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).

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

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.

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

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

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

The Operations Manager monitors operational performance for their operation.

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

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

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

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.

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

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

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

The table below lists Interpretation Words and their definitions.

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

The following resources may help in performing the work as outlined in this IRM.

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

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

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

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.

When procedures deviate from the IRM, submit IRM deviations in writing following instructions from IRM 1.11.2.2.4, When Procedures Deviate from the IRM, and elevate through proper channels for executive approval.

The Taxpayer Advocate Service (TAS) is an independent organization within the Internal Revenue Service (IRS), led by the National Taxpayer Advocate. Its job is to protect taxpayers’ rights by striving to ensure that every taxpayer is treated fairly and knows and understands their rights under the Taxpayer Bill of Rights (TBOR). TAS offers free help to taxpayers, including when taxpayers face financial difficulties due to an IRS problem, when they are unable to resolve tax problems on their own, or when they need assistance to address an IRS system, process, or procedure that is not functioning as it should. TAS has at least one taxpayer advocate office located in every state, the District of Columbia, and Puerto Rico.

TAS uses Form 12412, Operations Assistance Request (OAR), to start the OAR process of referring a case to the Wage and Investment (W&I) 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).

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.

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

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

See IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria, for more information.

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.

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.

Effective January 1, 2017, Computer Condition Code "E" may 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.

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.

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

For returns with refund claims ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, do the following:

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.

If you find a suspicious return, do the following:

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

The primary goal in identifying tax returns for Examination (Exam) is to promote the highest degree of voluntary compliance. Examination 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. SP can refer any questionable return to Exam, unless prohibited by instructions currently found in several IRMs.

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.

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.

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 may work with the return later.

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.

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.

For a description of specific edit marks, see the table below:

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.

Review the return to decide whether it appears to be a frivolous return.

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

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.

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.

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.

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

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

Under the Inflation Reduction Act (IRA) of 2022 and CHIPS and Science Act of 2022, the taxpayer can elect to:

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) or on an attachment.

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

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 revision) dotted portion or on an attachment. When found, do the following:

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.

When necessary, assign a three-digit Action Code.

Edit the Action Code in the bottom left margin of the return.

Assign Action Codes in the following priority:

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

Figure 3.11.217-1

This is an example of a current year Form 1120-S (Page 1 only) with a missing signature and a completed Form 4227, Intra-SC Reject or Routing Slip. The taxpayer wrote “Filed Pursuant to Rev. Proc. 2013-30” at the top of the Form 1120-S.Form 1120-S, Page 1, Current year returnTop left corner of Form 1120-S reads: DRAFTBox B shows 712100 for the Business Activity CodeBox D shows 00-8764901 for the Employer Identification Number (EIN)Box E shows 4-1-77, for the date incorporatedASPEN MUSEUM is shown on the name line and ASPE is underlined as the name control2502 BALSAM AVE is shown for the street address lineWASHINGTON, DC 20013 is shown for the city, state and ZIP code lineBox I shows 1 for the Number of Shareholders during any part of the tax yearLine 1a, Gross receipts or sales, shows $1,565Line 1c, Balance, shows $1,565Line 3, Gross profit, shows $1,565Line 4, Net gain (loss), shows $100Line 5, Other income (loss) $500Line 6, Total income (loss) shows $2,165Line 10 shows $750Line 17 shows $1,215Line 20 shows $1,965Line 21 shows $200Action Code 347 (Entity) is edited in the bottom left margin of the Form 1120-SForm 4227, Intra-SC Reject or Routing Slip, Boxes: Name-Unit box: 924. Date box reads 031524. Route to box: BMF has an “X” mark in it. Action Code box has an “X” mark. Action Code 225 (Signature) is edited in the Action Code box.

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Continue perfecting the return after editing the Action Codes.

Valid Action Codes are listed below:

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.

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

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:

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

Action to Secure Perfection:

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

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.

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

Compliance notates:

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.

Route Statute returns to the Statute Control Unit daily or more often if needed.

