U. S. Business Income Tax Return

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Instructions for Form
1120-SF
(Rev. December 2025)

U.S. Income Tax Return for Settlement Funds
Section references are to the Internal Revenue Code
unless otherwise noted.

Future Developments
For the latest information about developments related to
Form 1120-SF and its instructions, such as legislation
enacted after they were published, go to IRS.gov/
Form1120SF.

What’s New

Increase in penalty for failure to file. For tax returns
required to be filed after 2025, the minimum penalty for
failure to file a return that is more than 60 days late has
increased to the lesser of the tax due or $525 (adjusted for
inflation). See Late filing of return, later.
Electronic payments. If the fund has access to U.S.
banking services or electronic payment systems, it should
use direct deposit for any refunds and pay electronically
for any payments, whenever possible.
Direct deposit. Direct deposit fields have been added
to the form on lines 20c, 20d, and 20e. If there is an
overpayment on line 19, enter the amount the fund wants
refunded on line 20b and complete the direct deposit
information on lines 20c, 20d, and 20e. Instead of a direct
deposit of the fund’s refund, it can still choose to have all
or part of the overpayment credited to next year’s
estimated tax by completing line 20a. See Line 19, later,
for more information.
Making a payment. If there is a balance due on
line 18, go to IRS.gov/Payments for information on how to
make a payment. See Tax Payments and the instructions
for line 18, later, for more details.

General Instructions
Purpose of Form

Use Form 1120-SF to report transfers received, income
earned, deductions claimed, and distributions made, and
to figure the income tax liability of a designated or
qualified settlement fund.

Who Must File

All section 468B designated and qualified settlement
funds must file an annual income tax return on Form
1120-SF.

However, a fund with a fiscal tax year ending on June
30 must file by the 15th day of the 3rd month after the end
of its tax year. A fund with a short tax year ending in June
will be treated as if the short year ended on June 30, and
must file by the 15th day of the 3rd month after the end of
its tax year.
If the due date falls on a Saturday, Sunday, or legal
holiday, the fund may file on the next business day.
Private delivery services (PDSs). Settlement funds can
use certain PDSs designated by the IRS to meet the
“timely mailing as timely filing” rule for tax returns. See the
Instructions for Form 1120, U.S. Corporation Income Tax
Return, for details.
Caution: PDSs can’t deliver items to P.O. boxes. The
fund must use the U.S. Postal Service to mail any item to
an IRS P.O. box address.
Extension of time to file. File Form 7004, Application for
Automatic Extension of Time To File Certain Business
Income Tax, Information, and Other Returns, to request an
extension of time to file. Generally, the settlement fund
must file Form 7004 by the regular due date of the return.
See the Instructions for Form 7004.

Who Must Sign

The return must be signed and dated by the administrator
of the fund.

Paid Preparer Use Only section. If an employee of the
fund completes Form 1120-SF, the paid preparer section
should remain blank. Anyone who prepares Form
1120-SF but doesn’t charge the fund shouldn’t complete
that section. Generally, anyone who is paid to prepare the
return must sign and complete the section.
The paid preparer must complete the required preparer
information and:
• Sign the return in the space provided for the preparer’s
signature,
• Include their Preparer Tax Identification Number (PTIN),
and
• Give a copy of the return to the administrator.
A paid preparer may sign original or amended returns
by rubber stamp, mechanical device, or computer
software program.

Paid Preparer Authorization

If the fund wants to allow the IRS to discuss its tax return
with the paid preparer who signed it, check the “Yes” box
Dec 9, 2025

Instructions for Form 1120-SF (Rev. 12-2025) Catalog Number 14988X
Department of the Treasury Internal Revenue Service www.irs.gov

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Form 1120-SF. Use the December 2025 revision of Form
1120-SF and instructions for 2025 and subsequent years
until a superseding revision of Form 1120-SF is issued.

When To File

Generally, a settlement fund must file its income tax return
by the 15th day of the 4th month after the end of its tax
year.

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in the signature area of the return. This authorization
applies only to the individual whose signature appears in
the Paid Preparer Use Only section of the fund’s return. It
doesn’t apply to the firm, if any, shown in that section.

extensions). See the instructions for line 18, later. If the
due date falls on a Saturday, Sunday, or legal holiday, the
payment is due on the next day that isn’t a Saturday,
Sunday, or legal holiday.

If the “Yes” box is checked, the fund is authorizing the
IRS to call the paid preparer to answer any questions that
may arise during the processing of its return. The fund is
also authorizing the paid preparer to:
• Give the IRS any information that is missing from the
return;
• Call the IRS for information about the processing of the
return or the status of any related refund or payment(s);
and
• Respond to certain IRS notices about math errors,
offsets, and return preparation.

