Why does the IRS need Balance Sheet information on form 1120?

Answer 1

It is required so that the revenue departments (federal and state) can reconcile the business with its applicable tax. It is also an audit tool. By auditing the balance sheet accounts, they can determine if there is any un-reported income or over reported expenses. For example, by auditing your cash accounts, they can see the money going in and out and see it it matches the income. This is a very simplistic example but with the huge multi-billion dollar corporations, it can get extremely complicated.

Answer 2

become it an employer or a partnership? If it become a partnership, document type 1120-X to 0 out each little thing on the 1120 and document type 1065. If it become an employer, respond to the request for a 1065 via affirming the employer become an employer and type 1120 become filed.

Answer 3

Because this is a Corporate return. Balance sheets contain the information about the accounts that are maintained in the corporate bookkeeping system.

Individually owned businesses have to present information on these same kinds of accounts on their tax forms. They have to report their inventory, cost of goods sold, income, and expenses.

Its no different for corporations.

It may interest you to know that the IRS is the reason companies keep books in the first place. It's required by law.. the TAX law.

Answer 4

read page 2 & 3 of the 1120. not necessary if assets <250K

Answer 5

Statistical analysis and to make sure you are operating as a business.