How Is Income Allocated for an S Corporation Form 1120-S?

Once you make an "S" Corporation for your entity, you need to file a Form 1120-S and follow all of the federal tax rules that apply to S corporations.

One of the central tenants of S corporations is the entity must only have one class of stock.

One class of stock essentially means that all items of income, expense, credits, and distributions must be allocated in proportion to the ownership interest percentages of each person.

If you have an S corporation with multiple owners, you need to be mindful of these allocation rules.

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