Startups · Form 1120
Your C corporation must file Form 1120 every year, even with no revenue.
Form 1120, the U.S. Corporation Income Tax Return, is the federal return a C corporation files with the IRS. A C corporation’s duty to file Form 1120 lasts until it dissolves, whether or not it has taxable income. The return is due on the 15th day of the fourth month after the tax year ends.
Updated · Sources
Calendar-year C corporations, tax year 2026
- April 15
- is the due date, which puts the 2026 return on April 15, 2027.
- 21%
- is the federal tax on every dollar of taxable income, with no brackets.
- 6 months
- is the extra time to file that Form 7004 gives, to October 15, 2027. The tax is still due in April.
Fiscal years use the same fourth-month rule. A June 30 year that began before 2026 was due a month sooner, in the third month. The year from July 2025 to June 2026 was due September 15, 2026.
What do the Form 1120 instructions ask you to report?
The 2025 Form 1120 and its instructions cover 2025 returns, filed in 2026. The IRS has not yet published the 2026 form or its instructions.
Taxable income, on page 1
Page 1 subtracts the company’s deductions from its income to reach taxable income, on line 30. For tax years beginning after 2024, those deductions include US research costs, software development among them, in the year paid or incurred. Research done outside the US, software included, is still spread over 15 years.
The tax, on Schedule J
Schedule J figures the tax by multiplying taxable income by 21%. The rate is flat, with no brackets, so the first dollar of taxable income is taxed like the last.
Yes-or-no questions, on Schedule K
Schedule K asks questions about the company, most of them yes or no. Question 7 asks if one foreign person held 25% or more of the vote or value during the year, which can bring Form 5472.
The balance sheet, on Schedule L
Schedule L is the company’s balance sheet. A company whose total receipts and year-end total assets are both under $250,000 can skip it. A Delaware corporation may still want to fill it in, because Delaware’s lower franchise tax method starts from its line 15 total assets.
Filed and paid electronically
A corporation required to file 10 or more returns in a year, counting information returns such as W-2s and 1099s, must e-file Form 1120. Corporations pay estimated tax by electronic funds transfer, so there is no voucher to mail. Form 1120-W, the worksheet for figuring those payments, was only ever kept with the company’s records and is now retired.
An LLC files Form 1120 as its income tax return only if it elected on Form 8832 to be taxed as a corporation. For the election year, it attaches a copy of Form 8832.
A late Form 1120 costs $3,150 in penalties on $21,000 of tax, and $0 with no tax due.
A late return with unpaid tax draws a penalty for filing late and one for paying late. A company that skipped estimated tax can owe a third.
$21,000 of tax due
$3,150
That is $2,835 for filing late and $315 for paying late, plus interest.
$400 of tax due
$406
For a return over 60 days late, a minimum penalty takes the filing penalty to the full $400. Paying late adds $6.
No tax due
$0
Both penalties are a share of the tax, so neither applies. Other forms and state returns carry penalties of their own.
July 10 is 86 days after the April 15 due date. That falls in the third month, so each penalty runs for three months. Filing late costs 5% of the unpaid tax for each month or part of a month, up to 25%. Paying late costs 0.5% a month, also up to 25%. For months when both apply, the filing penalty is cut by the payment penalty. After 60 days, the filing penalty is at least $525, or the whole tax if that is less. The $525 is the minimum for returns due in 2026, and it is adjusted for inflation each year.
How does Form 1120 differ from the S corporation return?
A corporation files Form 1120 unless it made an S election on Form 2553 that covers the year. The dates are for a calendar year.
| Form 1120 | Form 1120-S | |
|---|---|---|
| Who pays the income tax | The corporation On its taxable income, at 21% | The shareholders On their share of the profit, paid out or not. The S corp itself can owe a few taxes |
| Shareholders | No limit | Up to 100 Mostly individuals. No partnerships, corporations or nonresident aliens. One class of stock |
| Due date | April 15 | March 15 |
| With Form 7004 | October 15 | September 15 |
| QSBS | Stock can qualify | Stock never qualifies |
A venture round usually ends an S election. Funds set up as partnerships or LLCs cannot hold S corporation stock, and preferred stock counts as a second class. The company then files Form 1120.
Where do startups go wrong with C corp tax filing?
A dormant company still owes returns
Stopping operations does not end the duty to file. The company keeps filing Form 1120 until it has formally dissolved and holds no assets. A Delaware corporation also owes franchise tax each March 1. It must pay through the month it dissolves before it can file the certificate of dissolution. The IRS can excuse a company from filing only if it never finished organizing, did no business and had no income.
A 25% foreign owner means an extra form
A company at least 25% owned by one foreign person files Form 5472 for each related party, such as that owner. A form is needed only for a party it had reportable transactions with, such as a loan or a payment. Each missing form costs $25,000 for the year, even when no tax is due. If it stays missing 90 days after an IRS notice, $25,000 more is due for each 30 days or part of that. A single-member US LLC with a foreign owner files Form 5472 with a pro forma Form 1120.
A Form 1120 extension is not time to pay
Tax paid after the original due date carries interest and the late payment penalty, even on an extended return. With Form 7004 filed, paying at least 90% of the tax on time and the rest by the extended date avoids the penalty. Interest still runs.