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.

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.

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.

Statute returns are unprocessable until cleared by Statute Control.

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.

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:

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

Some re-entry returns may 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.

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

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

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

A return is considered amended based on the following:

Examine the return for attachments:

Follow the instructions in the chart below when there is an indication of an amended return:

The following data must be edited on all Amended returns:

Detach Schedules K-1 for current year (TY2023), two preceding years (TY2022 and TY2021), and future Schedules K-1. See IRM 3.0.101, Schedule K-1 Processing, for complete instructions to edit and process Schedules K-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.

Document Perfection identifies refunds in jeopardy and requests manual refunds.

Figure 3.11.217-2

This is an example of a completed Form 1120-S (Page 1 only).Form 1120-S, Page 1, current year returnTop left corner of Form 1120-S reads: DRAFTThere is a text box at the center top of the form that reads: Today’s Date is June 6Box A shows March 30, 2023 for the effective date of the S electionBox B shows 236110 for the Business Activity CodeBox D shows 00-0071904 for the Employer Identification Number (EIN)Box E shows February 21, 20232, for the date incorporated.DJ Willow is shown on the name line and DJWI is underlined as the name control999 Cedar Corner is shown for the street address lineSalt Lake City, UT 84100 is shown for the city, state, and ZIP code lineThere is a 2 edited to the right of Box E for the Initial Return CodeBox I shows 1 for the Number of Shareholders during any part of the tax yearLine 1a, Gross receipts or sales, shows 1,900,000Line 1b, Returns and allowances, shows 1,000,000Line 1c, Balance, shows 900,000Line 3, Gross profit, shows 900,000Line 6, Total income (loss) shows 900,000In the middle of the Form 1120-S is a Received Date Stamp that reads: RECEIVED00105102024OGDEN, UT IRS-OSCLine 7, Compensation of officers, shows 10,000Line 9, Repairs and maintenance, shows 2,000Line 11, Rents, shows 2,000Line 13, Interest, shows 15,000Line 19, Other deductions, shows 5,000Line 20, Total deductions, shows 34,000Line 21, Ordinary business income (loss) shows 866,000Line 23a, Estimated tax payments, shows 168,000Line 23d, Add lines 23a through 23c, shows 168,000Line 26, Overpayment, shows 168,000Line 27, Enter amount from Line 26 Credited to estimated tax, center of line, shows 140,000Line 27, Enter amount from Line 26 Credited to estimated tax, shows 28,000Sign Here box: Signature of officer: Robert MagnoliaSign Here box: Date: 4/26/24Sign Here box: Title: PresidentPaid Preparer Use Only box: Paid Preparer name: Raymond Spruce, signed Raymond Spruce, 4-5-24Firm’s name: Elm Accounting ServiceFirm’s EIN: 00-1645689Firm’s address: 641 Ash Dr. Salt Lake City UT 84100Action Code 341 is edited in the bottom left margin of the form

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This credit was used for tax periods 200612 to 200711 when claiming credit on Form 8913, Credit for Federal Telephone Excise Tax Paid Only Tax Return. No editing is required.

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

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

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.

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.

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

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.

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

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.

Document Perfection is not required to edit a vertical line, 00, dash, or decimal point to show dollars and cents.

Edit negative entries as follows:

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

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.

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

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

Determine the EIN as follows:

The Name Control consists of four characters or less.

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

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.

Edit the Name Control as follows:

Figure 3.11.217-3

This is an example of completed Form 1120-S (Page 1 top part only) with the Name Control edited.Form 1120-S, Page 1, current year returnTop left corner of Form 1120-S reads: DRAFTBox A shows Feb 10, 1981 for the effective date of the S electionBox B shows 446110 for the Business Activity CodeBox D shows 00-1106960 for the Employer Identification Number (EIN)Box E shows February 10, 1981, for the date incorporated.Maple Pharmacy shown on the name line and MAPL is underlined as the name control1213 Hemlock Dr. is shown for the street address lineBuffalo, NY 14240 is shown for the city, state, and ZIP code lineBox F shows 110,200 for Total AssetsBox I shows 1 for the Number of Shareholders during any part of the tax year

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

Make sure the "in-care-of" name is in the proper location.

