Interactive Guide to C Corporation Taxes (Form 1120)

A Visual Guide to C Corporation Taxes

This tool breaks down the complex Form 1120 instructions, helping you understand how C Corporations are taxed and how to leverage key deductions and credits to reduce your liability.

The C Corp Tax Formula

A C Corporation is a separate tax-paying entity. Its tax liability is calculated on its own net profit. This is different from pass-through entities like S Corps. Here's the basic formula.

Gross Income

-

Deductions

=

Taxable Income

×

21% Rate

=

Corporate Tax

Deduction & Planning Explorer

Depreciation Powerhouse: Section 179 & Bonus

Instead of slowly deducting the cost of equipment over years, Section 179 allows you to expense the full cost immediately, up to a certain limit. This provides a huge first-year deduction. This simulator compares the immediate write-off to standard 5-year depreciation.

Cost of Qualifying Asset:

Dividends-Received Deduction (DRD) Calculator

A key C-Corp benefit to prevent triple-taxation. If your corporation receives dividends from another corporation it owns stock in, it can deduct a portion of those dividends from its own income. Use this calculator to see the potential deduction.

Dividends Received:

Ownership % in Paying Corp: Less than 20% 20% to less than 80% 80% or more

Charitable Contribution Limit Calculator

Corporations can deduct charitable contributions, but the deduction is generally limited to 10% of taxable income for the year. Amounts over the limit can be carried forward for 5 years.

Taxable Income (before contributions):

Contributions Paid:

Net Operating Loss (NOL) Carryforward Simulator

If deductions exceed income, the corporation has a Net Operating Loss (NOL). This loss can't be used to get a refund for the current year, but it can be carried forward indefinitely to reduce taxable income in future years. The deduction is limited to 80% of that future year's taxable income.

Year 1 Loss (NOL Amount):

Year 2 Taxable Income (before NOL):

Tax Credits: A Dollar-for-Dollar Benefit

More powerful than deductions, tax credits reduce your final tax bill directly. A $1,000 credit saves you $1,000 in tax. C Corporations are eligible for a wide range of credits, often consolidated on Form 3800.

Foreign Tax Credit

Reduces U.S. tax by taxes paid to foreign governments.

R&D Credit

For expenses related to increasing research activities.

Work Opportunity Credit

For hiring individuals from certain targeted groups.

Clean Energy Credits

Numerous credits for green investments and production.