How to Prepare a Final Tax Return for an S Corporation

how to file s corporation tax return

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When you terminate an S corporation, you must file a request to dissolve with the state in which the company was incorporated. The state will verify that the corporation does not owe any state taxes and send you a Certificate of Dissolution. Once you receive the state's approval, you may file your final tax return with the IRS. The final return is due on the 15th day of the third month after the S corporation's dissolution date. You may request an automatic six-month extension by filing Form 7004.

Step 1

Visit the IRS website to download Form 1120S and the necessary schedules and instructions. Mark the "Final" checkbox on the form to indicate it is the corporation's last tax return.

Step 2

List the company's income or loss items on lines 1 through 5 and total them on line 6. Report any deductions on lines 7 through 19 and enter the total on line 20. Subtract line 20 from line 6 to find the net income or loss for the year. Enter your tax and payment information on lines 22 through 27.

Step 3

Use Schedule K to list income, deductions and credits that must be passed through to the shareholders. You must also complete a Schedule K-1 for each shareholder showing their individual share of these line items. Check the "Final" box at the top of each K-1.

Step 4

Carry the ending balances from the prior year over to the beginning balances on Schedule L. Complete the remaining information on the balance sheet. Because this is a final tax return, the ending balances should be zero when you are finished.

Complete schedule M-1 to reconcile the company's book income to its taxable income. This is not necessary if the corporation had no income in the final tax year. Use Schedule M-2 to report adjustments to income or shareholders' undistributed taxable income that was taxed in a previous year.

Sign and date the bottom of the form. It must be signed by the president, vice president, treasurer, assistant treasurer, chief accounting officer or another officer with authority to sign on the corporation's behalf. Make a copy for your files and mail the original to the IRS office listed in the instructions.


Category: Taxes

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