3.11.217. Form 1120-S Corporation Income Tax Returns

(1) Document Perfection codes and edits (perfects) returns and documents for input to Master File (MF) through the Integrated Submission and Remittance Processing System (ISRP) and the Service Center Recognition Image Processing System (SCRIPS).

(2) Document Perfection forwards documents and attachments not related to the processing of the returns to the function responsible for handling.

(3) Code and Edit does not mathematically verify or check the validity of returns and other documents being processed unless otherwise specified in the applicable section.

(1) Authority for these procedures is found in the following sections of the Internal Revenue Code and their corresponding Treasury Regulations:

• IRC 6201(a)

• IRC 6213(b)

(2) Policy Statements for Submission Processing are contained in IRM 1.2.1, Servicewide Policies and Authorities, Servicewide Policy Statements.

(1) The Campus Director monitors operational performance for the Submission Processing campus.

(2) The Operations Manager monitors operational performance for their operation.

(3) The Team Manager/Lead conducts performance monitoring and ensures employees have the tools to perform their duties.

(4) Team employees follow the instructions contained in this IRM and maintain updated IRM procedures.

(1) Program Goals: Make sure documents are code and edit ready for transcription.

(2) Program Reports: The Batch Block Tracking System (BBTS) captures and stores a vast amount of data which can be used in performance monitoring and production projections.

(3) Program Effectiveness: The program goals are measured by using the following tools:

• Embedded Quality Submission Processing (EQSP)

• Balanced Measures

• Managerial Reviews

(4) Annual Review: The processes outlined in this IRM must be reviewed annually to make sure accurate and promote consistent tax administration.

(1) Quality Review conducts a statistical valid sample size review of completed work to make sure IRM guidelines are followed.

(1) The table below lists Interpretation Words and their definitions.Interpretation Words

(2) See Exhibit 3.11.217-1, Acronyms and Abbreviations, for a list of commonly used acronyms and abbreviations.

(1) The following resources will help in performing the work as outlined in this IRM.

• Servicewide Electronic Research Program (SERP)

• Integrated Data Retrieval System (IDRS)

• Instructor’s Corner for Submission Processing

• Integrated Automation Technologies (IAT)

• IRM 3.12.217, Error Resolution, Error Resolution Instructions for Form 1120-S

• IRM 3.24.16, ISRP System - Corporation Income Tax Returns

(1) The purpose of this initiative is to achieve consistency in the Business Master File (BMF) Code and Edit (C&E) processing IRMs.

(2) Ogden, Kansas City, and Return Processing Branch, BMF Code and Edit and Error Resolution System (ERS) identified and developed topics for BMF Consistency.

(3) A ♦ (diamond) before and after the subsection title shows BMF Consistency subsections.

(4) Text in normal print is the common processes for BMF returns. The text in BOLD print is form specific and applies to this IRM only.

(1) When procedures deviate from the IRM, submit IRM deviations in writing following instructions from IRM 1.11.2.2.3, When Procedures Deviate from the IRM, and elevate through proper channels for executive approval.

(1) The Taxpayer Advocate Service is an independent organization within the Internal Revenue Service (IRS), led by the National Taxpayer Advocate, that helps taxpayers and protects taxpayer rights. TAS offers free help to taxpayers when a tax problem is causing a financial difficulty, when they have tried and been unable to resolve their issue with the IRS, or when they believe an IRS system, process, or procedure just is not working as it must. TAS strives to ensure that every taxpayer is treated fairly and knows and understands their rights under the Taxpayer Bill of Rights. TAS has at least one taxpayer advocate office located in every state, the District of Columbia, and Puerto Rico.

(2) TAS uses Form 12412, Operations Assistance Request (OAR), to start the OAR process of referring a case to the Taxpayer Services (TS) Division, to affect the resolution of the taxpayer’s problem. For more information, refer to IRM 13.1.19, Taxpayer Advocate Service, Taxpayer Advocate Case Procedures, Advocating With Operations Assistance Requests (OARs).

(3) Refer taxpayers to TAS when the contact meets TAS criteria, or when Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order), is attached and steps cannot be taken to resolve the taxpayer's issue the same day. See IRM 21.1.3.18 , Taxpayer Advocate Service (TAS) Guidelines.

(4) The definition of "same day resolution" is within 24 hours. The following two situations meet the definition of "same day resolution":

• The issue can be resolved within 24 hours.

• The IRS takes steps within 24 hours to resolve the taxpayer’s issue.

(5) When making a TAS referral, use Form 911, and forward to TAS following your local procedures.

(6) For more information, see IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria, and IRM 13.1.7.4 , Exceptions to Taxpayer Advocate Service Criteria, for information on cases that TAS will no longer accept.

(1) BMF Identity (ID) Theft is increasing. If a case is found with attachments or correspondence showing the taxpayer is a victim of "ID Theft", give the entire case to the manager/lead.

(2) The manager/lead expedites the case to the Planning and Analysis (P&A) staff for referral to one of the Submission Processing (SP) BMF ID Theft liaisons. The taxpayer must show they are a victim of "ID Theft"; do not send cases subject to Criminal Investigation (CI), Examination (Exam), or Fraud review.

(3) Effective January 1, 2017, Computer Condition Code "E" will be edited on Form 1120-S (any year) by the BMF ID Theft Liaison to identify a potential identity theft filing. See IRM 3.11.217.14.3, CCC "E" - Potential Identity Theft Filing, for more information.

(1) Criminal Investigation (CI) investigates potential criminal violations of the Internal Revenue Code (IRC) and related financial crimes. Criminal violations of the IRC include willful effort to evade or defeat the income tax. Criminal tax violations also include the willful failure to collect or pay over tax and false claims for refunds based on bogus return information.

(2) If CI stamped the return, do not send for further CI action.

(3) For returns with refund claims ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, do the following: Criminal Investigation (CI) Referral

(4) Because of the repetitive nature of the Code and Edit (C&E) function, C&E Tax Examining Technicians often recognize income tax return data that is outside of the norm for data found on similar returns for each income tax return type. If C&E finds return characteristics not meeting Audit Code or Exam referral criteria it considered suspicious, CI is available to review the referral.

(5) If you find a suspicious return, do the following:

1. Make a copy of the first two pages of the return along with any page of the return that appears suspicious.

2. Attach Form 4227, Intra-SC Reject or Routing Slip, to the copy.

3. Route the copy as shown in the table below.

CI Referral Criteria Routing

Submission Processing Campus/Center	Route the copy to:
Ogden	Mail Stop 9001, Criminal Investigation (CI)
Kansas City	Mail Stop S2 9000, Criminal Investigation (CI)

4. Edit an action trail "Copy to CI", or "CI Referral", or similar language in the lower left corner going vertically up the side of the return.

5. Continue processing the return.

(6) If the return fits other criteria (for example Frivolous Argument), take proper action.

(1) The primary goal in identifying tax returns for Examination (Exam) is to promote the highest degree of voluntary compliance. Exam gives support and helps Submission Processing (SP) with any questionable return found during processing. Exam has a vast multitude of programs and tolerance criteria already found in several IRM sections and subsections. SP can refer any questionable return to Exam, unless prohibited by instructions currently found in several IRMs.

(1) Edit marks are edited on the return for transcription to the Automated Data Processing (ADP) System through Integrated Submission and Remittance Processing (ISRP) System. Enter edit marks in brown, red, orange, purple, or green pencil or pen.

(2) Only edit items on the return that are for transcription except where specific instructions require editing of a non-transcribed item. Leave lines blank if the entry would be a zero amount unless otherwise instructed.

(3) Do not obliterate, alter, or erase the original entry on a return when deleting or correcting an entry. Always exercise care to make sure that the original entry remains legible. Perfected entries provide a legible "edit trail" for anyone who will work with the return later.

(4) Do not re-edit edit marks entered by other areas, such as Collections, Entity or Accounts Management, except to place the marks in the correct area or perfect for legibility.

(5) Photocopied Returns - Re-edit or underline any valid, black edit marks. See IRM 3.11.217.3.4.3, Correspondence Imaging Inventory (CII) Returns, and IRM 3.11.217.3.8, Re-Entry Document Procedures.

(6) For a description of specific edit marks, see the table below:Edit Marks

(1) Businesses use frivolous arguments for expressing dissatisfaction with the substance, form or administration of the tax laws by trying to illegally avoid or reduce tax liabilities. See IRM 25.25.10, Frivolous Return Program, and Exhibit 3.11.217-5, Potential Frivolous Arguments for Examination Review, for a list of recognized frivolous arguments made by businesses.

(2) Review the return to decide whether it appears to be a frivolous return.Frivolous Arguments

(3) Do not consider the following returns as frivolous, unless there is other evidence of a frivolous argument:

• Returns that have only zeros, blanks, or no entries.

• Returns showing "None", "Not Liable", etc.

(1) For returns completed in other than U.S. currency, process as filed. However, if corresponding for missing/incomplete item(s), include in the letter to resubmit in U.S. currency.

(1) Remove returns marked as "Protective Claim", "Protective Refund", "Protective Claim for Refund", or similar statement from the batch and route to Accounts Management. Notate "Protective Claim" in the remarks box of Form 4227, Intra-SC Reject or Routing Slip.

(1) Section 14103 of the Tax Cuts and Jobs Act (TCJA) of 2017 overhauled Section 965 of the Internal Revenue Code. As a result of Section 965, now titled "Treatment of deferred foreign income upon transition to participation exemption system of taxation", US shareholders must pay a transition tax on the untaxed foreign earnings of certain specified foreign corporations as if those earnings had been repatriated to the United States.

(2) Identify a Section 965 return when the tax period is 201712 through 202012 and any of the following are present:

• "Section 965" or "965 Tax" (or similar language) notated on the return, schedules, attachments, or, statements.

