smart Worksheet titled "Supplemental Information Smart Worksheet." Enter information here for disclosure to each specific shareholder. This method works best if you want to enter the specific pro rata information directly on each shareholder's Schedule K-1 and the corporation doesn't have many Schedule K-1's. Refer to the Specific Instructions for Schedules K and K-1, Part III, in the IRS instructions for the unique reporting requirements for each code.
Form 1120S, Schedules L, M-1, and M-2
Companies with less than $250,000 of total receipts and less than $250,000 in assets no longer have to complete Schedules L and M-1 of Form 1120S.
If the S corporation meets these exceptions and wishes to suspend the L and M-1 calculations, check the box immediately below Schedule B, Question 10. Schedules L and M-1 won't calculate if this box is checked.
- Schedule L (Form 1120S, page 4) is the balance sheet for the corporation. These balance sheets should agree with the corporation's books and records.
- Schedule M-1 (Form 1120S, page 5) is a reconciliation of income (loss) recorded on the S corporation's books with the income (loss) reported on the return. You don't need to fill out Schedule M-1 if your S corporation's total receipts for the year, as well as total assets, shown on Schedule L, line 15, column (d), are less than $250,000. See Schedule B question 10, check the box as appropriate.
- Schedule M-2 (Form 1120S, page 5) is an analysis of the Accumulated Adjustments Account, Shareholders' Undistributed Taxable Income Previously Taxed, Accumulated Earnings and Profits and Other Adjustments Account. See IRS instructions for more information regarding this schedule.