For those farmers who have corporations for their farm operations, there are several changes to the form 1120 for this year. These changes are as follows:
- Merchant card and third-party payments. For the 2011 tax year, the IRS has deferred the requirement to separately report on the corporation's tax return the amount of merchant card and third-party payments from form 1099-K. These were going to be required to be reported on line 1a of the return. The instructions now indicate these should be lumped in with all gross sales on line 1b.
- New form 1125-A, Cost of Goods Sold. For tax years beginning in 2011, filers of form 1120, 1120-C, 1120-F, 1120-S, 1065, or 1065-B are required to use new form 1125-A to report any cost of goods sold. For most farm operations, this would not be applicable if you report your farm income and expenses on Schedule F, but it may apply to you.
- New Form 1125-E, Compensation of Officers. If you farm corporation has gross receipts greater than $500,000 and you pay officer compensation, then you are now required to fill out new form 1125-E.
- Change of Address. Form 8822-B, Change of Address - Business, has been created by the IRS specifically for business use. In the past, changing the address on form 1120 normally was sufficient, however, now the IRS wants this form filled out for a business change of address.
Although these changes are specifically associated with form 1120, most of the same changes apply to form 1065 for partnerships. The only one that would not apply is form 1125-E, Compensation of Officers.