• IRC 965 Transition Tax Statement (or similar 965 statement) is attached.

• Form 965, Inclusion of Deferred Foreign Income Upon Transition to Participation Exemption System, is attached.

• Form 965, Schedule A, U.S. Shareholder’s Section 965(a) Inclusion Amount, is attached.

• Form 965, Schedule B, Deferred Foreign Income Corporation’s Earnings and Profits (E&P), is attached.

• Form 965, Schedule C, U.S. Shareholder’s Aggregate Foreign Earnings and Profits Deficit, is attached.

• Form 965, Schedule D, U.S. Shareholder’s Aggregate Foreign Cash Position, is attached.

• Form 965, Schedule E, U.S. Shareholder’s Aggregate Foreign Cash Position - Detail, is attached.

• Form 965, Schedule F, Foreign Taxes Deemed Paid by Domestic Corporation, is attached.

• Form 965, Schedule G, Foreign Taxes Deemed Paid by Domestic Corporation for U.S. Shareholder Tax Year Ending in 2017, is attached.

• Form 965, Schedule H, Disallowance of Foreign Tax Credit and Amounts Reported on Forms 1116 and 1118, is attached. Before 2019, the title was Form 965, Schedule H, Amounts Reported on Forms 1116 and 1118 and Disallowed Foreign Taxes.

• Form 965-B, Corporate and Real Estate Investment Trust (REIT) Report of Net 965 Tax Liability and Electing REIT Report of 965 Amounts, is attached.

• Form 1120-S, Schedule K, Line 10, Other income (loss), shows a significant entry with the notation "Section 965" or similar language (202012 - 201712 form revisions). See IRM 3.11.217.24.3, Schedule K, Line 10 – Other income (loss), for more information.

• Form 1120-S, Schedule K, Line 12d, Other deductions, shows a significant entry with the notation "Section 965" or similar language (202012 - 201712 form revisions). See IRM 3.11.217.24.4, Schedule K, Line 12d, Other deductions, for more information.

• Form 1120-S, Schedule K, Line 14r, Other foreign tax information, shows a significant entry with the notation "Section 965" or similar language (202012 - 201712 form revisions). See IRM 3.11.217.24.11, Schedule K, Line 14r - other foreign tax information, for more information.

• Form 1120-S, Schedule K, Line 17d, Other items and amounts, shows a significant entry with the notation "Section 965" or similar language. See IRM 3.11.217.24.13, Schedule K, Line 17d - Other items and amounts, for more information.

(3) When a return is identified as a Section 965 return, edit as follows:

1. Completely edit the return.

2. Edit CCC "J". See IRM 3.11.217.14.7, CCC "J" - Section 965 Tax.

3. Edit Action Code 460 (Management Suspense). See IRM 3.11.217.3.1, Action Codes.

4. Do not correspond on the return. ERS will take care of any correspondence needed.

   Caution: Notate "K-1 Missing" (or similar language) in the lower left margin (Action Trail) of the return, if correspondence is needed for missing Schedules K-1.

(1) Under the Inflation Reduction Act (IRA) of 2022 and CHIPS and Science Act of 2022, the S-Corporation can elect to:

• Take certain credits as an "Elective or Deemed Payment".

• Transfer a credit to another taxpayer.

• Claim the credit as a General Business Credit.

(2) For tax periods 202201 - 202212, identify an "Elective or Deemed Payment Election" when the taxpayer writes "IRA22DPE" on Form 1120-S line 23d dotted portion (prior year form revisions),or line 24d (year 2023 revision and subsequent) or on an attachment.

(3) When a return is identified with an "Elective or Deemed Payment Election", do the following:

1. Completely edit the return.

2. Edit RPC "J".

3. Place a flag at the top of the return and attach the "IRA22 DPE/TRE Reminder" sheet to the return.

   Note: P&A will provide the pre-printed half-sheets for C&E to use.

4. Give the return to the lead.

5. The lead will have the returns rebatched with "DPE" in the batch ID.

(4) For tax periods 202201 - 202212, identify a "Credit Transfer" when the taxpayer writes "IRA22TRE" on Form 1120-S line 23d (prior year form revisions),or line 24d (year 2023 and subsequent) dotted portion or on an attachment. When found, do the following:

1. Completely edit the return.

2. Edit RPC "K".

3. Place a flag at the top of the return and attach the "IRA22 DPE/TRE Reminder" sheet to the return.

   Note: P&A will provide the pre-printed half-sheets for C&E to use.

4. Give the return to the lead.

5. The lead will have the returns rebatched with "TRE" in the batch ID.

(1) Action Codes are used to show whether correspondence, research, or other action is needed. The Action Code sets the suspense period for the return and places the return in the workable or unworkable suspense inventory.

(2) When necessary, assign a three-digit Action Code.

(3) Edit the Action Code in the bottom left margin of the return.

(4) Assign Action Codes in the following priority:

1. Action Code 310 (Statute Control)

2. Action Code 320 (Entity Control)

3. Action Code 4XX

4. Action Code 6XX

5. Action Code 3XX

6. Action Code 2XX (Correspondence)

(5) Use the following table if more than one Action Code is needed on Form 1120-S, :Action Codes

(6) Continue perfecting the return after editing the Action Codes.

(7) Valid Action Codes are listed below:Action Codes

(8) For more information and applicable Action Codes, see IRM 3.12.38.3.4, Error Resolution System (ERS) Action Codes, and the exhibit in IRM 3.12.38-1, Action Codes.

(1) A tax return is an Ogden Submission Processing Campus (OSPC) only return if at least one of the following conditions exists:

1. The tax return has a foreign address.

2. There is a refund credit claimed because of U.S. income tax paid or withheld at source because of the Foreign Investors in Real Property Tax Act whether or not Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests, is attached.

(1) Kansas City Submission Processing Campus (KCSPC) - If the Form 1120-S, U.S. Income Tax Return for an S Corporation, is an "OSPC only" return:

1. Discontinue perfection of the return.

2. Prepare Letter 86C, Referring Taxpayer Inquiry/Forms to Another Office, to inform the taxpayer the IRS sent the return to Ogden Submission Processing Campus (OSPC).

3. Edit an Action Trail (e.g., "86C Sent" or similar language) in the lower left corner going vertically up the side of the return.

(2) If the Form 1120-S is other than an "OSPC only" return, perfect the return.

1. Examine schedules and other attachments for necessary information and edit the return as needed for processing.

2. If perfection is not possible, perfect to the extent possible and proceed as set forth in (3) below.

(3) Action to Secure Perfection:

1. Where shown, prepare Form 4227, Intra-SC Reject or Routing Slip, indicating the reason for rejecting the document and that the taxpayer needs to resubmit for processing when it is perfected.

2. Attach the Form 4227, Intra-SC Reject or Routing Slip, below the entity area.

3. If the tax return is not numbered, withdraw it from processing and forward it to the proper area.

4. If the tax return is numbered, edit the proper Action Code in the bottom left margin of the return and leave it in the block.

(1) There are two types of correspondence that Code and Edit may encounter:

1. Correspondence received from taxpayers, and

2. Correspondence issued to taxpayers.

(1) Listed below are letters which are provided by Headquarters for Submission Processing Campus use in corresponding for items listed in this IRM. It is expected that tax examiners or their supervisors (or delegates) will have access to and be familiar with the Submission Processing Center Correspondex for selection of proper letters. The list is not all-inclusive.

1. Letter 86C, Referring Taxpayer Inquiry/Forms to Another Office - Letter referring taxpayer inquiry/forms to another office.

2. Letter 118C, Corporate Return Incomplete for Processing: Form 1120, Form 1120 Series, Form 1120-S - Letter requesting missing schedules or documents.

3. Letter 319C, Return Covers Other Than 12-Month Accounting Period - Letter advising the taxpayer that the IRS can’t process return because it shows an improper tax period, or a period of more than 12 months, or a period less than 12 months without an explanation.

4. Letter 1382C, Penalty Removal Request Incomplete - Letter requesting taxpayer to resubmit request for penalty relief after receiving notice of penalty assessment.

5. Letter 3463C, Missing Information Request to Process Business Returns - Letter requesting missing information to process business returns.

(1) Compliance functions (Collections and Examination) secure returns from the taxpayer and prepare returns if the taxpayer does not provide them.

(2) Compliance notates:

1. Prepared tax returns with "6020(b)" or "SFR" (Substitute for Return).

2. Secured tax returns with "TC 59X" or "ICS" or "Process as Original" with a Form 13133, Expedite Processing Cycle, attached with the "Delinquent Return" box checked.

(1) Any return with a received date that is two years and nine months or more after the Return Due Date is a potential Statute Control return.

(2) Route all Statute returns to the Statute Control Unit daily or more often if needed, unless any of the conditions below are present.

(3) If any of the conditions listed below are present, do not route to Statute Control Unit for clearance. Instead, edit CCC "W" and continue processing.

• Compliance IRC 6020(b) returns. See IRM 3.11.217.3.6.1, IRC 6020(b) Prepared by Collections.

• Secured by Examination/Collections, secured by TEGE, secured by TEGE Employee Plan (EP) Exam.

• Returns identified by the notation "Process as Original" on Page 1 of the return with Form 13133, Expedite Processing Cycle, attached with the "Delinquent Return" box checked. See IRM 3.11.217.3.6.4, Examination Secured.

• Returns with Transaction Code (TC) 59X or Integrated Collection System "ICS" notated on the face of the return.

• Returns showing "substitute returns prepared by Examination (SFR)" in top margin of the return. See IRM 3.11.217.3.6.3, Examination Prepared.

• Returns with a stamp indicating a previous clearance by Statute Control within the last 90 days.