Electronic Deposit Requirement

The authorization will automatically end no later than
the due date (excluding extensions) for filing the fund’s
subsequent tax return. If the fund wants to expand the
paid preparer’s authorization or revoke the authorization
before it ends, see Pub. 947, Practice Before the IRS and
Power of Attorney.

Assembling the Return

To ensure that the fund’s tax return is correctly processed,
attach all schedules after page 2 of Form 1120-SF in
alphabetical order followed by other forms in numerical
order.

Complete every applicable entry space on Form
1120-SF. Don’t enter “See Attached” or “Available Upon
Request” instead of completing the entry spaces. If more
space is needed on the forms or schedules, attach
separate sheets using the same size and format as the
printed forms.
If there are supporting statements and attachments,
arrange them in the same order as the schedules or forms
they support and attach them last. Show the totals on the
printed forms. Enter the fund’s name and employer
identification number (EIN) on each supporting statement
or attachment.

Tax Payments

Generally, the fund must pay any tax due in full no later
than the due date for filing its tax return (not including

Depositing on time. EFTPS accepts same day
payments of $1 million or less if the payment is submitted
before 3:00 p.m. Eastern time on a business day. If the
fund’s payment is more than $1 million, the fund must
submit the deposit by 8:00 p.m. Eastern time the day
before the date the deposit is due. If the fund uses a third
party to make deposits on its behalf, they may have
different cutoff times.
Same-day wire payment option. If the fund fails to
submit a timely deposit transaction on EFTPS, it can still
make its deposit on time by using the Federal Tax
Collection Service (FTCS). To use the same-day wire
payment method, the fund will need to make
arrangements with its financial institution ahead of time
regarding availability, deadlines, and costs. Financial
institutions may charge a fee for payments made this way.

Where To File
File the fund’s return at the applicable IRS address listed below.
If the fund’s principal business, office, or agency is located in:
The United States

A foreign country or U.S. territory

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Use the following address:
Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201-0012
Internal Revenue Service Center
P.O. Box 409101
Ogden, UT 84409

Instructions for Form 1120-SF (Rev. 12-2025)

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The fund isn’t authorizing the paid preparer to receive
any refund check, bind the fund to anything (including any
additional tax liability), or otherwise represent the fund
before the IRS.

Settlement funds must use electronic funds transfer (EFT)
to make all federal tax deposits (such as deposits of
employment, excise, and income taxes). An EFT can be
made using the Electronic Federal Tax Payment System
(EFTPS) or the fund’s IRS business tax account. However,
if the fund doesn’t want to use one of these methods, it
can arrange for its tax professional, financial institution,
payroll service, or other trusted third party to make
deposits on its behalf. Also, it may arrange for its financial
institution to submit a same-day wire payment (discussed
below) on its behalf. EFTPS is a free service provided by
the Department of the Treasury. Payments made using the
fund’s IRS business tax account are also free. Services
provided by a tax professional, financial institution, payroll
service, or other third party may have a fee.
To get more information about EFTPS or to enroll in
EFTPS, go to EFTPS.gov or call 800-555-4477. To
contact EFTPS using Telecommunications Relay Services
(TRS) for people who are deaf, hard of hearing, or have a
speech disability, dial 711 and then provide the TRS
assistant the 800-555-4477 number above or
800-733-4829. Additional information about EFTPS is also
available in Pub. 966.
For more information about making an EFT through the
fund’s IRS business tax account, go to IRS.gov/
BusinessAccount.

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To learn more about the information the fund will need to
provide to its financial institution to make a same-day wire
payment, go to IRS.gov/SameDayWire.
Generally, the following rules apply to the fund’s payments
of estimated tax.
• A fund must make installment payments of estimated
tax if it expects its total tax for the year (less applicable
credits) to be $500 or more.
• The installments are due by the 15th day of the 4th, 6th,
9th, and 12th months of the tax year. If any date falls on a
Saturday, Sunday, or legal holiday, the installment is due
on the next regular business day.
• The fund must use EFTs to make installment payments
of estimated tax.
• If, after the fund figures and deposits estimated tax, it
finds that its tax liability for the year will be more or less
than originally estimated, it may have to refigure its
required installments. If earlier installments were
underpaid, the fund may owe a penalty. See the
instructions for line 17, later.
• If the fund overpaid estimated tax, it may be able to get
a quick refund by filing Form 4466, Corporation
Application for Quick Refund of Overpayment of
Estimated Tax.
See section 6655 for more information on how to figure
estimated taxes.