Deducting every start-up cost in year one
In the year it begins business, a company can deduct only $5,000 of start-up costs and $5,000 of organizational costs. Each limit shrinks by the amount those costs pass $50,000. The rest is amortized over 180 months on Form 4562.
The first profitable year needs estimated tax
A corporation that expects to owe $500 or more must pay estimated tax in four installments, or face a penalty. For a calendar year they are due April 15, June 15, September 15 and December 15. Paying 100% of last year’s tax in four equal installments normally avoids the penalty. That shortcut does not work if last year was shorter than 12 months or its return showed no tax.
Old losses cannot cancel all new profit
A C corporation’s loss stays with the company as a net operating loss. Losses from years beginning after 2017 carry forward with no time limit. In a later year, they can offset only 80% of taxable income. So a startup with years of losses can still owe tax the first year it turns a profit. Funding rounds can add up to an ownership change under Section 382, which caps the old losses each later year can use.
A CPA prepares and signs your C corp tax return.
Valim’s CPAs prepare and file Form 1120 for startup C corporations, including in years with no revenue.
- We file your state returns alongside Form 1120, in all 50 states.
- We work out the estimated payments for your company’s first profitable year.
- We prepare Form 5472 with your return for each related party with reportable transactions, when one foreign person owns 25% or more.
- We work from your bookkeeper’s year-end books, which give the return its income, deductions and balance sheet.
- Responding to an IRS or state notice on a return we prepared is included.
- Business return
- from $495
We quote a flat fee before work starts. We do not bill hourly.
Form 1120 questions.
Who is required to file Form 1120?
Every US corporation that is not tax-exempt must file Form 1120 each year, even with no taxable income. The exceptions are a corporation with an S election in effect and a type that files a special return. A limited liability company files Form 1120 as its income tax return only after electing, on Form 8832, to be taxed as a corporation. A single-member LLC owned by a foreign person files a pro forma Form 1120 with Form 5472 in any year with reportable transactions.
When is Form 1120 due?
Form 1120 is due on the 15th day of the fourth month after the tax year ends. A calendar-year C corporation’s Form 1120 is due April 15, so its 2026 return is due April 15, 2027. Form 7004, filed by then, extends the time to file by six months, to October 15, 2027. The tax itself is still due in April. June 30 fiscal years that began before 2026 had an earlier date, the 15th day of the third month.
Is Form 1120 for an S corp or a C corp?
Form 1120 is for C corporations. An S corporation files Form 1120-S instead, due a month earlier, on March 15 for a calendar year. Any corporation without an S election in effect for the year is a C corporation. A C corporation pays its own income tax, so its shareholders get no Schedule K-1 from it.
How much corporate tax do I pay on $100,000?
A C corporation pays $21,000 of federal income tax on $100,000 of taxable income, at the flat 21% rate. State tax comes on top: California taxes most C corporations at 8.84%, or $8,840 on $100,000 of California profit. That state tax is deductible federally, so taxable income falls to $91,160 and federal tax to $19,143.60. A California company with $100,000 of profit pays $27,983.60 in all. Profit paid out as dividends is taxed again on the shareholders’ own returns.
Sources
- 26 U.S.C. § 195, Start-up expenditures
- 26 U.S.C. § 248, Organizational expenditures
- IRS, Instructions for Form 4562 (2025)
- IRS, Instructions for Form 1120 (2025)
- IRS, Form 1120 (2025), U.S. Corporation Income Tax Return
- 26 C.F.R. § 1.6012-2, Corporations required to make returns of income
- 26 U.S.C. § 6072, Time for filing income tax returns
- 26 C.F.R. § 1.6081-3, Automatic extension of time for filing corporation income tax returns
- 26 U.S.C. § 11, Tax imposed (corporations)
- 26 U.S.C. § 6651, Failure to file tax return or to pay tax
- 26 U.S.C. § 6655, Failure by corporation to pay estimated income tax
- 26 C.F.R. § 301.6011-5, Required use of electronic form for corporate income tax returns
- 26 U.S.C. § 6038A, Information with respect to certain foreign-owned corporations
- 26 U.S.C. § 1361, S corporation defined
- California Franchise Tax Board, Corporation tax rates
- IRS, Prior-year forms and instructions
- IRS, Instructions for Form 1120-S (2025)
- IRS, Instructions for Form 7004
- IRS, Instructions for Form 5472 (Rev. December 2024)
- IRS, Rev. Proc. 2024-40 (the $525 minimum penalty)
- P.L. 114-41, § 2006(a)(3), June 30 fiscal years (note under 26 U.S.C. § 170)
- 26 C.F.R. § 301.6651-1, Failure to file or to pay (reasonable cause on extension)
- 26 C.F.R. § 301.7701-3, Classification of certain business entities
- 26 U.S.C. § 174A, Domestic research or experimental expenditures
- 26 U.S.C. § 174, Foreign research or experimental expenditures
- 26 U.S.C. § 172, Net operating loss deduction
- 26 U.S.C. § 382, Limitation on losses after an ownership change
- 26 U.S.C. § 164, Deduction for taxes
- 8 Del. C. § 503, Rates and computation of franchise tax
- 8 Del. C. § 277, Payment of franchise taxes before dissolution, merger, transfer or conversion
Reviewed and updated September 2026. General information, not advice for your situation.