Question

what is the primary difference between the income section for form 1120 and form 1120s?

Answer 1

A domestic corporation which has elected to be a Subchapter S Corporation for any tax year is required

by the IRS to file   Form 1120S   to report the income, gains, losses, deductions, credits, arising out of the business carried on in that tax year.

All other Corporations (unless specifically exempted )must file Form 1120 so as to report all the above & to assess their taxable income

The primary difference between the 2 forms as above is:

Incomes other than from business -- such as rental income,investment income or any other passive income are not to be listed under this section of 1120 S

These items are allocated directly to the S Corporation's Shareholders and will appear later in the return-- under Schedule K