CPA-prepared S corporation tax returns with reasonable compensation analysis, Schedule K-1 preparation, and shareholder basis tracking to reduce IRS compensation exposure and shareholder-level tax errors.
S corporations remain one of the most popular entity structures in the United States — and also one of the most frequently mishandled. TYM Business Consulting prepares Form 1120-S and all related filings for S corporations in Miami, across Florida, and nationwide. Every engagement is built around a documented, reconciled return.
Reasonable compensation is the most litigated S-corp issue. Document your position before examination, not during.
Request a Compensation AnalysisWith active business income and shareholder employee compensation issues.
Investment entities with passive activity and at-risk considerations.
With potential built-in gains exposure from C-to-S conversion.
Requiring individual basis tracking and pro rata allocation compliance.
Unresolved historical basis or compensation issues requiring reconstruction.
Evaluating whether S corporation treatment is appropriate relative to C corporation, LLC, or partnership taxation.
Built on documented reconciliation, verified compensation analysis, and audit-ready shareholder records.
TYM determines a defensible compensation figure based on the shareholder's role, industry benchmarks, corporation revenue and profitability, and the degree to which returns are attributable to labor versus capital. The analysis is documented and retained as part of the return support file.
TYM maintains annual basis schedules as a standard deliverable. Basis increases with income allocations and capital contributions; decreases with loss allocations, distributions, and certain deductions. Where historical basis has not been tracked, TYM reconstructs basis from available records before current-year filing.
Complete Form 1120-S with all required schedules: B, D, K, K-1, L, M-1/M-2, Form 4562, Form 7203. Each component is reconciled to source records and reviewed for internal consistency. K-1 package cross-referenced to Schedule K in aggregate.
The Accumulated Adjustments Account reflects post-1982 undistributed taxable income and determines whether distributions are tax-free or taxable. TYM maintains the AAA schedule, reconciles it to the prior year, and incorporates it into the current-year distribution analysis.
For corporations that converted from C to S status, Section 1374 may impose entity-level tax on gains attributable to appreciation at conversion if assets are sold during the recognition period. TYM reviews this exposure, identifies affected assets, and calculates built-in gains tax where applicable.
Every engagement produces a return support file: shareholder basis schedules, AAA analysis, reasonable compensation documentation, depreciation schedules, and K-1 allocation workpapers — organized for IRS correspondence, examinations, or future shareholder transactions.
A Miami professional services S corporation generated approximately $400,000 in annual net income. The sole shareholder paid themselves a $30,000 salary and distributed the remaining $370,000.
During an IRS examination, the agent concluded that reasonable compensation for the shareholder's role was $120,000 based on comparable market data. The IRS reclassified $90,000 of distributions as wages.
This was not a complex tax issue. It was a basic compensation structure failure with expensive consequences.
Suspended losses, taxable distributions, and sale gain calculations all depend on accurate basis. Reconstruct before filing current-year return.
Schedule Basis ReconstructionReview prior-year Form 1120-S, identify carryforward items (suspended losses, AAA balance, basis positions), confirm shareholder roster and ownership percentages. Built-in gains exposure is assessed for recently converted entities.
Client provides year-end close package (trial balance, financial statements, general ledger), officer payroll records, shareholder loan activity, fixed asset additions/disposals, and any IRS correspondence.
Shareholder-employee compensation reviewed and benchmarked. When compensation falls outside the defensible range, TYM coordinates an adjustment with the shareholder prior to return preparation.
Form 1120-S and all schedules prepared. Basis schedules updated for each shareholder. K-1 package assembled and cross-referenced to Schedule K. Distributions analyzed against AAA balance and shareholder basis.
Completed return reviewed internally for cross-schedule consistency, accuracy of shareholder allocations, completeness of disclosures. Summary presented covering ordinary income, separately stated items, year-over-year changes, and distribution analysis.
Upon client approval, the return is filed electronically with the IRS, and K-1s are distributed to shareholders. Return support file delivered and retained for reference.
Typical Form 1120-S engagements start from $1,800 for single-shareholder S corporations with clean year-end financials. TYM establishes final fees after the initial filing assessment confirms the scope.
| Factor | S Corporation (Form 1120-S) | C Corporation (Form 1120) |
|---|---|---|
| Entity-level tax | None (pass-through) | 21% flat rate |
| Shareholder taxation | Pro-rata income allocation via K-1 | Dividends (qualified: 0–20%) |
| Double taxation | No | Yes (entity + dividend level) |
| Reasonable compensation | Required for shareholder-employees | Not required |
| Ownership restrictions | U.S. citizens/residents only, max 100 shareholders | Unlimited, any entity type |
| Basis tracking | Required annually | Only upon stock sale |
| Built-in gains tax | Applies to C-to-S conversions (5 years) | Not applicable |
| Estimated taxes | Shareholder-level (Form 1040-ES) | Entity-level (Form 1120-W) |
For Miami businesses with foreign shareholders, S corporation status is generally unavailable — nonresident alien ownership disqualifies the election under Section 1361. See U.S. Corporate Tax Return (Form 1120) for C corporation filing.
TYM Business Consulting provides S corporation tax preparation services for businesses in Miami, Coral Gables, Brickell, Aventura, and throughout South Florida. TYM also serves S corporations across Florida and nationally where federal filing obligations apply.
TYM reviews prior-year returns, identifies carryforward items, and confirms the scope before any preparation begins.
Request an AssessmentThe process starts with a filing scope assessment — a review of prior-year returns, carryforward positions, compensation structure, and document readiness. TYM confirms the full scope before any preparation begins.
This page is for informational purposes only and does not constitute tax or legal advice. Tax obligations depend on individual circumstances. Consult a qualified CPA for guidance specific to your situation.