IRS FAQ: Must a partnership or corporation file an information return or income tax return even though it had no income for the year?

Partnerships and corporations have different standards for filing an information return or income tax return.

• A domestic partnership must file an information return, unless it neither receives gross income nor pays or incurs any amount treated as a deduction or credit for federal tax purposes.

• A foreign partnership generally must file an information return if:

  • It has gross income effectively connected with the conduct of a trade or business within the United States,

  • It has gross income derived from sources in the United States, or

  • It or its U.S. partner is making an election, such as an election to amortize organization expenses.

Refer to the Instructions for Form 1065, U.S. Return of Partnership Income, for exceptions to filing requirements.

• A domestic corporation (including a Subchapter S corporation) must file an income tax return whether it has taxable income or not, unless it's exempt from filing under section 501.

• A foreign corporation generally must file an income tax return if it:

  • Engages in a trade or business in the United States, even if it has no income effectively connected with the conduct of a trade or business in the United States during the taxable year,

  • Has income, gains or losses treated as if effectively connected with the conduct of a U.S. trade or business and subject to taxation under subtitle A of the Internal Revenue Code (relating to income taxes), or

  • Doesn't engage in a trade or business in the United States at any time during the taxable year but has U.S. source income, and the withholding at source under Chapter 3 of the Internal Revenue Code didn't fully satisfy its taxation.

Refer to the Instructions for Form 1120-F, U.S. Income Tax Return of a Foreign Corporation, for other reasons a foreign corporation may file a return and exceptions to filing requirements. 

Source: CCH Incorporated; IRS.gov

The Doty Group is a full-service CPA firm offering Tax, Audit, Valuation, and Advisory Services to Business and Individuals in Tacoma, WA. If you have more questions regarding this or other Business Accounting matters, please give us a call at (253) 830-5450 or e-mail info@dotygroupcpas.com.