Does an S Corporation file one 1120-S for multiple businesses structured under its legal umbrella?

[aedwan]

Client has an S Corporation that operates multiple businesses. Can he file one 1120-S for all DBAs formed under the same S corporation? And if yes, how to report earned income and expenses from each DBA on the same 1120-S as a single filing?  Do we need to attach statements, specifying which income/expense belong to which DBA?   

[sjrcpa · Accepted solution]

One 1120S. Do a "comsolidation" spreadsheet and enter the totals in the software.

[rbynaker]

For QBI reporting purposes you might have more than one activity.  Something to consider if you think things may matter downstream (i.e. if one or more shareholders is over the $157/315K threshold.)  I have one of these, one S Corp, two completely distinct activities (separate bank accounts, separate business licences, separate Quickbooks files).  One owner who's under the $157.5K so I'm probably not going to bother spinning my wheels on activity reporting but if I didn't know he's under $157.5K and wages/ubia might matter I would probably report them as two activities.  I have yet to jump through ProSeries hoops to figure out how (if?) this can be done.  Don't know your situation, just thinking out loud.:+1:

[aedwan]

Form 1120-S, Page 3, Schedule K states that when a corporation has more than one trade or activity, IRS requires an attachment to the K-1. Will this be in the form of a spreadsheet or a pdf file attached to the return or a statement within the return...And is it used to report income and deduction from each trade separately?

[sjrcpa]

I'd do astatement listing each activity and net income from each.

[sjrcpa]

Where do you see that requirement? I don't see it on 1120S page 3.

[rbynaker]

https://www.irs.gov/pub/irs-pdf/i1120s.pdf

Bottom of page 23 (it's actually the K-1 instructions, not the 1120S page 3 instructions).  It's tied to the passive activity reporting requirements, but in practice, I don't see how you can determine QBI at the activity level without this information being split out and reported.

Edit:  Oops, meant to paste the text:

If items of income, loss, deduction, or
credit from more than one activity
(determined for purposes of the passive
activity loss and credit limitations) are
reported on Schedule K-1, the corporation
must provide information separately for
each activity to its shareholders.

[rbynaker]

And here it is on page 38 re:QBI:

To allow shareholders
to correctly figure their QBI deduction, the
S corporation must attach a statement to
its Schedules K-1, separately identifying
each trade or business and identifying any
specified service trade or business.

[sjrcpa]

Got it. Thanks.

[aedwan]

Great thanks rbynaker, sjrcpa! Is there anyway to list each trade expenses separately or just the net income goes on the statement?

[sjrcpa]

Not automatically. You could create a statement.

[aedwan]

Thanks