• Return is a 2020 and prior year original. Due to the COVID-19 pandemic and subsequent Submission Processing (SP) and Accounts Management (AM) site closures, SP and AM developed procedures to bypass AM statute clearance and be processed. In addition, any 2020 and prior year returns previously cleared by AM statute will not be returned by SP to AM to be cleared again if the 90-calendar day statute stamp has expired.

(4) If a return has any of the following computer paragraphs (CPs) or letters attached, do not route to Statute Control Unit for clearance. Edit CCC "W" if the return needs processing. See Exhibit 3.11.217-3, Routing Guide for Attachments, for more information.

• CP 259, Master File Generated 1st TDI Notice.

• CP 959, Master File Generated 1st TDI Notice (Spanish version).

• CP 518, Final Notice - Return Delinquency.

• Letter 112C, Payment/Overpayment/Credit Applied; No Record of Return Filed.

• Letter 282C, Return Not Received: Copy Requested/Received.

• Letter 2255C, Delinquent Return (Forms 720, 1041, 1065, 1120).

• Letter 2284C, Delinquent Return (Form 940, 941, 942, 943).

(5) If a return has a Form 12412, Operations Assistance Request (OAR), from TAS and is a potential statute control return but is not stamped "Cleared by Statute", give it to lead. The lead contacts the TAS employee listed on the OAR for rejection of the return and sends it back to TAS for clearance by the Statute Control Unit.

(6) Statute returns are unprocessable until cleared by Statute Control.Statute Returns

(7) Edit CCC "W" if the Statute Control Unit stamps or shows clearance on the front of the return. Exhibit 3.11.217-2, Due Date Chart.

(8) Statute stamps "No Statute Issue" or shows clearance on the front of the return. Follow the chart below to determine if a CCC "W" is needed: Statute Returns

(1) Reprocess a return posted to the wrong account or module to post it to the correct account module.

(2) Some re-entry returns will have originally been filed electronically through Modernized E-file (MeF). These returns may be identified by the presence of MeF printouts in lieu of an actual return. Do not correspond for missing signatures on these documents.

(3) Each re-entry return must have a Form 3893, Re-Entry Document Control, or Form 13596, Reprocessing Returns, attached.

• Form 3893 is used to re-input documents that have not posted to an account or module.

• Form 13596 is used to reprocess documents to the correct account or module that had previously posted to the wrong account or module.

(4) Always leave the Form 3893 or Form 13596 on the front of the return. It must remain as a permanent part of the document.

(5) Examine Form 3893 or Form 13596 to determine the action needed to make the return processable.

(1) A return is considered amended based on the following:

• The Amended box is checked.

• Words such as "Supplemental", "Corrected", "Superseded", or "Additional" are present.

• Any indication from the taxpayer that a previous return was filed.

  Note: Words such as "Copy" or "Duplicate" are not sufficient indicators and must be accompanied by a statement from the taxpayer that a previous return was filed.

(2) Examine the return for attachments:

• Do not separate any related attachments submitted to explain the reason for the Amended Return. Accounts Management may use the information.

• Detach any unrelated documents and route them to the correct function using Form 4227, Intra-SC Reject or Routing Slip, and edit the Action Trail on the return.

(3) Follow the instructions in the chart below when there is an indication of an amended return:Amended Returns

(4) The following data must be edited on all Amended returns:

1. Name Control - See IRM 3.11.217.5.4, Entity Perfection - Name Control.

2. Employer Identification Number (EIN) - See IRM 3.11.217.5.3, Entity Perfection - Employer Identification Number (EIN).

3. Tax Period - See IRM 3.11.217.6, Tax Period.

4. CCC "G" - See Exception above.

5. Received Date - See IRM 3.11.217.7, Received Date.

6. Signature - See IRM 3.11.217.19, Signature.

(5) Detach Schedules K-1 for current year (TY2024), two preceding years (TY2023 and TY2022), and future Schedules K-1. See IRM 3.0.101, Schedule K-1 Processing, for complete instructions to edit and process Schedules K-1.

(1) A "Prompt Assessment", Internal Revenue Code (IRC) Section 6501 is requested, either in the form of a letter or on Form 4810, Request for Prompt Assessment Under Internal Revenue Code Section 6501(d). A "Prompt Determination" is requested under Section 505 of the U.S. Bankruptcy Code.Prompt Assessment or Prompt Determination - Form 4810

(1) Document Perfection identifies refunds in jeopardy and requests manual refunds.

(1) All prior year returns must be reformatted to current year format. Refer to Code and Edit BMF Job Aids for specific year coding.

(2) If the return is on other than current form format (either a prior year or non-standard form) and the transcription lines cannot be numbered to agree with the current year return:

1. Edit all available transcribed tax data items to the tax data part of a blank current year form.

2. Place a large "X" across the tax data entries of the prior year (or non-standard) form.

3. Staple the forms together, attaching the dummied form (current format) on top so that ISRP can enter the entity data from the prior year (or non-standard) form.

(1) If a taxpayer filed Form 1120 and the Entity Control Unpostable Unit has determined the taxpayer has a valid Small Business Election (Form 2553, Election by a Small Business Corporation) on file, Rejects function will convert Form 1120 to a Form 1120-S, U.S. Income Tax Return for an S Corporation. No action is required of Document Perfection. Do not detach Form 1120.

(2) If you receive a Form 1120-S converted from Form 1120 and the Form 13596, Reprocessing Returns, is attached for reprocessing, see IRM 3.11.217.3.8.2, Form 13596 - Reprocessing Returns, for more information.

(1) Reference is made throughout this IRM to "significant entries". A significant entry is defined as any amount other than zero.

(1) When the return serves only as a transmittal for statements, schedules, and other attachments, or is otherwise incomplete, analyze the supporting documents and edit the missing entries on the form itself.

(2) Examine attachments and edit the information to proper transcription lines of both the income and deduction sections.

1. Edit the income section if Line 6 is the only entry in the income section.

2. Edit the deduction section if Line 22 (line 21 for prior year form revisions) is the only entry in the deduction section.

3. Edit the income or deduction sections if blank and there is an indication the income or deduction items are included on an attachment (e.g., a notation such as "See attached", "See Schedule F", "Statement attached", etc.).

(3) Secured Delinquent Returns are returns secured by compliance personnel. If information is missing from one of these returns, do not send the return back to the taxpayer; correspond using approved Correspondence Action Sheet.

(1) Document Perfection is not required to edit a vertical line, 00, dash, or decimal point to show dollars and cents. Editing Dollars and Cents

(1) Edit negative entries as follows:Negative Entries

(1) The entity of a tax return identifies the taxpayer on the Business Master File (BMF). The entity area of the return contains the following:

• Employer Identification Number (EIN)

• Name

• "In-care-of" Name

• Address

(1) If the Form 1120-S, U.S. Income Tax Return for an S Corporation, shows bankruptcy (e.g., shows "RECEIVER", "TRUSTEE", or "DEBTOR IN POSSESSION") in the entity area or on an attachment, route to Entity Control. Follow local procedures using Form 13934, Entity Document/C&E Merge Transmittal.

(2) Completely edit the return except the name control prior to routing to Entity Control.

(1) The EIN is a nine-digit number (XX-XXXXXXX) assigned to identify the taxpayer.

(2) Determine the EIN as follows:

Employer Identification Number (EIN)

If	And	Then
EIN is missing,	You can determine the correct EIN from the attachments or schedules,	Edit the EIN to the proper location.
The EIN is either a Practitioner Tax Identification Number (PTIN) or Individual Taxpayer Identification Number (ITIN),	Unnumbered/Numbered,	Unnumbered Remove return from batch. Route to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal, for EIN assignment. Numbered Edit Action Code 320. Leave return in batch.
Multiple EINs are present,	Unnumbered/Numbered,	Unnumbered Remove return from batch. Route to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal, for EIN assignment. Numbered Edit Action Code 320. Leave return in batch.
The EIN contains any of the following conditions and can’t be determined from attachments or schedules: Illegible Missing Other than nine digits All zeros All nines	Unnumbered/Numbered,	Unnumbered Circle out all illegible EINs, zeros, or nines. Research IDRS. If found, edit to the proper location. If not found, route to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal. Numbered Circle out all illegible EINs, zeros, or nines. Edit Action Code 320. Leave return in batch.
"Pending", "applied for", etc., is shown in the EIN area,	Unnumbered/Numbered,	Unnumbered Research Integrated Data Retrieval System (IDRS). If found, edit to the proper location. If not found, route to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal. Numbered Edit Action Code 320. Leave return in batch.

(1) The Name Control consists of four characters or less.

1. Valid characters are alpha, numeric, ampersand (&), hyphen (-), and blank. However, blanks are only valid in the last three positions.

2. Disregard the word "The" in the Name Control only when followed by more than one word.

(2) See Job Aid Document 7071-A, Name Control Job Aid - For Use Outside the Entity Area, to determine the Name Control.

(3) If Box H(2) "Name Change" is checked, route the return to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal.

(4) Edit the Name Control as follows:

Name Control

If	And	Then
Able to determine the Name Control,		Underline the Name Control. See Figure 3.11.217-3, Example of Editing a Name Control.
Unable to determine the Name Control,	Unnumbered/Numbered,	Unnumbered Research Integrated Data Retrieval System (IDRS). If found, edit to the proper location. If not found, route to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal. Numbered Edit Action Code 352 (Name Research). Leave return in batch.

(1) An "in-care-of" name can be identified by the words "in care of" or the symbols "c/o" or "%" (percent).

(2) Make sure the "in-care-of" name is in the proper location."In-Care-Of" Name

(3) Determine a change in the in-care-of name by any of the following:

• A check mark in Box H(2) "Name Change", or

• A check mark in Box H(3) "Address Change", or

• Taxpayer edits or added to the "in-care-of"” name (e.g., original "in-care-of" name crossed out, new name added, etc.)

