Arizona Form 120s - S Corporation Income Tax Return

Arizona Form 120S

this line. Attach a schedule that details the amount of income

Income Subject to Federal and Arizona

Corporate Income Taxes

that is allocable to Arizona.

Arizona Tax Liability Computation

Lines 2 through 4 - Excess Net Passive Income and

Capital Gains/Built-in Gains

Is the S corporation subject to federal and Arizona corporate

Was the S corporation subject to the FEDERAL excess net

income tax? If so, the S corporation must complete lines 2

passive income tax, capital gains tax, or built-in gains tax on

through 25. Is the S corporation subject to Arizona corporate

its federal Form 1120

S? If so, the S corporation is subject to

income tax from the recapture of the Arizona credits for

Arizona corporate income tax on this income.

environmental technology facilities, healthy forest enterprises,

Enter the amount of income which was subject to the federal

renewable energy industry or qualified facilities? If so, the S

excess net passive or capital/built-in gains income tax from the

corporation must complete lines 13 through 25, even if not

federal worksheet included in the instructions for Form 1120-S.

required to complete lines 2 through 12.

(Refer to the instructions for the computation of these taxes in

Line 12 - Arizona Tax

the federal Form 1120-S.)

The S corporation is subject to the tax computed on line 12

Lines 5 through 10 - Apportionment Computation

only if it has income subject to tax at the corporate level on

(Multistate S Corporations Only)

the federal Form 1120-S, even if line 11 is zero or a negative

An S corporation that has income from business activity

amount. Pursuant to A.R.S. § 43-1111, the amount of the tax

taxable in more than one state is a multistate S corporation.

is the greater of $50 or 6.968 percent of the net income

An S corporation that has income from business activity that

subject to Arizona corporate income tax (line 11).

is taxable entirely within Arizona is a wholly Arizona

Line 13 - Tax From Recapture of Tax Credits

S corporation. Wholly Arizona S corporations should skip

Enter the amount of tax due from the recapture of tax credits

lines 5 through 10 and go directly to line 11.

from Arizona Form 300, Part II, line 29.

Any S corporation that has income from business activity that is

Line 14 - Subtotal

taxable both within and without Arizona must allocate and

apportion its net income according to the Uniform Division of

Add lines 12 and 13. This is the amount of tax to which the

Income for Tax Purposes Act (UDITPA), A.R.S. §§ 43-1131

total amount of tax credits claimed by the taxpayer may be

through 43-1150. The instructions for Schedules ACA and A

applied.

have more detailed information regarding apportionment of

Line 15 - Nonrefundable Tax Credits

income. Carry out the decimal on line 7 to six places.

Enter the allowable nonrefundable tax credit amount from

Line 5 - Nonapportionable or Allocable Income

Arizona Form 300, Part II, line 53. This amount cannot be

(Multistate S Corporations Only)

larger than the amount on line 14. Attach the completed credit

Nonbusiness income is nonapportionable and specifically

forms to the tax return with Arizona Form 300.

allocable to a particular state. "Business income" means



Enterprise Zone Credit. Taxpayers located in a former

income arising from transactions and activity in the regular

enterprise zone prior to June 30, 2011, may qualify to

course of the taxpayer's trade or business, and includes

claim a third year credit for qualified employment

income from tangible and intangible property if the

positions. Complete Form 304 to claim this tax credit or

acquisition, management, and disposition of the property

carryforwards established in prior years.

constitute integral parts of the taxpayer's regular trade or



Environmental Technology Facility Credit. This tax

business operations. (A.R.S. § 43-1131(1)).

credit is for costs incurred in constructing a qualified

"Nonbusiness income" means all income other than business

environmental technology manufacturing, producing, or

income. (A.R.S. § 43-1131(4)). Refer to A.R.S. §§ 43-1134

processing facility as described in A.R.S. § 41-1514.02.

through 43-1138 for the methods of allocating certain types

Complete Form 305 to claim this tax credit.

of nonbusiness income.



Military Reuse Zone Credit. This tax credit is for net

Enter the total amount of all income (loss) which is

increases in employment of full-time employees working

nonapportionable or specifically allocable to Arizona. Attach

in a military reuse zone established under Arizona law.

a schedule that details the amount of nonapportionable

Complete Form 306 to claim this tax credit.

income subtracted on page 1, line 5.



Credit for Increased Research Activities. This tax credit

Line 7 - Arizona Apportionment Ratio

is for taxpayers who incur qualified research expenses for

(Multistate S Corporations Only)

research conducted in Arizona. A portion of the excess

credit claimed for taxable years beginning from and after

Compute the apportionment factors according to the

December 31, 2009, may be refundable with approval

instructions for Schedule ACA or A. Enter the average

from the Arizona Commerce Authority. Be sure to include

apportionment ratio from Schedule ACA, line 3, or from

only the nonrefundable portion on line 15. Complete

Schedule A, line A5, column C, on page 1, line 7.

Form 308 to claim this tax credit.

Line 9 - Other Income Allocated to Arizona



Pollution Control Credit. This tax credit is for

(Multistate S Corporations Only)

expenses incurred during the taxable year to purchase

Enter the total amount of all income (loss) that is specifically

real or personal property used in the taxpayer's trade or

allocable to Arizona. DO NOT include the amount of any

business in Arizona to control or prevent pollution.

nonbusiness income which is allocable to another state on

Complete Form 315 to claim this tax credit.

Arizona Form 120s - S Corporation Income Tax Return - 2013 Page 4

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