Question

What is the tax liability and how would you report the clock on a 1120 form

Answer 1

Tax liability is the total amount of tax debt that is owed either by an individual, a corporation or any other entity. The tax debt is owed to a taxing authority like the IRS.

In the form 1120 a company reports its income, gains, losses, deductions and credits. These figures are used to compute the final amount of tax liability for a given financial year. In the form a reporting company will first have to fill out different components of income like sales, gross profit, capital gains, other income etc. Next they fill details about deductions like salaries, repair expenses, rent, interest, etc. This leads to the figure for ‘taxable income’ and the amount of tax payable, refundable credits and payments.