Interest and Penalties
Interest. Interest is charged on taxes paid late even if an
extension of time to file is granted. Interest is also charged
on penalties imposed for failure to file, negligence, fraud,
substantial valuation misstatements, substantial
understatements of tax, and reportable transaction
understatements from the due date (including extensions)
to the date of payment. The interest charge is figured at a
rate determined under section 6621.
Late filing of return. A fund that doesn’t file its tax return
by the due date, including extensions, may be penalized
5% of the unpaid tax for each month or part of a month the
return is late, up to a maximum of 25% of the unpaid tax.
The minimum penalty for a tax return that is more than 60
days late is the lesser of the tax due or $525 (adjusted for
inflation). Go to IRS.gov/Newsroom/Inflation-Adjusted-TaxItems-by-Tax-Year for adjusted failure-to-file penalty
amounts for the applicable tax year. The penalty won’t be
imposed if the fund can show that the failure to file on time
was due to reasonable cause. See Reasonable-cause
determinations, later.
Late payment of tax. A fund that doesn’t pay the tax
when due may generally be penalized 1/2 of 1% of the
unpaid tax for each month or part of a month the tax isn’t
paid, up to a maximum of 25% of the unpaid tax. The
penalty won’t be imposed if the fund can show that the
failure to pay on time was due to reasonable cause. See
Reasonable-cause determinations, later.
Trust fund recovery penalty. This penalty may apply if
certain excise, income, social security, and Medicare
taxes that must be collected or withheld aren’t collected or
withheld, or these taxes aren’t paid. The trust fund
Instructions for Form 1120-SF (Rev. 12-2025)

Other penalties. Other penalties can be imposed for
negligence, substantial understatements of tax, reportable
transaction understatements, and fraud. See sections
6662, 6662A, and 6663.
Reasonable-cause determinations. If the fund receives
a notice about penalties after it files its return, send the
IRS an explanation, and we will determine if the fund
meets the reasonable-cause criteria. Don’t attach an
explanation when the fund files its return.

Accounting Method

A designated or qualified settlement fund must use the
accrual method of accounting.

Rounding Off to Whole Dollars

The fund may enter decimal points and cents when
completing its return. However, the fund should round off
cents to whole dollars on its return and schedules to make
completing its return easier. The fund must either round
off all amounts on its return to whole dollars, or use cents
for all amounts. To round, drop amounts under 50 cents
and increase amounts from 50 cents to 99 cents to the
next dollar. For example, $1.39 rounds to $1 and $2.50
rounds to $3.
If two or more amounts must be added to figure the
amount to enter on a line, include cents when adding the
amounts and round off only the total.

Recordkeeping

Keep the fund’s records for as long as they may be
needed for the administration of any provision of the
Internal Revenue Code. Usually, records that support an
item of income, deduction, or credit on the return must be
kept for 3 years from the date the return is due or filed,
whichever is later. Keep records that verify the fund’s basis
in property for as long as they are needed to figure the
basis of the original or replacement property.
The fund should keep copies of all filed returns. They
help in preparing future and amended returns.

Additional Information

See the Instructions for Form 1120 and Pub. 542,
Corporations, for more information about corporations,
including additional forms the fund may need to file and
how to get forms and publications.

Definitions
Qualified Settlement Fund

A fund, account, or trust (“a fund”) is a qualified settlement
fund if it meets the following requirements.
• Governmental order or approval requirement.
• Resolve or satisfy requirement.
• Segregation requirement.
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Estimated Tax Payments

recovery penalty may be imposed on all persons who are
determined by the IRS to have been responsible for
collecting, accounting for, and paying over these taxes,
and who acted willfully in not doing so. The penalty is
equal to the full amount of the unpaid trust fund tax. See
the Instructions for Form 720, Quarterly Federal Excise
Tax Return, or Pub. 15, Employer’s Tax Guide, for details,
including the definition of “responsible persons.”