(1) Perfect the address when the mailing address (Street or P.O. Box) is not easily identified.

(2) A business may have two addresses. One is the mailing address, and the other is the location address or physical location of the business.

(3) Perfect the address as follows:Domestic Addresses

(4) The U.S. Postal Service established new address requirements for Army Post Office (APO), Diplomatic Post Office (DPO), and Fleet Post Office (FPO) addresses. If the old address appears, convert to the new state code abbreviation based on the ZIP Code (e.g., APO New York, NY 091XX would be converted to APO AE 091XX). Consider APO/DPO/FPO addresses as domestic addresses. Refer to APO/DPO/FPO Conversion Chart below:APO/DPO/FPO Addresses

(1) A foreign (international) address is any address that is not in the 50 states or the District of Columbia.

(2) Consider returns with Army Post Office (APO), Diplomatic Post Office (DPO), and Fleet Post Office (FPO) addresses as domestic addresses. See IRM 3.11.217.5.6, Entity Perfection - Domestic Addresses.

(3) Route returns with a foreign address to Ogden Submission Processing Campus (OSPC) for processing. Prepare Letter 86C, Referring Taxpayer Inquiry/Forms to Another Office, to inform the taxpayer that the IRS sent the return to Ogden. Edit an Action Trail (e.g., "86C Sent" or similar language) in the lower left corner going vertically up the side of the return.

(4) Consider returns with addresses in the following U.S. Possessions/Territories as foreign for processing purposes. Edit the same way as domestic addresses.

1. Edit a two-character alpha code for the Possession/Territory name.

U.S. Possession/Territory

U.S. Possession	Abbreviation
American Samoa	AS
Federated States of Micronesia	FM
Guam	GU
Marshall Islands	MH
Northern Mariana Islands	MP
Palau	PW
Puerto Rico	PR
Virgin Islands (U.S.)	VI

2. A ZIP Code must be present for U.S. Possessions/Territories. Edit the correct ZIP Code if one is not provided. See Exhibit 3.11.217-7, U.S. Possessions ZIP Codes.

(5) All other foreign addresses are edited the same as a domestic address with the following exceptions:

1. Ensure the foreign country is the last entry in the address.

2. Circle the foreign country and edit the Country Code preceded by a "/" and followed by "/$" (e.g., "/GM/$" is edited for Germany). See Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries, for acceptable Foreign Country Codes.

3. Edit a unique country code for returns filed with an address in Canada. See IRM 3.11.217.5.7.1, Country Code - Canada.

   Note: Coding and Editing BMF Tax Returns, Foreign Addresses Job Aid (Number 2324-002) provides examples for editing foreign addresses.

4. If the foreign address is from Australia, Brazil, Canada, Cuba, Italy, Mexico, or The Netherlands, check if the address has a province, state, or territory:

   Note: There may be other countries with provinces, states, and territories not listed above, see Coding and Editing BMF Tax Returns, Foreign Addresses Job Aid (Number 2324-002) for more information.

Province, State or Territory

If	Then
A province, state, or territory name is present,	Circle the province, state, or territory name. Enter the correct abbreviation. See Exhibit 3.11.217-6, Province, Foreign State and Territory Abbreviations.
A province, state, or territory name is not present,	Continue editing the return.
A province, state, or territory is shown in abbreviated format,	Continue editing the return.

5. A ZIP Code or state is not required on a foreign address. Foreign addresses use a postal code that is entered before the city or foreign country and is part of the address.

(1) Form 1120-S, U.S. Income Tax Return for an S Corporation, must have a tax period.

(2) Edit the tax period to the right of the title area of Form 1120-S in YYMM format following the instructions below.Tax Period

(3) A tax period will end on the last day of a month. (Ignore a minor discrepancy such as October 30 instead of October 31). The exceptions are a 52-53-week filer, and final or short period returns. The table below identifies examples of tax periods.Tax Period

(4) Tax periods reported under the 52-53-week rule must end not more than six days before, and not more than three days after, the end of a month. In the edit format, use the numeric designation of the month, the last day of which is closest to the actual ending date.Tax Period

(5) If the tax period is for more than 12 months or 53 weeks, correspond.

(6) On a "Final" return, if the month and year is equal to or later than the received date month and year (future return) or the taxpayer has not shown in which month the business ended, edit the tax period to be one month before the received date. See Figure 3.11.217-7, Example of Editing an Early Filed Final Return.

(7) On a "Final" return, if the received date is after the short period due date but on or before the regular full tax period due date ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, edit CCC "R" and CCC "F". See IRM 3.11.217.6.3(2), Early Filed Return, and Exhibit 3.11.217-2, Due Date Chart, for more information. See Figure 3.11.217-8, Example of Editing CCC “F” and CCC “R” on Form 1120-S.

(8) The separate short period return of a subsidiary which became affiliated with a "consolidated" group may end on the day preceding such affiliation. As a practical matter, do not question the ending date on any change-of-accounting period return.

(9) Check all tax periods for the Statute of Limitation (two years and nine months from the normal due date of the return). For statute instruction, see IRM 3.11.217.3.7, Statute Returns.

(1) Edit the Tax Period Beginning to the left of the title area of Form 1120-S, U.S. Income Tax Return for an S Corporation, in MMDDYY format following the instructions below: (See Figure 3.11.217-9, Example of Editing the Tax Period Beginning.)Tax Period Beginning

(1) Never send an early filed return back to the taxpayer.

(2) If the month of the tax period is the same or after the month of the received date, determine how early the return was filed:Tax Period

(1) A Short Period Return is one which covers a period of less than 12 months or 52-53 weeks.

• If the Short Period Return is marked "Final", see instructions for editing the tax period in IRM 3.11.217.6.1, Tax Period - General.

• If the Short Period Return is marked "Initial", "First Return", "New Corporation", etc., or meets any of the identifying conditions in the instructions for "Initial Return Code", see IRM 3.11.217.11, Initial Return Code - Page 1, Box G, Is the corporation electing to be an S corporation beginning with this tax year?

• Process all other Short Period Returns as a "Change of Accounting Period". In such cases, proof of entitlement to the change is required.

(2) Use the Proof of Entitlement Table below to identify and edit proof of entitlement.Proof of Entitlement

(1) If proof of entitlement is missing or the taxpayer says on the return or an attachment that the S Corporation has filed an application but has not received a response, research IDRS using Command Code BMFOLE (or other applicable Command Code) for approval or disapproval information and proceed as follows:Proof of Entitlement

(1) If Form 1128, Application to Adopt, Change, or Retain a Tax Year, is disapproved, the return is considered unprocessable:

1. Edit Action Code 211 or 215 and correspond.

2. In the correspondence, instruct the taxpayer to file a return for the next regular full period due. Request a disposition of any remittance paid with the return or other credits which have posted to the short period module.

(1) When a Form 1128, Application to Adopt, Change, or Retain a Tax Year, is attached with no indication of approval or disapproval and no proof of entitlement is present, research Integrated Data Retrieval System (IDRS) using Command Code BMFOLE (or other applicable Command Code) for approval or disapproval and proceed as follows:Form 1128

(2) Form 1128, Application to Adopt, Change, or Retain a Tax Year, with neither approval nor disapproval, stop processing Form 1120-S, U.S. Income Tax Return for an S Corporation. Route Form 1120-S and Form 1128 to Entity Control as directed in the paragraphs below.

1. If Form 1128, Application to Adopt, Change, or Retain a Tax Year, is attached to a numbered return, enter Action Code 320. Attach Form 4227, Intra-SC Reject or Routing Slip, and check the box for Entity Control. Edit the Form 1120-S received date to Form 1128. Leave the return in the batch and continue processing the return.

   Note: Do not detach Form 1128.

2. If Form 1128 is attached to an unnumbered return, edit the Form 1120-S received date to Form 1128, attach Form 4227, Intra-SC Reject or Routing Slip, and route the return to Entity Control. See Figure 3.11.217-12, Example of Form 1128 Attached With No Indication of Approval or Disapproval.

   Note: Do not detach Form 1128.

3. Entity will process the Form 1128 and route the return back to Code and Edit with a Form 4227, Intra-SC Reject or Routing Slip, attached. The Form 4227 will show if the Form 1128 is approved, denied, or returned and the words "Process Return" or "Let Unpost".

(1) Route to Accounting for possible adjustment action any return meeting both conditions below.

1. A prepaid credit, Line 24a or Line 24b is claimed. (202301 and later)

2. The return is a short period (an initial return, a final return, or one with a change of accounting period).

(2) Take the following action when routing these returns to Accounting:

1. Enter Action Code 342 on the return.

2. Attach Form 4227, Intra-SC Reject or Routing Slip, check the "Accounting" box and notate "Short period return with ES Credits".

3. Continue normal processing.

4. If the return shows a refund, follow "Refund Returns" instructions in IRM 3.11.217.3.11, Refund Returns 45 Day Jeopardy and High Dollar Refunds.

5. See Figure 3.11.217-13, Example of Short Period Return With ES Credits.

   Note: 2022 and prior Form Revisions have Prepaid Credits listed on lines 23a and/or 23b.

(1) Up to nine (9) Audit Codes may be used at one time.

(2) Edit Audit Codes in the left margin near Line 9 (Deductions area) of Form 1120-S.

(3) Edit as "1 -" followed by the correct code(s).

(4) Audit Code "1":

1. Form 8082, Notice of Inconsistent Treatment or Administrative Adjustment Request, is attached.

2. Form 8275 or Form 8275R, Disclosure Statement, is attached or statement referring specifically to IRC 6662, (Disclosure).

3. Form 8886, Reportable Transaction Disclosure Statement, is attached. See IRM 3.11.217.14.14, CCC T - Form 8886, Reportable Transaction Disclosure Statement.

