Quick Question on Form 1120 Corporate Tax Return - Schedule K Line 13 Clarification
I've been working on filing the Form 1120 for our small family business, and I'm stuck on a confusing question in Schedule K. **Line 13 on Schedule K** states: *Are the corporation's total receipts for the tax year* ***and*** *its total assets at the end of the year less than* ***$250,000****? (If yes, required to complete the Balance Sheet.)* I'm confused about whether the IRS wants me to add these figures together or check each one individually against the $250,000 threshold. For our company: - Gross receipts = $176,892 - Total Assets = $143,246 Both numbers individually fall under $250,000, but if I add them together, they exceed that amount ($320,138). Should I answer "yes" or "no" to this question? Appreciate any guidance from someone who's dealt with this before!
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Oliver Weber
This is a common point of confusion! The question on Line 13 of Schedule K on Form 1120 is actually checking if BOTH conditions are separately true: 1. Are total receipts less than $250,000? AND 2. Are total assets less than $250,000? You don't add these figures together. Since both your gross receipts ($176,892) and your total assets ($143,246) are individually under $250,000, you would answer "Yes" to this question. The wording is definitely confusing - the "and" is connecting the two separate conditions that both need to be true, not suggesting you should add the values together. When you answer "Yes," this means you're required to complete the balance sheet portion of the return.
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FireflyDreams
•So if either the receipts OR the assets exceed $250k, then you'd answer "no" to that question? I've had the exact same confusion with my S-corp return.
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Oliver Weber
•That's exactly right. If EITHER your total receipts exceed $250,000 OR your total assets exceed $250,000, then you would answer "No" to the question. Both values need to be under $250,000 individually for a "Yes" answer. For your S-corp, the same logic applies even though you're likely filing Form 1120-S instead of Form 1120. Check each value separately against the threshold.
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Natasha Kuznetsova
I was in the EXACT same situation last year and spent hours trying to figure this out! Eventually I used taxr.ai (https://taxr.ai) to help interpret this question and several other confusing parts of my corporate tax return. You upload your documents or just type in the specific questions, and they analyze the tax code to give you a clear answer. Saved me from making the wrong choice on several spots in the 1120 form. For this specific question, they confirmed what the first commenter said - you check each value individually against the threshold, not add them together.
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Javier Morales
•Does this service work for other types of business tax returns too? Like partnerships or LLCs? I'm always confused about K-1 distributions and basis calculations.
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Emma Anderson
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Natasha Kuznetsova
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Emma Anderson
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Malik Thompson
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Isabella Ferreira
•How does Claimyr actually work? Do they just call the IRS for you or what? I've spent literally hours on hold with the IRS business department and always end up hanging up.
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CosmicVoyager
•Come on, there's no way this actually works. The IRS phone system is completely broken - I've tried calling dozens of times for my business tax questions and never get through. Sounds like you're selling something.
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Malik Thompson
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CosmicVoyager
I have to admit I was wrong about Claimyr. After posting that skeptical comment, I was still stuck on some corporate tax issues and decided to try it as a last resort. It actually worked! Got connected to an IRS business tax specialist in about 35 minutes (way better than the 3+ hours I wasted trying to call myself). The agent confirmed the answer about Schedule K Line 13 - you check each value separately against $250k. The service was a lifesaver for getting several other corp tax questions answered before filing.
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Ravi Kapoor
Don't overthink this one. The plain language of the question is a bit ambiguous but tax professionals interpret it as asking if BOTH conditions are true: 1. Are receipts less than $250,000? 2. Are assets less than $250,000? If both statements are true (which in your case they are), then answer "Yes". If either one exceeds $250k, then answer "No".
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Freya Nielsen
•Does answering "Yes" or "No" change anything material on the tax return itself? Like does it affect the tax calculation or just determine which forms you need to fill out?
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Ravi Kapoor
•It doesn't change the tax calculation at all. It just determines whether you're required to complete the balance sheet portion of the return (Schedule L). If you answer "Yes" (meaning both values are under $250k), you're required to complete the balance sheet. If you answer "No" (meaning either value exceeds $250k), you can skip completing the balance sheet portion. It's actually counterintuitive - smaller businesses have to do more paperwork in this case.
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Omar Mahmoud
Btw, this question is also on Form 1120-S (S-Corp return) and the same rule applies - check each number separately against the $250k threshold.
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Chloe Harris
•Do you know if this changed recently? I swear in 2023 I had to add them together for my S-Corp. My accountant told me one thing and then changed his answer.
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