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

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

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

Perfect the address as follows:

Figure 3.11.217-4

This is an example of a completed Form 1120-S (Page 1 top part only). An attachment shows an address change. The new address information is edited to the entity area of Form 1120-S.Form 1120-S, Page 1, Entity part, current year returnTop left corner of Form 1120-S reads: DRAFTBox A shows 12-12-92 for the effective date of the S electionBox B shows 523900 for the Business Activity CodeBox D shows 00-0181650 for the Employer Identification Number (EIN)Box E shows 12-12-92 for the date incorporated.Balsam Finance Co is shown on the name line and BALS is underlined as the name control206 Pine Lane is circled out in red and the new address 3501 Chestnut Ave is written in red to the right of the old address on the street address lineSan Jose CA 95101 is circled out in red and the new city Miami, FL 33152 is written in red to the right of the old city for the city, state, and ZIP code lineBox F shows 79,850 for Total AssetsBox H(3): Address change, has an X markAn attachment shows an address change. There is an attachment text box that reads: To whom it may concern: Please change my address to:3501 Chestnut AvenueMiami, FL 33152Thank youSincerely,John CedarJohn Cedar

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Figure 3.11.217-5

This is an example of a completed Form 1120-S (Page 1 top part only). The address line contains a street address and a P.O. Box address. Form 1120-S, Page 1, Entity part, current year returnTop left corner of Form 1120-S reads: DRAFTBox A shows 06-01-88 for the effective date of the S electionBox B shows 481000 for the Business Activity CodeBox D shows 00-1234819 for the Employer Identification Number (EIN)Box E shows 06-01-88 for the date incorporated.Cypress Airlines shown on the name line and CYPR is underlined as the name control21 Alder Drive PO Box 116 is shown for the street address lineDallas TX 75260 is shown for the city, state, and ZIP code lineBox F shows 607,040 for Total AssetsBox I shows 1 for the Number of Shareholders during any part of the tax yearAction Trail TC 014 is edited in the left margin of the return

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Figure 3.11.217-6

This is an example of a completed Form 1120-S (Page 1 top part only). The street address includes a c/o. The Name Control (HICK) is underlined and c/o is circled in red.Form 1120-S, Page 1, Entity part, current year returnTop left corner of Form 1120-S reads: DRAFTBox A shows 01-01-90 for the effective date of the S electionBox B shows 621330 for the Business Activity CodeBox D shows 00-2233456 for the Employer Identification Number (EIN)Box E shows 01-01-90 for the date incorporated.Hickory Evaluations Inc. shown on the name line and HICK is underlined in red as the name controlc/o 244 Aspen Lane is shown for the street address line and c/o is circled out in redSt. Louis, MO 63155 is shown for the city, state, and ZIP code lineBox F shows 310,008 for Total AssetsBox I shows 1 for the Number of Shareholders during any part of the tax year

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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:

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

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.

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 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.

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

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

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

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

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 periods reported under the 52-53 week rule may 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.

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

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.

