Forming a Corporation

In forming a corporation, prospective shareholders exchange money, property, or both, for the corporation's capital stock. A corporation generally takes the same deductions as a sole proprietorship to figure its taxable income. A corporation can also take special deductions. For federal income tax purposes, a C corporation is recognized as a separate taxpaying entity. A corporation conducts business, realizes net income or loss, pays taxes and distributes profits to shareholders.

The profit of a corporation is taxed to the corporation when earned, and then is taxed to the shareholders when distributed as dividends. This creates a double tax. The corporation does not get a tax deduction when it distributes dividends to shareholders. Shareholders cannot deduct any loss of the corporation.

If you are a C corporation, use the information in the chart below to help you determine some of the forms you may be required to file.

Corporations that have assets of $10 million or more and file at least 250 returns annually are required to electronically file their Forms 1120 and 1120S for tax years ending on or after December 31, 2007. For more e-file information, see e-file for Business and Self-Employed Taxpayers.


If you are a C corporation or an S corporation then you may be liable for... Use Form... Separate Instructions...
Income tax 1120, U.S. Corporation Income Tax ReturnPDF Instructions for Form 1120 U.S. Corporation Income Tax ReturnPDF
Employment taxes
  • Social Security and Medicare taxes and income tax withholding
  • Federal unemployment (FUTA) tax

941, Employer's Quarterly Federal Tax ReturnPDF or

943, Employer's Annual Federal Tax Return for Agricultural EmployeesPDF (for farm employees)

940, Employer's Annual Federal Unemployment (FUTA) Tax returnPDF

Instructions for Form 941PDF


Instructions for Form 943PDF


Instructions for Form 940PDF

Excise taxes Refer to the Excise Tax webpage