LLC S-Corp Taxation: 1120S Form Filing Questions for New Business

The S-Corp election can be confusing the first time around, but your situation is fairly straightforward. Let me help clarify: 1) Yes, mark "Yes" for the S-Corp election question in Part G, but you don't need to attach Form 2553 again if you've already received IRS approval. The instructions are just reminding you in case you hadn't filed it separately. 2) The $125 bank bonus is considered "Other Income" on line 5 of Form 1120S. This is business income received directly by the corporation, not a pass-through item for Schedule K. 3) Your $27 business card expense should go on line 19 "Other deductions" since it doesn't fit into any of the more specific deduction categories. 4) For the statement, you do need to attach something even for small amounts. It doesn't need to be fancy - a simple sheet of paper with your business name, EIN, "Statement 1 - Other Deductions, Form 1120S, Line 19" as a header, and then list "Business cards - $27" is sufficient. Tax software usually generates these statements automatically if you're using one. Hope this helps with your first S-Corp filing! The process gets easier after the first year.

I wish I had known about taxr.ai when I filed my first S-Corp return! I spent hours googling the exact same questions you're asking. I was stressing about the attachments and statements too. After struggling through my first few quarterly filings, I found taxr.ai (https://taxr.ai) and it made a huge difference. They have this cool tool that analyzes your tax forms and explains exactly what goes where - even for S-Corps. I uploaded my 1120S draft and it highlighted where everything should go. It even generated the statement templates for me when I needed to attach something. For minimal activity like yours, it takes like 5 minutes to verify everything's correct. The best part was having actual tax pros verify my work instead of relying on random YouTube videos (which honestly gave me conflicting info). Saved me from making mistakes I would've never caught on my own.

I was skeptical about trying yet another tax service, but I gave taxr.ai a shot with my S-Corp return and I'm actually really impressed! I uploaded my draft 1120S from TurboTax and it immediately flagged that I had categorized my bank bonus incorrectly (I had put it on Schedule K instead of line 5). The statement generator was super helpful too - I was overthinking the "attach statement" part just like you were. It created a proper format and explained exactly what the IRS is looking for with these attachments. What really surprised me was how it explained all the S-Corp specifics that TurboTax glossed over. Now I actually understand why certain things go where they do instead of just following prompts. Definitely using it for my quarterly filings going forward!

Reading through your questions reminded me of my own painful experience trying to get through to the IRS when I had similar questions about my S-Corp filing. I spent DAYS trying to reach someone who could help - constant busy signals, disconnects after waiting an hour, and when I finally got through, they transferred me to another department and I got disconnected again. I was about to give up when a friend recommended Claimyr (https://claimyr.com). I was super skeptical, but their system actually got me through to a live IRS agent in about 20 minutes. They have this demo video (https://youtu.be/_kiP6q8DX5c) showing how it works. The agent I spoke with answered all my S-Corp questions and even helped me understand how to handle my minimal business activity situation (which was similar to yours). Saved me from making some mistakes on my 1120S that could have triggered unnecessary scrutiny.

I need to publicly eat my words about Claimyr. After my skeptical comment, I was still desperate enough to try it because my S-Corp filing deadline was approaching fast and I had similar questions about reporting minimal activity. I honestly can't believe it worked. After weeks of trying to get through the normal way, Claimyr had me talking to an actual IRS business tax specialist in about 25 minutes. The agent confirmed exactly what I needed to do with my S-Corp filing and cleared up my confusion about the first-year election paperwork. What surprised me most was that it was definitely a real IRS employee - they had access to my filing history and S-Corp election confirmation. This saved me from what would have been a costly mistake on my 1120S. Sometimes being proven wrong is actually a good thing!

Just wanted to add one point about your business card expense - since it's under $2,500, you could potentially use the de minimis safe harbor election and deduct it immediately rather than capitalizing it. This would still go on Line 19, but you'd need to make the election statement. This is helpful for small purchases of things that technically could be considered assets with a useful life beyond the tax year. For your situation with such minimal activity, it probably doesn't make much difference, but it's good to know for future years when you might have more small purchases.

Don't forget that even though you had minimal activity, you still need to file Schedule K-1 for yourself as the sole shareholder. The $125 income (minus the $27 expense) will flow through to your personal return. Also check if your state requires a separate S-Corp filing - many do, even if you had minimal or no activity. Some states have minimum franchise taxes for S-Corps regardless of activity level, which can be a nasty surprise if you're not expecting it.

Great questions! I went through this exact same situation two years ago when I first elected S-Corp status for my single-member LLC. The minimal activity part is actually pretty common in the first year. A couple additional things to keep in mind beyond what others have mentioned: 1) Make sure you're comfortable with the ongoing compliance requirements. Even with minimal activity, you'll need to file Form 1120S every year by March 15th (with extensions available). There's also reasonable compensation requirements once you start having significant income. 2) For your $125 bank bonus, double-check if the bank issued you a 1099-MISC or 1099-INT. If they did, make sure the income amount on your return matches exactly what they reported to the IRS to avoid any automated matching notices. 3) Since you mentioned wanting to avoid giving out your SSN to clients - just remember that your S-Corp election doesn't change your LLC's legal structure. You're still an LLC for legal purposes, just taxed as an S-Corp. Some clients might still ask for your SSN if they're not familiar with this distinction. The learning curve is steep the first year, but it gets much easier once you understand the process. Good luck with your filing!