Figure 3.11.217-7

This is an example of a completed Form 1120-S (Page 1 top part only). Top left corner of Form 1120-S reads: DRAFTFor calendar year or tax year beginning shows 01/01/24, with preprinted tax year crossed out, and tax year ending 10/16, 2024The tax period beginning 010124 is edited in red to the right of the preprinted 1120-S in the upper left area of the form.The tax period 2406 is edited in red above the ending tax period area of the form.Box A shows 06/09/2001 for the effective date of the S electionBox B shows 441120 for the Business Activity CodeBox D shows 00-4623189 for the Employer Identification Number (EIN)Box E shows 06/09/2001 for the date incorporated.Poplar Used Car Sales shown on the name line and POPL is underlined in red as the name control204 Balsam Ave is shown for the street address lineFargo, ND 58102 is shown for the city, state, and ZIP code lineBox F shows $0 for Total AssetsBox H shows an “X” in the Final return boxBox I shows 1 for the Number of Shareholders during any part of the tax yearLine 1c shows 0Line 6 shows 0Computer Condition Code F is edited in red in the dotted part to the left of Line 1b.The IRS Received Date stamp of 07202024 is shown in the middle of the formA text box located to the left middle of the Form 1120-S has an arrow on the top right side of the box pointed to the tax period ending date and another arrow on the bottom right side of the box pointed to the Received Date. The text box reads: Early Filed Final:Edit the Tax Period ending date to be one month before the Received Date.

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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, for more information. See Figure 3.11.217-8, Example of Editing CCC “F” and CCC “R” on Form 1120-S.

Figure 3.11.217-8

This is an example of a completed “Final” Form 1120-S (Page 1 only) with Computer Condition Code (CCC) F and CCC R. Top left corner of Form 1120-S reads: DRAFTFor calendar year or tax year beginning shows 01/01/23, and tax year ending 08/31, 2023The tax period beginning 010123 is edited in red to the right of the preprinted 1120-S in the upper left area of the form.The tax period 2308 is edited in red above the ending tax period area of the form.Box A shows 09/12/2011 for the effective date of the S electionBox B shows 811420 for the Business Activity CodeBox D shows 00-3229875 for the Employer Identification Number (EIN)Box E shows 09/12/2011 for the date incorporatedPine Antiques Shop shown on the name line and Pine is underlined in red as the name control15 East Cypress Blvd is shown for the street address lineBoise, ID 83708 is shown for the city, state, and ZIP code lineBox F shows $0 for Total AssetsBox H shows an “X” in the Final return boxBox I shows 1 for the Number of Shareholders during any part of the tax yearLine 1c shows 0Line 6 shows 0Computer Condition Code (CCC)”F” and CCC “R” is edited in red in the dotted part to the left of Line 1b.The IRS Received Date stamp of 02152024 is shown in the middle of the formA text box located to the left middle of the Form 1120-S has an arrow on the top right side of the box pointed to the tax period ending date and another arrow on the bottom right side of the box pointed to the Received Date. The text box reads: Received Date after the Short Period Due Date, but before the regular full Tax Period Due Date

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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.

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.

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.)

Figure 3.11.217-9

This is an example of a completed Form 1120-S (Page 1 through Line 4). Top left corner of Form 1120-S reads: DRAFTFor calendar year or tax year beginning shows Feb. 01, 2023, and tax year ending Aug. 15, 2023The tax period beginning 020123Ris edited in red to the right of the preprinted 1120-S in the upper left area of the form.The tax period 2308 is edited in red above the ending tax period area of the form.Box A shows 01-31-84 for the effective date of the S electionBox B shows 523140 for the Business Activity CodeBox D shows 00-0509487 for the Employer Identification Number (EIN)Box E shows 01-31-84 for the date incorporated.Maple Pancakes House is shown on the name line and MAPL is underlined as the name control1259 Acacia Blvd is shown for the street address lineFargo, ND 58102 is shown for the city, state, and ZIP code lineBox F shows $75,846 for Total AssetsBox H shows a “✓” (check mark) in the Final return boxBox I shows 1 for the Number of Shareholders during any part of the tax yearComputer Condition Code F is edited in red in the dotted part to the left of Line 1b, Returns and allowances.

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Never send an early filed return back to the taxpayer.