(5) Audit Code "2":

1. Form 1120-S, Schedule K, Line 16f*, Foreign taxes paid or accrued, has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ *(Prior year line numbers: 2020 - 2018: Line 14p, 2017 - 2004: Line 14l).

2. Form 926, Return by a U.S. Transferor of Property to a Foreign Corporation, is attached.

3. Schedule N (Form 1120), Foreign Operations of U.S. Corporations, is attached and Questions 1a, 3, 4a (2019 and prior revisions), 5, or 7a are answered "Yes".

4. Form 5471, Information Return of U.S. Persons With Respect To Certain Foreign Corporations, is attached or Schedule N (Form 1120), Foreign Operations of U.S. Corporations, Question 4a is checked "Yes".

5. Form 5472, Information Return of a Foreign-Owned Corporation (Under Sections 6038A and 6038C of the Internal Revenue Code), is attached.

6. Form 5713, International Boycott Report, is attached and both Questions in 7(f) are answered "Yes".

7. Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company, or Qualified Electing Fund, is attached and Part V (Distributions From and Dispositions of Stock of a Section 1291 Fund), Lines 15a through Line 16f has an entry of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

8. Form 8832, Entity Classification Election, is attached and Box 6(d), (e), or (f) is checked.

9. Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), is attached.

10. Form 8858, Information Return of U.S. Persons With Respect To Foreign Disregarded Entities (FDEs) and Foreign Branches (FBs), is attached or Schedule N (Form 1120), Foreign Operations of U.S. Corporations, Question 1a is checked "Yes".

11. Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships, is attached.

(6) Audit Code "3":

1. Form 8883, Asset Allocation Statement Under Section 338, is attached and the amount in Box 5a, Stock Price is ≡ ≡ ≡ ≡ ≡ ≡ ≡ or more. See IRM 3.11.217.14.13, CCC S - Form 8883, Asset Allocation Statement Under Section 338 for more information.

2. Form 8594, Asset Acquisition Statement Under Section 1060, is attached and the amount in Box 3 is ≡ ≡ ≡ ≡ ≡ ≡ or more.

(7) Audit Code "4":

1. Entity Control Unpostable Unit determines that a valid Form 2553, Election by a Small Business Corporation, is on file, the Form 1120, U.S. Corporation Income Tax Return, must be converted to Form 1120-S, U.S. Income Tax Return for an S Corporation.

Caution: If you receive a Form 1120-S converted from Form 1120 and the Form 13596, Reprocessing Returns, is attached for reprocessing, see IRM 3.11.217.3.8.2, Form 13596 - Reprocessing Returns, for more information.

(8) Audit Code "5":

1. Form 1120-S, Schedule K, Line 10, Other Income (Loss), reflects a loss of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

(9) Audit Code "6":

1. Presence of Form 3115, Application for Change in Accounting Method.

(10) Audit Code "7":

1. Form 1120-S, Schedule K, Line 16f*, Foreign taxes paid or accrued, has an entry equal to or less than ≡ ≡ ≡ ≡ ≡ ≡ ≡. *(Prior year line numbers: 2020 - 2018: Line 14p, 2017 - 2004: Line 14l)

2. Form 5713, International Boycott Report, is attached and both questions in 7(f) are not answered "Yes".

3. Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company, or Qualified Electing Fund, is attached and Part V (Distributions From and Dispositions of Stock of a Section 1291 Fund), Lines 15a through Line 16f has an entry of less than ≡ ≡ ≡ ≡ ≡ ≡ ≡.

(11) Audit Code "8":

1. Edit Audit Code "8" if the following schedule is attached: Schedule M-3, Net Income (Loss) Reconciliation for S Corporations With Total Assets of $10 Million or More.

Reminder: See IRM 3.11.217.14.1, CCC "B" - Schedule M-3 for more information.

(12) Audit Code "9":

1. The date shown in Box A falls during the tax year for which the S Corporation return is being filed and the Date Incorporated in Box E is more than one year earlier than the Date of Election as an S Corporation in Box A. See Figure 3.11.217-19, Example of Editing Audit Code "9".

(13) Audit Code "C" - Edit audit code C when Form 8283, Noncash Charitable Contribution, is attached and Part I has any of the following conditions:

• Form 8283 (Noncash Charitable Contributions), Box 2b is checked, or

• Box 2b1 is checked, or

• Line 3, column (h) has an entry.

(1) Edit the Penalty and Interest Code in the left margin near Line 9 (Deductions area) of Form 1120-S.

(2) Edit as "2 - 1" if pre-computed interest or delinquency penalty is shown on a return with a received date ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

(3) This code is valid only within the unextended (original) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. When the pre-computed interest does not pertain to the ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but to some other situation, such as an Estimated Tax Penalty, do not code "1" and do not edit Computer Condition Code "R".

(1) Form 6252, Installment Sale Income, is used to report the sale of property on the installment plan.

(2) Codes are based solely on the S Corporation's response to Question 3 on Form 6252.

(3) Edit the Installment Sale Indicator in the left margin near Line 9 (Deductions area) of Form 1120-S.

(4) Edit as "3 -" followed by the correct code.

(5) Valid codes for installment Sale Indicator are as follows: Installment Sale Indicator

(6) See IRM 3.11.217.40 Form 6252, Installment Sale Income, for more information.

(1) Edit the Tax Preference Code in the left margin near Line 9 (Deductions area) of Form 1120-S as "4 - 1" if

• Form 4626, Alternative Minimum Tax - Corporations, for tax periods ending November 30, 2018 (201811) and prior, is attached and an amount is present on Lines 3, 6, or 11.

• Schedule K-1, Shareholder's Share of Income, Deduction, Credits, etc., Line 15, Alternative Minimum Tax (AMT) Items, sum equals an amount of more than ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ after computing positive or negative amounts.

  Note: Entries on Form 1120-S, Schedule K, Lines 15a through Line 15f are an indication that the Schedule K-1 may have Tax Preference Items.

• See Figure 3.11.217-20, Example of Editing the Tax Preference Code.

(1) Edit the Form 8586, Low-Income Housing Credit, in the left margin near Line 9 (Deductions area) of Form 1120-S.

(2) Edit as "5 -" followed by the credit amount in dollars only.

(3) When editing Form 1120-S, Schedule K, Line 13a or Line 13b for Form 8586, Low-Income Housing Credit, take the following actions:Form 8586, Low-Income Housing Credit

(1) Edit the Form 8611, Recapture of Low-Income Housing Credit, in the left margin near Line 9 (Deductions area) of Form 1120-S.

(2) Edit as "6 -" followed by the credit amount in dollars only.

(3) Form 8611 is required if Schedule K-1, Box 17, Code E or F shows a Form 8611 credit recapture ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

(4) Edit Form 8611 as follows:Form 8611

(1) A Return Processing Code (RPC) is an alpha character (e.g., A, B, C, D, E, F) or numeric character (e.g., 2, 4, 6, 7) used to alert the computer to a special condition.

(2) The RPC is edited on Page 1, in the right margin next to Line 1c (Total, Add Lines 1a and 1b) of Form 1120-S. Thirty-five characters may be edited.

(3) The table below lists the RPC and explanation when to edit each RPC.Return Processing Code (RPC)

(1) Edit CCC "B" when any of the following conditions are met:

1. Schedule M-3 (Net Income (Loss) Reconciliation for S Corporations With Total Assets of $10 Million or More) box on Form 1120-S, Page 1, Box C is checked, or

2. Schedule M-3 is attached.

(2) Edit Audit Code "8" if Schedule M-3 is attached. See IRM 3.11.217.13.1, Audit Codes.

(1) Do not edit CCC "D" if the taxpayer requests abatement for "Failing to Pay Timely" when the return is submitted. Send Letter 1382C, Penalty Removal Request Incomplete, to inform the taxpayer of the proper procedure to follow to request penalty abatement when a penalty is assessed.

(2) Edit CCC "D" when the return is stamped: "DO NOT ASSESS FAILURE TO PAY PENALTY".

(3) Edit CCC "D" on a "Final", Balance Due return if the received date is after the short period due date but before the regular tax period due date ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

(4) Edit CCC "D" if an S Corporation attaches a statement indicating the S Corporation qualifies for an automatic 3-month extension under Regulations Section 1.6081-5 or shows one of the following:

• The domestic S Corporation transacts its business and keeps its books and records of account outside the United States and Puerto Rico, or

• The domestic S Corporation's principal income is from sources within the possessions of the United States.

Exception: Do not edit CCC "D" if the balance due is paid after the 15th day of the 6th month following the tax period ending date.

(5) Do not edit CCC "D" when pre-computed penalty is shown on the return.

(1) Effective January 1, 2017, the BMF ID Theft Liaison may edit Computer Condition Code "E" on Form 1120-S (any year) to identify a potential identity theft filing if the return is claiming a refund of ≡ ≡ ≡ ≡ ≡ ≡ ≡. If CCC "E" was edited, take no action.

(2) If a tax examiner in Submission Processing (SP) Code and Edit (C&E) finds a case with attachments or correspondence indicating the taxpayer is a victim of ID Theft and the return is claiming a refund of ≡ ≡ ≡ ≡ ≡ ≡ ≡, give the whole case to your manager/lead. Your manager/lead will expedite the return to the Planning and Analysis (P&A) staff for referral to one of the SP BMF ID Theft liaisons. The taxpayer must show that they are a victim of "ID Theft"; do not send cases that are subject to "Criminal Investigation (CI)", "Examination (Exam)", or "Fraud" review.

(3) If the SP Theft Liaison says the return is "ID Theft", the tax examiner will (upon request) edit CCC "E".

