# Form 1120: the federal return, the extension and the 21% rate

> The C corporation's federal return: due Apr 15, 2027 for a calendar year, 21% of taxable income, filed even in a loss year, and extended for filing only.

Source: https://lopifi.com/learn/form-1120-corporate-income-tax
Part of: Lopifi — US GAAP books on autopilot, checked by a CPA (https://lopifi.com)

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**When is Form 1120 due, and what does a startup C corp owe in federal income tax?** The C corporation's federal return: due Apr 15, 2027 for a calendar year, 21% of taxable income, filed even in a loss year, and extended for filing only.

A C corporation is its own taxpayer. It files [Form 1120](https://lopifi.com/md/glossary/form-1120) every year it exists, whether or not it has taxable income, and pays federal income tax at a flat 21% of taxable income. For a calendar year the return is due the 15th day of the 4th month after year end: Northwind's first return, for 2026, is due April 15, 2027.

> “The amount of the tax imposed by subsection (a) shall be 21 percent of taxable income.”

— [26 U.S.C. §11(b)](https://www.law.cornell.edu/uscode/text/26/11), Tax imposed on corporations

> “must file its income tax return by the 15th day of the 4th month after the end of its tax year.”

— [Instructions for Form 1120 (2025), When To File](https://www.irs.gov/instructions/i1120), U.S. Corporation Income Tax Return — who must file, when, extensions, penalties

*[Figure: three statements]*

The return starts from the closed year's statements and ends on the tax line.

## Taxable income is not book income

The return starts from the books, which is why it waits on a closed year, and then adjusts for every place the tax law disagrees with GAAP: depreciation on a different schedule, expenses tax won't deduct, revenue it times differently. Those differences are what [temporary differences](https://lopifi.com/md/glossary/temporary-difference) and [deferred tax assets](https://lopifi.com/md/glossary/deferred-tax-asset) track. A year that ends in a tax loss still files: the return records the [net operating loss](https://lopifi.com/md/glossary/net-operating-loss) that offsets later income, up to the [80% cap](https://lopifi.com/md/glossary/nol-deduction-cap).

**Northwind — 21% of taxable income.** An illustration, not a forecast. If Northwind's 2027 taxable income were twelve Septembers of book profit, $20,968.80, the tax at 21% would be $4,403.45. Book profit isn't taxable income, so the real figure comes from the preparer, but the arithmetic is the same.

## The extension, and what it doesn't extend

[Form 7004](https://lopifi.com/md/glossary/form-7004), filed by the original due date, extends the time to file by 6 months, to October 15, 2027 for Northwind's first return. It doesn't extend the time to pay. Tax still owed on April 15, 2027 starts accruing late-payment penalty and interest whatever the extension says.

> “Form 7004 does not extend the time to pay any tax due.”

— [Instructions for Form 7004 (Rev. 12/2025)](https://www.irs.gov/instructions/i7004), Automatic extension of time to file certain business income tax returns

**File by Apr 15, 2027**
- Pro: One deadline, done.
- Pro: Delaware's assumed par method needs the same Schedule L figures anyway.
- Con: Needs a closed, reconciled year in the first weeks of the next one.
- Best for: A company whose year is closed and reviewed by March.

**Extend to Oct 15, 2027 with Form 7004**
- Pro: 6 more months to file, automatically.
- Pro: No reason has to be given.
- Con: Tax is still due on the original date: the extension covers filing, not paying.
- Con: A second deadline to keep.
- Best for: A company still closing the year, or waiting on a K-1 or a valuation.

Filing on time against extending. Both are normal; only one of them is about money.

| Form | When | For |
| --- | --- | --- |
| Form 1120 | Apr 15, 2027 | Every domestic C corporation, every year |
| Schedule L (on Form 1120) | With the return | The balance sheet — the gross assets Delaware's method uses |
| Form 7004 | By Apr 15, 2027 | To file by Oct 15, 2027 instead |
| Form 5472 | Attached to the return | Only if 25% or more foreign-owned ([lesson 9](https://lopifi.com/md/learn/form-5472-and-boi-reporting)) |
| Form 2220 | With the return | Only if an estimated installment was late or short ([lesson 4](https://lopifi.com/md/learn/corporate-estimated-tax-payments)) |

What goes to the IRS with Northwind's return.

| Failure | Penalty |
| --- | --- |
| Filing late | 5% of the unpaid tax for each month or part of a month, up to 25% |
| More than 60 days late | At least the smaller of the tax due or $525, for a return required to be filed in 2026 |
| Paying late | ½ of 1% of the unpaid tax for each month or part of a month, up to 25% |

Federal penalties, as the Instructions for Form 1120 (2025) state them.

**Wrong:** We lost money, so there's nothing to file.

**Right:** We lost money, so we file to record the loss and carry it forward.

The late-filing penalty is computed on unpaid tax, so a loss year owes little of it, but the return is still required and the loss is only usable once it's on a filed return.

> **Form 1120 every year, loss or not, by the 15th day of the 4th month. Form 7004 buys time to file, never time to pay.**

## Where this lesson's rules come from

- [26 U.S.C. §11(b)](https://www.law.cornell.edu/uscode/text/26/11) — Tax imposed on corporations (statute)
- [Instructions for Form 1120 (2025), When To File](https://www.irs.gov/instructions/i1120) — U.S. Corporation Income Tax Return — who must file, when, extensions, penalties (irs)
- [Form 1120](https://www.irs.gov/pub/irs-pdf/f1120.pdf) (PDF) — U.S. Corporation Income Tax Return (PDF) (form)
- [Instructions for Form 7004 (Rev. 12/2025)](https://www.irs.gov/instructions/i7004) — Automatic extension of time to file certain business income tax returns (irs)
- [Form 7004](https://www.irs.gov/pub/irs-pdf/f7004.pdf) (PDF) — Application for Automatic Extension of Time To File Certain Business Income Tax (PDF) (form)

## Read further

- https://lopifi.com/md/journal-entries/income-tax-provision
- https://lopifi.com/md/startups/form-1120-what-to-give-your-tax-preparer
- https://lopifi.com/md/startups/startup-tax-deadlines-by-month
- https://lopifi.com/md/accounting/form-1120
- https://lopifi.com/md/accounting/net-operating-loss
- https://lopifi.com/md/accounting/asc-740

- **Track:** [Compliance & tax](https://lopifi.com/md/learn/compliance)
- **Lesson:** Lesson 3 of 10 — 10 min
- **Terms taught:** [Form 1120](https://lopifi.com/md/glossary/form-1120), [Form 7004](https://lopifi.com/md/glossary/form-7004), [Net operating loss](https://lopifi.com/md/glossary/net-operating-loss), [NOL deduction cap](https://lopifi.com/md/glossary/nol-deduction-cap), [Income tax expense](https://lopifi.com/md/glossary/income-tax-expense), [Temporary difference](https://lopifi.com/md/glossary/temporary-difference)
- **Previous:** [Booking the franchise tax, Compliance · Lesson 2](https://lopifi.com/md/learn/delaware-franchise-tax-calculation/booking-the-franchise-tax)
- **Next:** [Corporate estimated tax: four installments a year, Compliance · Lesson 4](https://lopifi.com/md/learn/corporate-estimated-tax-payments)
- **The course:** https://lopifi.com/md/learn