Definition
Form 1065 reports partnership income and issues K-1s to partners, Form 1120-S reports S corporation income and issues K-1s to shareholders, and Form 1120 reports C corporation income and tax at the entity level. For calendar-year filers, Forms 1065 and 1120-S are due March 15 and Form 1120 is due April 15. For calendar-year filers, Form 7004 gives an automatic six-month extension to file, though payment of tax due is not extended.
Why it matters in an audit or review
The entity type decides what the auditor expects in the income tax accounts. A C corporation records current and deferred income taxes under ASC 740. A pass-through generally records no federal income tax, but may record state entity-level taxes or elected pass-through entity taxes. Auditors compare tax-basis income with book income, test the provision, and check that the tax return is consistent with the financial statements.
Example
Illustrative: a company converts from a C corporation to an S corporation. The auditor evaluates the deferred tax balances, whether they reverse, and any built-in gains tax exposure, and checks that the disclosures describe the change.
Common mistakes
Assuming a pass-through has no tax accounts.
FAQ
Do pass-throughs file extensions the same way?
Yes. Form 7004 covers each of these returns.
Sources
- IRS, Instructions for Form 1065, Form 1120-S and Form 1120 (filing due dates)
- IRS, About Form 7004, automatic extension of time to file (six months), https://www.irs.gov/forms-pubs/about-form-7004
- Internal Revenue Code Section 6072 (time for filing returns) and Section 1374 (built-in gains tax)
- FASB ASC 740-10, Income Taxes
Definitions paraphrase AICPA and FASB guidance; read the standard itself before relying on a requirement. Example figures are illustrative. This page is guidance, not professional advice. Report an error