(1) Edit CCC "F" when the "Final Return" box is checked or there is another indication the S Corporation is not liable for filing future returns. Notations such as (but not limited to):

• Final

• Deceased

• Out-of-Business

• Liquidation

• Exempt under IRC 501(c)(3)

• Dissolved

• Cites IRC 708(b)(1)(B)

• Notates "Filed in accordance with Rev. Proc. 2003-84"

(2) The presence of Form 966, Corporate Dissolution or Liquidation, is an indication of a possible dissolution. If Form 966 is attached, compare tax periods in Box 7a to the Form 1120-S being edited. If the tax periods are the same and the entity section of Form 966 is for the S Corporation, edit CCC "F"

(3) If a prepaid credit is claimed (Lines 24a and 24b (202301 and later)) on a short period "Final" return, enter Action Code 342 on the return. See IRM 3.11.217.6.8, Short Period Return with Prepaid Credits.

(4) Edit the Tax Period Beginning on final returns according to IRM 3.11.217.6.2, Tax Period Beginning - Final, Initial, or Short Period Return.

(1) See IRM 3.11.217.3.9, Amended Returns.

(1) Edit CCC "I" when Form 6781, Gains and Losses from Section 1256 Contracts and Straddles, is attached.

(1) The instructions in this subsection only apply to tax periods 201712 through 202012.

(2) CCC "J" shows Section 965 (Repatriation Provision), Treatment of deferred foreign income upon transition to participation exemption system of taxation for U.S. Shareholders of Specified Foreign Corporations per Tax Cuts and Jobs Act of 2017, Provision Section 14103, Public Law 115-97 (H.R. 1).

(3) Edit CCC "J" and Action Code 460 (Management Suspense) when:

• "Section 965" or "965 Tax" (or similar language) notated on the return, schedules, attachments, or statements.

• IRC 965 Transition Tax Statement (or similar 965 statement) is attached.

• Form 965, Inclusion of Deferred Foreign Income Upon Transition to Participation Exemption System, is attached.

• Form 965, Schedule A, U.S. Shareholder’s Section 965(a) Inclusion Amount, is attached.

• Form 965, Schedule B, Deferred Foreign Income Corporation’s Earnings and Profits, is attached.

• Form 965, Schedule C, U.S. Shareholder’s Aggregate Foreign Earnings and Profits Deficit, is attached.

• Form 965, Schedule D, U.S. Shareholder’s Aggregate Foreign Cash Position, is attached.

• Form 965, Schedule E, U.S. Shareholder’s Aggregate Foreign Cash Position - Detail, is attached.

• Form 965, Schedule F, Foreign Taxes Deemed Paid by Domestic Corporation, is attached.

• Form 965, Schedule G, Foreign Taxes Deemed Paid by Domestic Corporation, is attached.

• Form 965, Schedule H, Disallowance of Foreign Tax Credit and Amounts Reported on Forms 1116 and 1118, is attached.

• Form 965-B, Corporate and Real Estate Investment Trust (REIT) Report of Net 965 Tax Liability and Electing REIT Report of 965 Amounts, is attached.

• Form 1120-S, Schedule K, Line 10, Other income (loss), shows a significant entry with the notation "Section 965" or similar language (202012 - 201712 form revisions).

• Form 1120-S, Schedule K, Line 12d, Other deductions, shows a significant entry with the notation "Section 965" or similar language (202012 - 201712 form revisions).

• Form 1120-S, Schedule K, Line 14r, Other foreign tax information, shows a significant entry with the notation "Section 965" or similar language (202012 - 201712 form revisions).

• Form 1120-S, Schedule K, Line 17d, Other items and amounts, shows a significant entry with the notation "Section 965" or similar language.

(1) Edit CCC "L" when:

1. Taxpayer writes "Section 6114 Election" on the return or,

2. Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), is attached.

   Note: Edit Audit Code "2" if Form 8833 is attached to Form 1120-S. See IRM 3.11.217.13.1, Audit Codes.

(1) Edit CCC "M" when:

• Tax period ending is 201712 and later, and

• Form 8949, Sales and Other Dispositions of Capital Assets, contains a code "Z" or code "Y" in Column (f).

(2) CCC "M" is for Form 8949 per Tax Cuts and Jobs Act of 2017, P.L. 115-97 (H.R. 1), Section 13823, Opportunity Zones. Taxpayers who elect to defer gain on the sale of an asset by investing in an Opportunity Zone Fund will show that they are deferring the gain by entering code "Z" or "Y" in Column (f).

(1) CCC "O" is entered when a Pre-Settlement Manual Refund will be made and a Form 3753, Manual Refund Posting Voucher, Form 5792, Request for IDRS Generated Refund (IGR), or Form 12857, Refund Transfer Posting Voucher, is attached. Verify that the Name Control, EIN, and Tax Period on the return is the same as the data on the form.

1. Research to determine if "TC 840" (Manual Refund Transaction) has posted:

(2) TAS manual refund returns, see IRM 3.11.217.3.11, Refund Returns 45 Day Jeopardy and High Dollar Refunds, for processing instructions.

(1) No editing is required.

(1) Do not edit CCC "R" when a reason is given by the taxpayer for the delay in filing a return. Issue Letter 1382C, Penalty Removal Request Incomplete, and continue editing the return.

(2) Edit CCC "R" if an S Corporation attaches a statement indicating the S Corporation qualifies for an automatic 3-month extension under Regulations Section 1.6081-5 or shows one of the following:

• The domestic S Corporation transacts its business and keeps its books and record of account outside the United States and Puerto Rico, or

• The domestic S Corporation's principal income is from sources within the possessions of the United States

Exception: Do not edit CCC "R" if the return is filed after the 15th day of the 6th month following the tax period ending date.

(3) Edit CCC "R" on a "Final" return if the received date is after the short period due date but before the regular full tax period due date ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

(4) Edit CCC "R" on the return when there is an indication such as "DO NOT ASSESS FAILURE TO FILE PENALTY" on a secured return annotated with "599".

(5) Edit CCC "R" on the short period return when the Statement referring to "S" (1120-S) Status Termination or revocation under Section 1362, or Form 1120-S, Page 1, Item H, Box 5, S Election termination or revocation is checked. See IRM 3.11.217.6.4, Short Period - Editing Proof of Entitlement, for more information.

(6) Edit CCC "R" on the return if an internal use form or routing slip is attached and shows "DO NOT ASSESS FAILURE TO FILE PENALTY".

(7) All CCC "R" coded returns must have an IRS received date. If one is not present, edit the IRS received date in the middle of the return.

(1) Edit CCC "S" when Form 8883, Asset Allocation Statement Under Section 338, is attached to Form 1120-S.

(1) Edit CCC "T" when Form 8886, Reportable Transaction Disclosure Statement, is attached to Form 1120-S. Edit Audit Code "1" when Form 8886 is attached. See IRM 3.11.217.13.1, Audit Codes.

(1) Edit CCC "W" when Statute Control cleared the return. See IRM 3.11.217.3.7, Statute Returns.

(1) Edit CCC "X" when the taxpayer shows on the tax return a request that any balance left over after paying tax or penalties to be applied to another account. Take the following actions to route the request to Accounts Management (AM).

1. Prepare Form 3465, Adjustment Request, and show in the "Routing" box "Adjustments".

2. Notate the requested action in the "Remarks" box.

3. Attach a copy of Page 1 of the tax return to Form 3465.

(1) Edit CCC "Y" for Change of Accounting Period. Enter only for short period returns due to change of accounting period (not due to initial or final filing). See "Short Periods" in IRM 3.11.217.6.4, Short Period-Editing Proof of Entitlement, through IRM 3.11.217.6.8, Short Period Return with Prepaid Credits.

(2) Edit CCC "Y" on a Short Period Form 1120-S when the taxpayer shows any of the following:

• Statement referring to Qualifying Disposition under Regulations Section 1.1368-1(g)(2)(i).

• Statement referring to “S” Status Election and taxpayer is changing to required tax year (12/31/XX).

• Statement the S Corporation is coming out of consolidation.

• Statement the corporation is a qualified sub chapter S subsidiary.

• Notation referring to “Section 1398 election” (Bankruptcy Petition was filed) or “Second Short Year after Section 1398 Election”.

(3) If a prepaid credit is claimed on a short period return (Lines 24a and 24b), enter Action Code 342 on the return. See IRM 3.11.217.6.8, Short Period Return with Prepaid Credits.

(4) Edit the Tax Period Beginning on short period returns according to IRM 3.11.217.6.2, Tax Period Beginning - Final, Initial, or Short Period Return.

(1) Edit CCC "1" if Form 8824, Like-Kind Exchanges (and section 1043 conflict-of-interest sales), is attached.

(1) Edit CCC "2" if Form 8938, Statement of Specified Foreign Financial Assets, is attached to Form 1120-S.

(2) See IRM 3.11.217.27.10, Schedule N (Form 1120), Line 8 - Statement of Specified Foreign Financial Assets, and IRM 3.11.217.45, Form 8938, Statement of Specified Foreign Financial Assets, for more information.

(1) Edit CCC "3" if the return is unprocessable and there is a sign that correspondence was sent, but no reply received.

(1) Edit CCC "8" when any of the following is present:

1. Form 2220, Underpayment of Estimated Tax by Corporations, is attached and Part II, Box 6 or Box 7 is checked.

2. Form 2220 is attached and any column on Form 2220, Schedule A, Page 4, Line 38 has entries.

(1) Edit CCC "9" when any of the following are attached:

• Form 8611, Recapture of Low-Income Housing Credit

• Form 8609-A, Annual Statement for Low-Income Housing Credit (prior year Form 8609, Schedule A)

• Form 8586, Low-Income Housing Credit, with entries on any of Lines 1 or Line 3 (2016 and prior revisions)

(2) Edit CCC "9" whenever recapture tax for Low-Income Housing Credit is reported on Schedule K-1, Line 13, Code A or B.