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:

Figure 3.11.217-10

This is an example of a Form 1120-S with Early Filed Return – Editing Action Code 480 vs Action Code 211.First Form 1120-S: Top part of Form 1120-S with a tax year beginning 07-01, 2023, and tax year ending 06-30, 2024. Red edited tax period “2406” above the ending tax year information.Top left corner of Form 1120-S reads: DRAFTIRS Received Date stamped above the Sign Here area: that reads: RECEIVED00104192024KANSAS CITY, MOIRS-KCSCSign Here box: Signature of officer: Mark CypressRed edited Action Code 480 in the bottom left margin areaA text box located at the bottom center of Form 1120-S reads: Early Filed: Four Months or LessSecond Form 1120-S: Top part of Form 1120-S with a tax year beginning 10-01, 2023, and tax year ending 09-30, 2024. Red edited tax period “2409” above the ending tax year information.IRS Received Date stamped above the Sign Here area: that reads: RECEIVED00104192024KANSAS CITY, MOIRS-KCSCSign Here box: Signature of officer: Pamela MangroveRed edited Action Code 211 in the bottom left margin areaA text box located at the bottom center of Form 1120-S reads: Early Filed: More than Four Months

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

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

Figure 3.11.217-11

This is an example of a completed Form 1120-S (Page 1 through Line 6). An attached statement shows a change to the tax period. The attachment to the Form 1120-S reads:STATEMENT UNDER REVENUE PROCEDURE 2006-46 IN RELATION TO CHANGEOF TAX PERIOD(1) CORPORATION HAS NOT CHANGED ITS FISCAL YEAR DURING THELAST TEN CALENDAR YEARS.Form 1120-S fields are as follows:Top left corner of Form 1120-S reads: DRAFTFor calendar year or tax year beginning shows 06-01, 2023, and tax year ending 12-31, 2023The tax period beginning 060123 is edited in red to the right of the preprinted 1120-S in the upper left area of the form.Box A shows 6-1-80 for the effective date of the S electionBox B shows 453110 for the Business Activity CodeBox D shows 00-5718027 for the Employer Identification Number (EIN)Box E shows 6-1-80 for the date incorporated.Spruce Inc is shown on the name line and SPRU is underlined as the name control3112 Willow Ave. is shown for the street address lineOmaha, NE 68108 is shown for the city, state and ZIP code lineBox F shows $2,014,841 for Total AssetsBox I shows 1 for the Number of Shareholders during any part of the tax yearLine 1a, Gross receipts or sales, shows 1,222,796Line 1c, Balance, shows 1,222,796Line 2, Cost of goods sold, shows 794,152Line 3, Gross profit, shows 428,644Line 6, Total income (loss) shows 428,644To the left of Line 6: There is a text box that reads: Research Transaction Code (TC): TC 053 or TC 054 - Continue Processing.TC 059 - The return is unprocessable.

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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:

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

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, 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.

Figure 3.11.217-12

This is an example of a completed Form 1120-S (Page 1), a Form 1128, Application To Adopt, Change, or Retain a Tax Year, attachment, and Form 4227, Intra-SC Reject or Routing Slip.Form 1128, Application To Adopt, Change, or Retain a Tax Year, is attached to Form 1120-S. The IRS Received Date is edited as Rec’d 030424 in the left margin of Form 1128.Form 1120-S fields are as follows:Top left corner of Form 1120-S reads: DRAFTFor calendar year or tax year beginning shows 9-1, 2023 and tax year ending 12-31, 2023The tax period beginning 090123 is edited in red to the right of the preprinted 1120-S in the upper left area of the form.Box A shows 12-02-84 for the effective date of the S electionBox B shows 448140 for the Business Activity CodeBox D shows 00-1758893 for the Employer Identification Number (EIN)Box E shows 12-02-84 for the date incorporated.Beech Fashion Inc. is shown on the name line and Beec is underlined as the name control1177 Poplar Ave. is shown for the street address lineNew York, NY 10001 is shown for the city, state, and ZIP code lineBox F shows 343,175 for Total AssetsLine 9 shows 70,000Line 12 shows 12,000Line 15 shows 15,000Line 19 shows 5,000Line 20 shows 97,000Line 21 shows 70,142Line 22c shows 990Line 25 shows 990Sign Here box: Signature of officer: Audrey AshSign Here box: Date: 02/13/24Sign Here box: Title: PresidentForm 4227, Intra-SC Reject or Routing Slip, is attached to the front of Form 1120-S, below the Entity information.Form 4227, Intra-SC Reject or Routing Slip, fields are as follows: Name-Unit box shows 210 in red circleDate box shows 031824 in redRoute to box shows a red X in the Entity Control boxBMF box shows a red XOther (explain) box shows a red X with red text that reads: Research for approval of Form 1128