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Arbitration panels. An arbitration award that orders the
establishment of, or approves, a fund is an order or
approval of a governmental authority if:
• The arbitration award is judicially enforceable;
• The arbitration award is issued following a bona fide
arbitration proceeding in accordance with rules approved
by a governmental authority (such as self-regulatory
organization-administered arbitration proceedings in the
securities industry); and
• The fund is subject to the continuing jurisdiction of the
arbitration panel, the court of law that has jurisdiction to
enforce the arbitration award, or the governmental
authority that approved the rules of the arbitration
proceedings.
Resolve or satisfy requirement. To meet this
requirement, a fund must be established to resolve or
satisfy one or more contested or uncontested claims that
have resulted, or may result, from an event (or a series of
related events) that has occurred and that has given rise
to at least one claim asserting liability:
• Under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (CERCLA), as
amended for settlement funds created before May 18,
2006;
• Arising out of a tort, breach of contract, or violation of
law; or
• Designated by the IRS in a revenue ruling or revenue
procedure.
Generally, a fund doesn’t meet the resolve or satisfy
requirement if it is established to resolve or satisfy a
liability to provide property or services unless the
transferor’s obligation to provide property or services is
extinguished by a transfer or transfers to the fund.
Note: Settlement funds created after May 17, 2006, for
the purpose of resolving or satisfying liabilities under the
CERCLA are exempt from tax. See section 468B(g)(2) for
more information.
Segregation requirement. To meet this requirement, the
fund must (a) be a trust under applicable state law, or (b)
keep its assets segregated from other assets of the
transferor (and related persons). For example, cash held
by a transferor in a separate bank account satisfies the
segregation requirement.

4

Classification of fund prior to meeting all three requirements. If a fund meets the resolve or satisfy
requirement, the assets of the fund are treated as owned
by the transferor of those assets until the fund also meets
the governmental order or approval requirement and the
segregation requirement. On the day the fund meets all
three requirements, the transferor is treated as transferring
the assets to a qualified settlement fund.
Relation-back rule. If a fund meets the resolve or satisfy
requirement and the segregation requirement before it
meets the governmental order or approval requirement,
the transferor and the administrator (defined later) may
jointly elect the relation-back election (defined below) to
treat the fund as coming into existence as a qualified
settlement fund on the later of (a) the date the fund meets
the resolve or satisfy requirement and the segregation
requirement, or (b) January 1 of the calendar year in
which all three requirements are satisfied.
If a relation-back election is made, the assets held by
the fund on the date the qualified settlement fund is
treated as coming into existence are treated as transferred
to the qualified settlement fund on that date.
Relation-back election. Make the relation-back election
by attaching a copy of the election statement to Form
1120-SF for the tax year in which the qualified settlement
fund is treated as coming into existence. The statement
must be signed by each transferor and the administrator.
File Form 1120-SF and the election statement by the due
date of Form 1120-SF, including extensions. The election
statement must contain the following.
• The words “Regulations section 1.468B-1
Relation-Back Election” at the top of the first page.
• The name, address, and identifying number of each
transferor.
• The name, address, and EIN of the qualified settlement
fund.
• The date on which the qualified settlement fund is
treated as coming into existence.
• A schedule describing each asset treated as transferred
to the fund on the date the fund is treated as coming into
existence. The schedule of assets doesn’t have to identify
the amount of cash or the property transferred by a
particular transferor.
Qualified settlement fund treated as a corporation.
Except as otherwise provided in Regulations section
1.468B-5(b), for purposes of subtitle F of the Internal
Revenue Code, a qualified settlement fund is treated as a
corporation and any tax imposed under Regulations
section 1.468B-2(a) is treated as a tax imposed by section
11. See Regulations section 1.468B-2(k) for more
information.

Designated Settlement Fund

A fund, account, or trust is a designated settlement fund if
it meets the following requirements.
• It is established by a court order and completely
extinguishes the taxpayer’s tort liability.
• No amounts may be transferred to it other than in the
form of a qualified payment (defined below).
• It must be administered by persons, a majority of whom
are independent of the taxpayer.
Instructions for Form 1120-SF (Rev. 12-2025)

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Governmental order or approval requirement. To
meet this requirement, the fund must be ordered by, or
approved by, the United States, any state (including the
District of Columbia), territory, or political subdivision
thereof, or any agency or instrumentality (including a court
of law) of any of the foregoing, and it must be subject to
the continuing jurisdiction of that governmental authority.
A fund is ordered by or approved by a governmental
authority when the authority issues its initial or preliminary
order to establish, or grants its initial or preliminary
approval of, the fund, even if that order or approval may be
subject to review or revision. Generally, a governmental
authority’s order or approval has no retroactive effect and
doesn’t permit a fund to be a qualified settlement fund
prior to the date the order is issued or the approval is
granted. However, see Relation-back rule, later.

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• It is established for the principal purpose of resolving
and satisfying present and future claims against the
taxpayer arising out of personal injury, death, or property
damage.
• The taxpayer (or any related person) may not hold any
beneficial interest in the income or corpus of it.
• The taxpayer elects to have it treated as a designated
settlement fund.

post office doesn’t deliver mail to the street address and
the fund has a P.O. box, enter the box number instead.