(1) Document Perfection is responsible for arranging Form 1120-S in the following order when transcription line entries are present:

• Pages 1, 2, 3, 4, 5

• Schedule N, Foreign Operations of U.S. Corporations, - See IRM 3.11.217.27, Schedule N (Form 1120) - Foreign Operations of U.S. Corporations.

• Schedule D, (Form 1120-S) Capital Gains and Losses and Built-in Gains, - See IRM 3.11.217.30, Schedule D (Form 1120-S) - Capital Gains and Losses and Built-in Gains.

• Form 4797, Sales of Business Property, - See IRM 3.11.217.31, Form 4797, Sales of Business Property.

• Form 8949, Sales and other Dispositions of Capital Assets, - See IRM 3.11.217.32, Form 8949, Sales and other Dispositions of Capital Assets.

• Form 8996, Qualified Opportunity Fund, - See IRM 3.11.217.33, Form 8996, Qualified Opportunity Fund.

• Form 8825, Rental Real Estate Income and Expenses of a Partnership or an S Corporation, - See IRM 3.11.217.28, Form 8825, Rental Real Estate Income and Expenses of a Partnership or an S Corporation.

• Form 1125-A, Cost of Goods Sold, - See IRM 3.11.217.34, Form 1125-A, Cost of Goods Sold.

• Form 8050, Direct Deposit of Corporate Tax Refund.

  Note: It is not necessary to sequence Form 8050 if blank.

• Form 4136, Credit for Federal Tax Paid on Fuels, - See IRM 3.11.217.35, Form 4136, Credit for Federal Tax Paid on Fuels.

• Form 8941, Credit for Small Employer Health Insurance Premiums, - See IRM 3.11.217.37, Form 8941, Credit for Small Employer Health Insurance Premiums.

• Form 5884-B, New Hire Retention Credit (Tax Periods 2010 and 2011).

• Form 3800, General Business Credit (Tax Periods 202301 and later).

• Form 8997, Initial and Annual Statement of Qualified Opportunity Fund (QOF) Investments, - See IRM 3.11.217.41, Form 8997, Initial and Annual Statement of Qualified Opportunity Fund (QOF).

• Form 6252, Installment Sale Income, - See IRM 3.11.217.40Form 6252, Installment Sale Income.

• Form 8936, Schedule A, Clean Vehicle Credit Amount (Tax Periods 202301 and later).

• Form 4255, Certain Credit Recapture, Excessive Payments, and Penalties

• Schedule K-1 (Form 1120-S), Shareholder’s Share of Income, Deductions, Credits, etc. - Place all Schedules K-1 (Form 1120-S), filed as attachments to Form 1120-S, as the last attachment in the package or follow local agreement. Detach Schedules K-1 for current year (TY2024), two preceding years (TY2023 and TY2022), and future Schedules K-1. See IRM 3.0.101, Schedule K-1 Processing, for complete instructions to edit and process Schedule K-1. See IRM 3.11.217.44, Schedule K-1 - Shareholder’s Share of Income, Deductions, Credits, etc. and IRM 3.11.217.12, Number of Shareholders - Page 1, Line 1, for more editing instructions.

• Form 8938, Statement of Specified Foreign Financial Assets - Sequence Form 8938 to the back of the last page of Form 1120-S (after schedules and attachment pages), attaching the Form 8938 so that it is back-to-back with the parent return.

  Note: Form 8938 will only be sequenced if Form 8938 meets the requirements in IRM 3.11.217.45, Form 8938, Statement of Specified Foreign Financial Assets.

(2) It is not necessary to sequence the forms or schedules listed above if there are no transcription line entries.

(3) It is not necessary to sequence an Amended return. See IRM 3.11.217.3.9, Amended Returns, for more information.

(1) Income Items - Lines 1a, 1b, 1c, 2, 3, 4, 5, and 6 can have positive or negative amounts.

(2) Deduction Items - All lines in the deduction section can have positive or negative amounts.

(3) Tax and Payment Items - Following lines are positive only amounts:

• Line 23c - Total tax (Add Lines 23a and 23b)

Note: 2022 revision: Line 22c - Total tax

• Line 24a - Current year’s estimated tax payments and preceding year’s overpayment credited to the current year

  Note: 2022 revision: Line 23a - Estimated tax payments and overpayment credited

• Line 24b - Tax Deposited with Form 7004

  Note: 2022 revision: Line 23b - Tax Deposited with Form 7004

• Line 24c - Credit for Federal Tax Paid on Fuels (attach Form 4136)

  Note: 2022 revision: Line 23c - Credit for Federal Tax Paid on Fuels

• Line 24d - Elective payment election amount from Form 3800

• Line 24z - Total Payments (Add Line 24a through Line 24d)

  Note: Prior year line numbers: 2021 - 2022 revision: Line 23d - Total Payments, 2019 - 2020 revision: Line 23d - Reserved, 2018 revision: Line 23d - Refundable Credit from Form 8827; 2007 - 2017 revision: Line 23d - Total Payments.

• Line 25 - Estimated Tax Penalty

  Note: 2022 revision: Line 24 - Estimated Tax Penalty

• Line 28 - Credit Elect Amount

  Note: 2021-2022 revision: Line 27 - Credit Elect Amount

(4) Do not bracket any negative entries on Lines 26, 27, and 28.

(1) Line 1a is Gross Receipts or Sales and Line 1b is Returns and Allowances. Do not bracket or "X" amount on Line 1b if negative.

(2) Edit Lines 1a, 1b, and 1c as follows:Line 1 - Gross Receipts or Sales

(1) Follow instructions below for editing Cost of Goods Sold (Line 2):Line 2 - Cost of Goods Sold

(1) Correspond with the taxpayer for the missing Form 4797, Sales of Business Property, if there is an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ on Line 4, Page 1 and Form 4797 is not attached.

(2) Form 4797 is a transcribed form. Place Form 4797 in sequence order if Line 1b or Line 1c (2021 and later revisions) has significant entries. See IRM 3.11.217.31, Form 4797, Sales of Business Property, for more information.

(1) Accept taxpayer's entry.

(1) Edit Line 6 as follows:

(1) Accept taxpayer's entry.

(1) Accept taxpayer's entry.

(1) Edit a "1" in the right margin of Page 1, Line 8Form 1120-S if an entry greater than zero is present on any of the following:

• Form 1120-S, U.S. Income Tax Return for an S Corporation, Page 1, Line 8.

• Form 1125-A, Cost of Goods Sold, Line 3. See Figure 3.11.217-22, Example of Editing Salary and Wage Code from Form 1125-A.

• Form 8825, Rental Real Estate Income and Expenses of a Partnership or an S Corporation, Page 1, Line 13, Columns A through D or Page 2, Line 13, Columns E through H.

• Schedule F, Profit or Loss From Farming, Line 22.

• Form 4835, Farm Rental Income and Expenses (Crop and Livestock Shares (Not Cash) Received by Landowner (or Sub-Lessor)), Line 20, or

• An attachment shows an entry for salaries, wages, labor, or payroll. See Figure 3.11.217-23, Example of Editing Salary and Wage Code from an Attachment.

(2) Do not code for any of the following entries:

• Contract, outside, custom, or miscellaneous labor

• Temporary help

• Management fees

• Janitorial services

• Maintenance fees

• Commissions

• Payroll taxes

• Casual labor

(1) Accept taxpayer's entry.

(1) Accept taxpayer's entry.

(1) Accept taxpayer's entry.

(1) Accept taxpayer's entry.

(1) Accept taxpayer's entry.

(1) Accept taxpayer's entry.

(1) Accept taxpayer's entry.

(1) Accept taxpayer's entry.

(1) Accept taxpayer's entry.

(1) Accept taxpayer's entry.

(1) Accept taxpayer’s entry.

(2) For prior years, Line 19 was used for other deductions.

(3) Edit RPC "M" if Form 7205 is attached. See IRM 3.11.217.13.7, Return Processing Code (RPC), for more information.

(1) Edit Page 1, Line 20 as follows:Line 20 - Other Deductions

(2) In prior years, Other Deductions were listed on line 19.

(1) Edit Page 1, Line 21 as follows:Line 21 - Total Deductions

(2) In prior years, Total Deductions were listed on line 20.

(1) Edit Page 1, Line 22 as follows: Line 22 - Ordinary Income

(2) In prior years, Ordinary Business Income was listed on line 21.

(1) If there is a significant entry on Line 23b and Schedule D, (Form 1120-S) Capital Gains and Losses and Built-in Gains, is not attached, correspond.

(2) In prior years, Tax from Schedule D was listed on line 22b.

(1) Total Tax (Line 23c) can only be a positive amount. If blank, edit as follows:Line 23c - Total Tax

(2) If Lines 23a and 23b are blank, and a significant amount is present on Line 23c (Total Tax), edit as follows:Line 23c - Total Tax

(3) In prior years form revisions , Total Tax was listed on line 22c.

(1) Accept taxpayer's entry.

(2) In prior years, Estimated Tax Payments are listed on line 23a.

(1) Accept taxpayer's entry.

(2) In prior years, Tax Deposited with Form 7004 is listed on line 23b.

(1) If Line 24c has a significant entry and Form 4136, Credit for Federal Tax Paid on Fuels, is not present, correspond with the taxpayer for the missing Form 4136.

(1) If Line 23d (Prior year line numbers: 2020 - 2018 revisions: Line 23e) is blank or illegible and there are entries on any of Lines 23a, 23b or 23c, compute the total of Lines 23a, 23b and 23c and edit the total to Line 23d (Prior year line numbers: 2020 - 2018 revisions: Lines 23a, 23b, 23c and 23d).

(2) If Line 23d (Prior year line numbers: 2020 - 2018 revisions: Line 23e) has an entry, but there are no entries on Lines 23a through Line 23c, double arrow or edit the amount to Line 23a (Prior year line numbers: 2020 - 2018 revisions: Lines 23a, 23b, 23c and 23d).