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

Take the following action when routing these returns to Accounting:

Figure 3.11.217-13

This is an example of a completed short period, final Form 1120-S (Page 1 only) and Form 4227, Intra-SC Reject or Routing Slip. There is an indication the return is a final return and prepaid credits are present on Line 23a and Line 23b. Form 1120-S fields are as follows:Top left corner of Form 1120-S reads: DRAFTTaxpayer wrote Final! in the center top area of the Form 1120-S.For calendar year or tax year beginning shows 01-01-24, with preprinted tax year 2023 crossed out, and tax year ending 04-30, 2024The tax period beginning 010124 is edited in red to the right of the preprinted 1120-S in the upper left area of the form.The tax period 2404 is edited in red above the ending tax period area of the form.Box A shows 1-16-85 for the effective date of the S electionBox B shows 812990 for the Business Activity CodeBox D shows 00-0001230 for the Employer Identification Number (EIN)Box E shows 1-16-85 for the date incorporated.Hemlock Valet Inc. is shown on the name line and HEML is underlined in red as the name control123 Pine Avenue is shown for the street address lineSan Jose, CA 95101 is shown for the city, state, and ZIP code lineBox F shows $110,120,500 for Total AssetsBox I shows 5 for the Number of Shareholders during any part of the tax yearComputer Condition Code F is edited in red in the dotted part to the left of Line 1b, Returns and allowances.Line 1a, Gross receipts or sales, shows 650,800Line 1b, Returns and allowances, shows 50,700Line 1c, Balance, shows 600,100Line 3, Gross profit, shows 600,100Line 6, Total income (loss) shows 600,100Line 7, Compensation of officers, shows 25,000Line 9 shows 25,000Line 10 shows 126,300Line 11 shows 2,000Line 12 shows 5,800Line 14 shows 10,000Line 16 shows 5,100Line 18 shows 3,000Line 19 shows 113,000Line 20 shows 315,200Line 21 shows 284,900Line 22b shows 50,000Line 22c shows 50,000Line 23a shows 25,000Line 23b shows 7,500Line 23d shows 32,500Line 25, Amount owed, shows 17,500Sign Here box: Signature of officer: Catrina L. CedarSign Here box: Date: 6-7-24Sign Here box: Title: Vice-Pres.Action Code 342 is edited in the bottom left margin of the Form 1120-SForm 4227, Intra-SC Reject or Routing Slip, is attached to the front of Form 1120-S, below the Entity information. Form 4227 fields are as follows: Name-Unit box shows 210 in red circleDate box shows 7-22-24 in redRoute to box shows a red X in the Accounting boxBMF box shows a red XOther (explain) box shows a red X with red text that reads: Short period with ES Credits

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

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

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

Audit Code "1" :

Audit Code "2" :

Audit Code "3" :

Audit Code "4" :

Audit Code "5" :

Audit Code "6" :

Audit Code "7" :

Audit Code "8" :

Audit Code "9" :

