The 1120-F tax return, the full name is the U.S. Income Tax Return of a Foreign Corporation, is a U.S. income tax return. This article will briefly describe what the purpose of filing Form 1120-F is, who needs to file Form 1120-F; what information needs to be disclosed on Form 1120-F, Form 1120-F’s deadlines, and penalties situations.

The IRS requires eligible foreign corporations to file Form 1120-F with it. Filing Form 1120-F serves the following three purposes:

1. Foreign corporations report their U.S.-sourced income, deductions, credits, losses, and gains, and calculate their U.S. income tax liability.
2. Any claim for a refund by a foreign corporation due to file Form 8833: Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b).
3. Under section 884, a foreign corporation calculates and pays tax liability for a foreign corporation’s branch profit and the taxation of excess interest, if applicable.

Form 1120-F must be filed when the foreign corporation meets one of the following six conditions:

1. The foreign corporation has income, losses, and gains that are effectively related to U.S. trade or business.
2. The foreign corporation does not engage in trade or business in the United States but has U.S.-sourced income that has not been fully withheld of tax liability at source under Chapter 3 of the code.
3. When a foreign corporation engages in a trade or business in the United States, whether it has U.S.-sourced income from that trade or business, and under a tax treaty, whether the income from such trade or business is exempt from U.S. tax.
4. The foreign corporation had a branch, and the branch was a qualified derivatives dealer.
5. The foreign corporation claims a refund for the overpaid tax in the tax year.
6. The foreign corporation claims benefit of any credits or deductions.

Form 1120-F mainly discloses the following five basic information:

1. Basic information of a foreign corporation: including name, country of incorporation, company business address, company mailing address, U.S. federal employer identification number, accounting method selection, etc.
2. Calculate the amount of tax due or overpayment. Also, check "Yes or No" to answer the additional information questions on the second page.
3. The foreign corporation has income from U.S. sources, but is not effectively connected to income related to U.S. trade or business, such as dividend income, rental income, annuity income, etc.
4. The foreign corporation has income from U.S. sources and is effectively connected to income related to U.S. trade or business, such as gross receipts or gross sales, other income, etc.
5. Schedule L-balance sheet, which mainly contains the assets, liabilities, and owners’ equity of the foreign corporation.

There are two main types of deadlines for filing Form 1120-F:

1. When a foreign corporation has an office or place of business in the United States, the Form 1120-F deadline is on the 15th day of the fourth month following the end of the tax year. When the tax year end date of the foreign corporation is June 30, even if it has an office or place of business in the United States, the Form 1120-F deadline is the 15th day of the third month following the end of the tax year. A foreign corporation may request an extension to file Form 1120-F by filing Form 7004. Can be extended for an additional six months.
2. When the foreign corporation does not have an office or place of business in the United States, the Form 1120-F deadline is on the 15th day of the sixth month following the end of the tax year. A foreign corporation may request an extension to file Form 1120-F by filing Form 7004. Can be extended for an additional six months.

When a foreign corporation does not file Form 1120-F on time (including extensions), it will be subject to corresponding penalties. The amount fined each month is 5% of the unpaid tax. Up to a maximum of 25% of the unpaid tax. When a foreign corporation has failed to file Form 1120-F on time for more than 60 days, the penalty amount is $435 or the tax due, whichever is less. If the foreign corporation can demonstrate that the failure to file Form 1120-F on time was due to reasonable cause, there will be no penalty.

Reference:
https://www.irs.gov/pub/irs-pdf/f1120f.pdf
https://www.irs.gov/pub/irs-pdf/i1120f.pdf