(3) If Form 1120-S, line 23d, has an amount listed claiming the IRA22DPE, and Form 3800 is not attached, correspond with the taxpayer for the missing form for tax periods ending 202301 and subsequent.

(4) If the taxpayer has indicated an "Elective Payment" or "Deemed Payment" by writing "IRA22DPE" on Form 1120-S, line 23d dotted portion, refer to the instructions found at IRM 3.11.217.2.12, Elective or Deemed Payment Election (DPE) and Credit Transfers.

(1) If Line 23d has a significant entry, then "X" the entry.

(2) If Form 8827 is attached, do not edit the credit amount to Line 23d. Continue processing the return.

(1) If the taxpayer shows a credit on Line 23d from Form 8827, Refundable Credit from Form 8827, then "X" the entry. Continue processing the return.

(1) If Line 23e is blank or illegible and there are entries on any of Lines 23a, 23b, 23c, or 23d, compute the total of Lines 23a, 23b, 23c, and 23d and edit the total to Line 23d.

(2) If Line 23e has an entry, but there are no entries on Lines 23a through Line 23d, double arrow or edit the amount to Line 23a.

(1) If Line 24z is blank or illegible and there are entries on any of Lines 24a, 24b, 24c, or 24d, compute the total of Lines 24a, 24b, 24c and 24d and edit the total to Line 24z.

(2) If Line 24z has an entry, but there are no entries on Lines 24a through Line 24d, double arrow or edit the amount to Line 24a.

(3) If Form 1120-S, line 24d, has an amount listed claiming the IRA22DPE, and Form 3800 is not attached, correspond with the taxpayer for the missing form for tax periods ending 202301 and subsequent.

(4) If the taxpayer has indicated an "Elective Payment" or "Deemed Payment" by writing "IRA22DPE" on Form 1120-S, line 24d dotted portion, refer to the instructions found at IRM 3.11.217.2.12, Elective or Deemed Payment Election (DPE) and Credit Transfers.

(1) Estimated Tax Penalty must be edited when either:

1. An additional penalty is pre-computed on the return, or

2. Form 2220, Underpayment of Estimated Tax by Corporations, is attached to the return, and shows liability for estimated tax penalty.

(2) In prior years, Estimated Tax Penalty was reported on line 24. IRM 3.11.217.18.12, Line 24 - Estimated Tax Penalty.

(3) To edit Form 1120-S, Line 25, do the following:

1. If the taxpayer follows the instructions on Form 2220, the applicable amount must be shown on Form 2220, Line 38*, and on Form 1120-S, Line 25. The taxpayer may have also increased Form 1120-S, Line 26 or decreased Form 1120-S, Line 27, accordingly. Do not adjust this amount.

2. If Form 1120-S, Line 25 is blank, edit the amount from Form 2220, Line 38, to Form 1120-S, Line 25.

3. If Form 1120-S, Line 25 is blank and Form 2220, Line 38 is also blank, review the Form 2220 to determine the taxpayer's method of computation. If there are entries on Form 2220, Line 37, Columns (a) - (d), compute the total amount and enter on Form 1120-S, Line 25.

(1) Estimated Tax Penalty must be edited when either:

1. An additional penalty is pre-computed on the return, or

2. Form 2220, Underpayment of Estimated Tax by Corporations, is attached to the return, and shows liability for estimated tax penalty.

(2) To edit Form 1120-S, Line 24, do the following:

1. If the taxpayer follows the instructions on Form 2220, the applicable amount must be shown on Form 2220, Line 38*, and on Form 1120-S, Line 24. The taxpayer may have also increased Form 1120-S, Line 25 or decreased Form 1120-S, Line 26, accordingly. Do not adjust this amount.

2. If Form 1120-S, Line 24 is blank, edit the amount from Form 2220, Line 38, to Form 1120-S, Line 24.

3. If Form 1120-S, Line 24 is blank and Form 2220, Line 38 is also blank, review the Form 2220 to determine the taxpayer's method of computation. If there are entries on Form 2220, Line 37, Columns (a) - (d), compute the total amount and enter on Form 1120-S, Line 24.

(1) Lines 26 and 27 are edited as positive only. If the taxpayer enters a negative amount, no action is required.

(2) Edit the proper entry to Line 26 or Line 27 if both are blank. Do both of the following:

1. Add Lines 23c and 25. Subtract Line 24z (Prior year line numbers: 2022 - 2021 Form 1120-S revision: Line 23d, 2018 - 2020 revision: Line 23e; 2017 - 2007 revision: Line 23d).

2. Edit the positive result on Line 26 or the negative result (do not bracket) on Line 27.

(3) If pre-computed interest, delinquency penalty, or other charge is evident, make sure that it has not been included in Line 25 or reduced Line 26.Lines 26 and 27 - Amount Owed/Overpayment

(4) In prior years, Amount Owed/Overpayment is listed on lines 25 and 26.

(1) If the taxpayer shows "Backup Withholding", edit an "X" to the left of the amount and continue processing the return.

(1) The Preparer's Tax Identification Number (PTIN) is to the right of the Preparer's Signature in the PTIN Box at the bottom right margin of Form 1120-S, Page 1.

(2) No action is required on Amended returns.

(3) A valid PTIN begins with the alpha "P" followed by an eight-digit number (e.g., PXXXXXXXX). Circle the PTIN if invalid, all zeros or all nines.

(1) The Firm's EIN is located below the Preparer's PTIN Box at the bottom right margin of Form 1120-S, Page 1.

(2) No action is required on amended returns.

(3) The Firm's EIN is a nine-digit number. Circle the EIN if it is invalid, all zeros or all nines.

(1) The Paid Preparer's Phone Number is below the Paid Preparer's EIN at the bottom right corner of Form 1120-S, Page 1.

(1) The Accounting Method Code is transcribed from the taxpayer’s response to the boxes on Form 1120-S, Schedule B, Line 1.

(2) No editing is required.

(1) If Form 1120-S, Schedule B, Question 15 "Is the corporation attaching Form 8996, Qualified Opportunity Fund, to certify as a Qualified Opportunity Fund" is answered "Yes" and the amount line is blank, search attachments for Form 8996. If Form 8996 is attached with an amount on Line 15 (Form 8996 prior year revision line numbers: 2020: Line 14, 2018: Line 13), then edit the amount to Schedule B, Question 15.

(2) If Form 8996, Qualified Opportunity Fund, is attached, edit Return Processing Code (RPC) 6 to Page 1, in the right margin next to Line 1c (Total, Add Lines 1a and 1b) of Form 1120-S. See IRM 3.11.217.13.7, Return Processing Code (RPC), for more information.

(3) See IRM 3.11.217.33, Form 8996, Qualified Opportunity Fund, for more information.

(1) Form 1120-S, Schedule B, line 16 has a checkbox regarding Crypto Currency Reporting for tax periods ending 202301 and subsequent.

(2) The valid characters for the checkbox field (listed in the table below) are 0,1,2, and 3. Data will enter:

(1) Correspond with the taxpayer for Form 8825, Rental Real Estate Income and Expenses of a Partnership or an S Corporation, if the amount on Form 1120-S, Page 3, Schedule K, Line 2 is either ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and Form 8825 is not attached.

(2) For processing of Form 8825, see IRM 3.11.217.28, Form 8825 - Rental Real Estate Income and Expenses of a Partnership or an S Corporation.

(1) If Form 1120-S, Schedule K, Line 4, Interest income, is blank check the supporting attachments for Portfolio Income. If an amount is present, edit to Line 4.

(2) Bracket if negative.

(1) If Form 1120-S, Schedule K, Line 10, Other income (loss), reflects a loss ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ edit Audit Code "5" in the left margin near Line 9 (Deductions area). See IRM 3.11.217.13.1, Audit Codes, for more information.

(2) If Form 1120-S, Schedule K, Line 10, Other income (loss) shows a significant entry with the notation "Section 965" or similar language (202012 - 201712 form revisions), edit Computer Condition Code (CCC) "J" and Action Code 460 (Management Suspense). This instruction is only valid for Tax Periods 201712 - 202012.

(3) Form 1120-S, Schedule K-1, Box 10, with Code F (202012 - 201712 form revisions) may show a Section 965(a) return. See IRM 3.0.101, Schedule K-1 Processing, for complete instructions to edit and process Schedules K-1. This instruction is only valid for Tax Periods 201712 - 202012.

(4) See IRM 3.11.217.2.11, Section 965 Returns (201712 through 202012), IRM 3.11.217.14.7, CCC "J" - Section 965 Tax, and IRM 3.11.217.3.1, Action Codes, for more information. This instruction is only valid for Tax Periods 201712 - 202012.

(1) If Form 1120-S , Schedule K, Line 12d, Other deductions, shows a significant entry with the notation "Section 965" or similar language (202012 - 201712 form revisions), edit Computer Condition Code (CCC) "J" and Action Code 460 (Management Suspense). This instruction is only valid for Tax Periods 201712 - 202012.

(2) Form 1120-S, Schedule K-1, Box 12, with Code K (202012 - 201712 form revisions) may show a Section 965(c) return. See IRM 3.0.101, Schedule K-1 Processing, for complete instructions to edit and process Schedules K-1. This instruction is only valid for Tax Periods 201712 - 202012.

(3) See IRM 3.11.217.2.11, Section 965 Returns (201712 through 202012), IRM 3.11.217.14.7, CCC J - Section 965 Tax, and IRM 3.11.217.3.1, Action Codes, for more information. This instruction is only valid for Tax Periods 201712 - 202012.

(1) If Form 1120-S, Schedule K, Line 13a, Low-income housing credit (section 42(j)(5)), has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, Form 8586 is required. Form 8586