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

Figure 3.11.217-19

This is an example of a completed fiscal year Form 1120-S (Page 1 only) with Audit Code 9.Top left corner of Form 1120-S reads: DRAFTThe tax year beginning 050123 is edited in red to the right of the preprinted Form 1120-SThe tax period 2404 is edited in red to the left of the preprinted tax year of the Form 1120-S. To the left of the tax period is a black circle with a white 1 inside.For calendar year 2023 or tax year beginning shows May 1 2023, ending Apr 30 2024Box A shows 05/01/23 for the effective date of the S electionBox B shows 561500 for the Business Activity CodeBox D shows 00-1070871 for the Employer Identification Number (EIN)To the left of the Box E is a black circle with a white 3 insideBox E shows 06/01/07 for the date incorporatedThe Initial Return Code 2 is edited in red to the right of Box EBox F shows $15,078 for Total AssetsTo the left of the Name line is a black circle with a white 2 insidePoplar Travel is shown on the name line and POPL is underlined as the name controlP.O. Box 1350 is shown for the street address lineNew Orleans, LA 70113 is shown for the city, state, and ZIP code lineBox G, Is the corporation electing to be an S corporation beginning with this tax year, Yes box is checkedBox I, Enter the number of shareholders who were shareholders during any part of the tax year, shows 1Line 4 shows 423Line 6 shows 423Audit Code 9 is edited as 1-9 in the left margin near Line 9 of Form 1120-SThere is a text box located in the center of the Form 1120-S (below the Entity area) with an arrow coming out the bottom left side of the box pointed to the left of Line 9, where 1-9 (Audit Code 9) is edited in red. The text box reads as follows: IF (underlined) The date shown in Box A (black circle with a white 2 inside) falls during the tax year for which the S Corporation return is being filed (black circle with a white 1 inside)AND (underlined)Box E (Date Incorporated) (black circle with a white 3 inside) is more than one year earlier than Box A (black circle with a white 2 inside)THEN (underlined)Edit Audit Code 9.

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

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

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" .

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

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

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

Edit as "3 -" followed by the correct code.

Valid codes for installment Sale Indicator are as follows:

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

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

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

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

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

Figure 3.11.217-21

This is an example of editing the Low Income Housing Credit from Form 8586. Form 8586, Low-Income Housing Credit, is attached.Name line shows Beech One & TwoIdentifying Number box shows 00-6647985Line 4 shows an amount 400The total on Line 5 is edited in red to the left of the Deductions area of Form 1120-S, Page 1 preceded by the number 5 (e.g., 5-400).DRAFT is shown under the 5-400

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

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

Form 8611 is required if Schedule K-1, Line 13, Code A or B shows a Form 8611 credit ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

Edit Form 8611 as follows:

If Form 8693, Low-Income Housing Credit Disposition Bond, is attached to Form 1120-S, enter CCC "9" .

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.

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.

The table below lists the RPC and explanation when to edit each RPC.

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

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

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.

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

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 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

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:

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

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.

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.

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

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):

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"

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.

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.

See IRM 3.11.217.3.9, Amended Returns.

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

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

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).

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

Edit CCC "L" when:

Edit CCC "M" when:

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).

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.

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

No editing is required.

No editing is required.

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.

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:

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 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

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" .

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.

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" .

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.

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

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.

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

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).

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.

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

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.

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.

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

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

See IRM 3.11.217.27.10, Schedule N (Form 1120), Line 8 - Statement of Specified Foreign Financial Assets, and IRM 3.11.217.44, Form 8938, Statement of Specified Foreign Financial Assets, for more information.

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

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

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

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

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

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

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

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

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

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

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

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.

Edit Lines 1a, 1b, and 1c as follows:

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

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.

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.

Accept taxpayer's entry.

Edit Line 6 as follows:

Accept taxpayer's entry.

Accept taxpayer's entry.

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

Do not code for any of the following entries:

