Hello, I’m CPA Maximiliano Mira Salas. Today we address one of the most common questions from our clients with C-Corporations in the U.S.: Is it necessary to file Form 1120 if the company had no income or operations during the fiscal year?

The technical answer is clear: yes, filing is mandatory in all cases. The IRS requires every registered C-Corporation to report its tax situation, regardless of whether it generated profits, losses, or even remained inactive.

🧾 Technical Aspects of Form 1120

1. Mandatory filing even without income or activity: The IRS requires an annual Form 1120 for every active or inactive C-Corporation registered in the U.S. Failure to comply results in penalties and loss of good tax standing.

2. Minimum information required: Even if the company had no income, Form 1120 must include:
a. Basic financial statements (balance sheet and P&L showing zero or minimal expenses).
b. Incorporation or maintenance expenses (registered agent, state fees, bookkeeping).
c. Identification of responsible parties and authorized signature.

3. Link with financial statements: Form 1120 includes Schedules L, M-1, and M-2, which reflect accounting and tax adjustments. Even without operations, these must be filed consistently with the company’s books.

4. Penalties for non-compliance: Omission or late filing can generate penalties of up to USD 210 per month per shareholder (applicable in consolidated return cases), in addition to interest on any tax eventually assessed.

5. Impact on future tax planning: Failure to file Form 1120 may hinder the issuance of additional EINs, good standing certificates, bank account openings, or application of international treaties.

⚠️ Common Errors in Practice

Assuming that no income means no filing obligation.
Failing to record maintenance expenses (which prevents future deductions).
Filing late (due date: the 15th day of the fourth month after the fiscal year-end).
Confusing C-Corporation obligations with those of an LLC (which may be taxed under a different regime).

📌 Legal and Accounting Disclaimer

This communication is for informational purposes only and does not constitute legal, accounting, or tax advice. Each case must be evaluated individually by a licensed professional, considering the corporate structure, the shareholders’ tax residency, and applicable international treaties.

At FINANCERS, we assist companies, freelancers, and Latin American investors with the technical filing of Form 1120, ensuring consistency between financial statements, U.S. GAAP, and IRS requirements.

If you are unsure whether your C-Corp complied with this year’s obligation, you can schedule a technical review before the next deadline.

CPA Maximiliano Mira Salas
International Tax Advisor | FINANCERS 🇦🇷🇺🇸