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NSTRUCTIONS

REPARATION OF

FORM

2006

20S

LABAMA

EPARTMENT OF

EVENUE

S Corporation Information/Tax Return

INSTRUCTIONS

General Instructions

LIABILITY FOR FILING RETURNS. Alabama Form 20S is to be used only by

corporations doing business in Alabama that have elected to be treated as an S

REQUIRED ATTACHMENTS. To be considered a complete return, the Ala-

corporation for federal income tax purposes. For Alabama S corporation qualifica-

bama S Corporation Information/Tax Return must have attached a complete copy

tion requirements and for the requirements for computing Alabama S corporation

of the federal Form 1120S, U.S. Income Tax Return for an S Corporation, with all

income, loss, deductions, and credits, see Alabama Department of Revenue regu-

federal K-1s, all statements and all attachments. Failure to attach a copy of the fed-

lation numbers 810-3-160 through 810-3-173.

eral Form 1120S will consitute improper preparation subjecting the return to treat-

MULTISTATE ALABAMA S CORPORATIONS. Section 40-18-22, Code of

ment as a delinquent return. Voluminous depreciation and like schedules may be

Alabama 1975, requires Alabama S corporations that are doing business both

omitted; however, a list of all omitted schedules must be attached and must be pro-

within and without the State of Alabama to allocate and apportion their income in

vided if requested. In addition, for the Alabama Form 20S to be considered a com-

accordance with Chapter 27, Title 40, Code of Alabama 1975, (also known as the

plete return, a properly completed Alabama Schedule K-1 must be attached for

Multistate Tax Compact). See the Alabama Department of Revenue’s Web site

each person or tax entity that was a shareholder of the corporation at any time dur-

( ) for additional information concerning Alabama’s multi-

ing the taxable year.

state tax laws and regulations.

INTERNET AVAILABILITY OF LAWS, REGULATIONS, AND FORMS. The

WHO MUST SIGN. The Alabama Form 20S is not considered a complete re-

Alabama Department of Revenue’s Web site ( ) has ad-

turn unless it is signed by an officer of the corporation. When a return is made for

ditional information concerning the Alabama income tax laws and regulations that

an Alabama S corporation by a receiver, trustee or assignee, the fiduciary must

apply to Alabama S Corporations. Current and prior year forms and instructions,

sign the return, instead of the corporate officer.

as well as frequently asked questions, are also available on the Web site.

PAID PREPARER AUTHORIZATION. Above the return signature area, on

ALABAMA S CORPORATIONS. The income tax computation and reporting

page 4 of the form, is a check box which can be used to authorize the Alabama De-

requirements for Alabama S corporations are based on federal S corporation re-

partment of Revenue to discuss the Alabama Form 20S and its attachments with

quirements. Section 40-18-160(b), Code of Alabama 1975, establishes the re-

the paid preparer – who is identified in the Paid Preparer’s Use Only section of the

quirement for an Alabama S corporation. The section states:

return. Checking the box can facilitate the process of resolving a problem when in-

“…an Alabama S corporation” is a corporation:

formation on the return is missing or incomplete.

(1) With respect to which an election under 26 U.S.C. §1362 is in effect; or

PAID PREPARER INFORMATION. Anyone who is paid to prepare the Ala-

(2)a. With respect to which there is in effect an election under 26 U.S.C.

bama Form 20S for an Alabama S corporation must sign and provide the informa-

§1361(b)(3) to treat such corporation as a qualified subchapter S subsidiary; and

tion required in the Paid Preparer’s Use Only section of the Form 20S. The

b. All the stock of which is owned by an S corporation qualifying as an “Ala-

signature can be made in hand, by rubber stamp, by mechanical device, or a com-

bama S corporation” under subdivision (b)(1).

puter software program. Paid preparers must provide the Alabama S corporation

No corporation shall be an Alabama S corporation for any portion of a taxable

with a copy of the prepared return.

year of the corporation during which an election under 26 U.S.C. §1362 or

TIME AND PLACE FOR FILING. The Alabama Form 20S is due by the 15th

§1361(b)(3), whichever is applicable, is not in effect for federal income tax pur-

day of the 3rd month after the end of the tax year. An automatic extension of time

poses. No corporation shall be an Alabama S corporation if it is a financial institu-

to file the return (up to a maximum of 6 months) will be granted if: (1) a copy of the

tion, as defined in Section 40-16-1…”

Federal Form 7004 is attached to the return and the return is filed within the six-

Qualified Subchapter S Subsidiaries. Alabama income tax law also provides

month period, or (2) Form 20-E is filed on or before the due date of the return re-

for qualified subchapter S subsidiaries in Section 40-18-160(d), which states:

gardless of whether the corporation files Federal Form 7004.

“…(d) With respect to a qualified subchapter S subsidiary for which there is in ef-

Mail the completed return to:

fect an election under 26 U.S.C. §1361 (b)(3), all of its assets, liabilities, and items

Alabama Department of Revenue

of income, deductions, and credit shall be treated as assets, liabilities, and such

Individual and Corporate Tax Division

items, as the case may be, of the Alabama S corporation owning the stock of the

Pass Through Entity Unit

qualified subchapter S subsidiary…”

P. O. Box 327441

The Alabama Form 20S is similar to the federal Form 1120S in many ways.

Montgomery, AL 36132-7441

And, the Alabama Form 20S requires that an Alabama Schedule K-1 be completed

Make check payable to:

for any entity that was a shareholder at any time during the taxable year. Again,

Alabama Department of Revenue

please refer to the Alabama Department of Revenue Web site should you need a

CAUTION: Do not attach the Form PTE-C or the Form PTE-C payment to the

form or the instructions for the form.

Form 20S.

To be considered a complete return, the Alabama S Corporation Information

/Tax Return must have attached a complete copy of the federal Form 1120S, with

ESTIMATE/EXTENSION/INFORMATIONAL REQUIREMENTS:

all federal K-1s, all statements and all attachments. Failure to attach a copy of

FORM 20-CD. Corporation Estimated Tax Voucher. A corporation, which will

Form 1120S will constitute improper preparation subjecting the return to treatment

have an Alabama income tax liability in excess of $5,000, must pay estimated tax

as a delinquent return. Failure to properly complete the return and attach copies of

based on the current year’s liability. The first payment is due by the 15th day of the

the Federal 1120S, Alabama Schedule K-1s, and all applicable Nonresident Share-

4th month of the taxable year. The 2nd, 3rd, and 4th filings and payments are due

holder Agreement forms may result in the assessment of penalties and additional

by the 15th day of the 6th, 9th, and 12th months, respectively.

filing requirements.

To obtain a 20CD or 20E coupon visit our Web site at

All schedules of the Alabama Form 20S must be completed. Schedules and

. When payments are made by EFT, the Forms 20-

statements may be attached to support line entries.

CD and 20-E must still be remitted.

Instructions For Form 20s - Preparation Of Alabama Department Of Revenue S Corporation Information/tax Return - 2006

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