Figure 3.11.217-22

This is an example of a completed Form 1120-S (Page 1 only). Form 1125-A, Cost of Goods Sold, is attached and includes an entry for cost of labor on Line 3. Form 1125-A, Cost of Goods Sold, is attached to Form 1120-SA text box located at the top of Form 1125-A reads: Edit the Salary and Wage Code “1” to Form 1120-S. There is an arrow pointing from the bottom of the text box to Line 3, Cost of labor, 581,900.Top left corner of Form 1120-S reads: DRAFTForm 1125-A, Name shows Cedar Chiropractic Clinic, PAForm 1125-A, Employer identification number shows 00-4551212Form 1125-A, Line 3, Cost of labor, shows 581,900Form 1120-S, Box A shows 1/01/1988 for the effective date of the S electionForm 1120-S, Box B shows 621310 for the Business Activity CodeForm 1120-S, Name line reads: Cedar Chiropractic Clinic, PA and CEDA is underlined as the name controlForm 1120-S, Address line reads: 361 Highway 12Form 1120-S, City, state, and ZIP code line reads: Tampa, FL 33602Form 1120-S, Box D shows 00-4551212 for the Employer Identification Number (EIN)Form 1120-S, Box E shows 10/30/1980 for the date incorporated.Form 1120-S, Box F shows $591,000 for Total AssetsForm 1120-S, Box I shows 2 for the Number of Shareholders during any part of the tax yearForm 1120-S, Line 1a, Gross receipts or sales, shows 1,145,500Form 1120-S, Line 1c, Balance, shows 1,145,500Form 1120-S, Line 3, Gross profit, shows 1,145,500Form 1120-S, Line 5, Other income (loss), shows 5,500Form 1120-S, Line 6, Total income (loss) shows 1,151,000Form 1120-S, Line 7, Compensation of officers, shows 144,500Form 1120-S, Line 8, Salaries and wages, shows a Salary and Wage Code 1 edited in red to the right of Line 8Form 1120-S, Line 9, Repairs and maintenance, shows 18,000Form 1120-S, Line 11, Rents, shows 30,200Form 1120-S, Line 12, Taxes and license, shows 67,050Form 1120-S, IRS Received Date stamp shows: IRS Received date stamp shows:RECEIVED00103142024OGDEN, UTIRS-OSC

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Figure 3.11.217-23

This is an example of a completed Form 1120-S (Page 1 only). An attachment (Statement 1, Other deductions) includes an entry for Cost of Labor. The Salary and Wage Code 1 is edited to the right of Form 1120-S, Line 8.Top left corner of Form 1120-S reads: DRAFTBox A shows 05/05/97 for the effective date of the S electionBox B shows 598320 for the Business Activity CodeBox D shows 00-3367842 for the Employer Identification Number (EIN)Box E shows 01/01/97 for the date incorporated.Hemlock or Less, Inc. is shown on the name line and HEML is underlined as the name control5484 Larch Ln. is shown for the street address lineRochester, NY 14603 is shown for the city, state, and ZIP code lineBox F shows $35,014 for Total AssetsBox I shows 3 for the Number of Shareholders during any part of the tax yearLine 1a, Gross receipts or sales, shows 27,554Line 1c shows 27,554Line 6 shows 27,554Salary and Wage Code 1 is edited in red to the right of Form 1120-S, Line 8To the left of Line 19 reads: See Statement 1Line 19, Other deductions, shows 14,055Line 20, Total deductions, shows 14,055Line 21, Ordinary business income (loss) shows 13,499An attachment (Statement 1, Other Deductions) is attached to Form 1120-S (below Line 1a) and includes an entry for Cost of Labor. The following items are shown on the attachment:Statement 1 (Other deductions)Advertising 2,898Meals and Entertainment 1,657Cost of Labor 5,035Repairs and Maintenance 4,465Totals 14,055

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Accept taxpayer's entry.

Accept taxpayer's entry.

Accept taxpayer's entry.

Accept taxpayer's entry.

Accept taxpayer's entry.

Accept taxpayer's entry.

Accept taxpayer's entry.

Accept taxpayer's entry.

Accept taxpayer's entry.

Accept taxpayer's entry.

Accept taxpayer’s entry.

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

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

If Form 1120-S, line 19 has an entry, Form 7205, Energy Efficient Commercial Buildings Deduction, is required. If Form 7205 is not attached, correspond with the taxpayer for the missing form for tax period ending 202301 and subsequent.

Edit Page 1, Line 20 as follows:

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

Edit Page 1, Line 21 as follows:

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

Edit Page 1, Line 22 as follows:

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

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.

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

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