Qualified payment. A qualified payment is any money or
property that is transferred to a designated settlement
fund under a court order other than the following.
• Any amount that may be transferred from the fund to the
taxpayer (or any related person).
• The transfer of any stock or indebtedness of the
taxpayer (or any related person).

If the fund receives its mail in care of a third party (such
as an accountant or an attorney), enter on the street
address line “C/O” followed by the third party’s name and
street address or P.O. box.

Other Definitions
Administrator. An administrator, which may include a
trustee if the designated or qualified settlement fund is a
trust, is (in order of priority) any of the following.
• The person designated or approved by the
governmental authority that ordered or approved the fund.
• The person designated in the escrow agreement,
settlement agreement, or other similar agreement
governing the fund.
• The escrow agent, custodian, or other person in
possession of the fund’s assets.
• The transferor or, if there are multiple transferors, all of
the transferors unless an agreement is signed by all of the
transferors that designates a single transferor as the
administrator.
Transferor. A transferor is a person who transfers (or on
whose behalf an insurer or other person transfers) money
or property to a settlement fund to resolve or satisfy claims
against that person.

If the fund has a foreign address, enter the city or town,
state or province, country, and foreign postal code in the
spaces provided. Don’t abbreviate the country name.
Follow the country’s practice for entering the name of the
state or province and postal code.

Employer Identification Number (EIN)
Enter the fund’s EIN. If the fund doesn’t have an EIN, it
must apply for one. An EIN can be applied for in the
following ways.
• Online—Go to IRS.gov/EIN. The EIN is issued
immediately once the application information is validated.
• By faxing or mailing Form SS-4, Application for
Employer Identification Number.

If the fund hasn’t received its EIN by the time the return
is due, write “Applied For” in the space for the EIN and the
date the fund applied in the space for the EIN. For more
details, see the Instructions for Form SS-4.

Final Return, Name Change, Address
Change, or Amended Return

Indicate a final return, name change, address change, or
amended return by checking the appropriate box. If a
change in address occurs after the return is filed, use
Form 8822-B, Change of Address or Responsible Party —
Business, to notify the IRS. See the instructions for Form
8822-B for details.

Part I. Income and Deductions

Related person. A related person is any person who is
related to the transferor within the meaning of section
267(b) or section 707(b)(1).

Income

Specific Instructions

Line 1. Taxable interest. Enter total taxable interest
received or accrued during the tax year, including any
original issue discount (OID) or market discount that is
includible in income during the tax year. If the fund
acquired a taxable bond at a premium and elects to
amortize bond premium on taxable bonds under section
171, only report the net amount of taxable stated interest
on line 1 (that is, the excess of the taxable stated interest
received or accrued during the tax year over the amortized
bond premium for the tax year). Don’t report on line 1 any
tax-exempt interest (including tax-exempt OID). Don’t
offset interest expense against interest income.

Period Covered

Enter the tax year in the space provided at the top of the
form. For a calendar year, enter the last two digits of the
calendar year in the first entry space. For a fiscal or short
tax year return, fill in the tax year space at the top of the
form.

Name and Address

Enter the fund’s true name (as set forth in the charter or
other legal document creating it), address, and EIN on the
appropriate lines. Enter the address of the fund’s principal
office or place of business. Include the suite, room, or
other unit number on the “Room or suite no.” line. If the
Instructions for Form 1120-SF (Rev. 12-2025)

Note: Amounts transferred to the fund by or on behalf of a
transferor are generally excluded from income.

Note: Report tax-exempt interest (including tax-exempt
OID) on line 2 of Additional Information (on page 2 of Form
1120-SF). However, if the fund acquired a tax-exempt
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Note: A designated settlement fund is taxed in the same
manner as a qualified settlement fund. In addition, if a
fund doesn’t meet the requirements of a designated
settlement fund but does meet the requirements of a
qualified settlement fund, the fund is treated as a qualified
settlement fund.

Don’t use the address of the registered agent for the
state in which the fund is incorporated. For example, if a
fund is incorporated in Delaware or Nevada and the fund’s
principal office is located in Little Rock, Arkansas, the fund
should enter the Little Rock address.

TREASURY/IRS AND OMB USE ONLY DRAFT
bond at a premium, only report the net amount of
tax-exempt stated interest on line 2 of Additional
Information (that is, the excess of the tax-exempt stated
interest received or accrued during the tax year over the
amortized bond premium for the tax year, which is
required under section 171).
Line 3. Capital gain net income. Every sale or
exchange of a capital asset must be reported in detail on
Schedule D (Form 1120), Capital Gains and Losses (and
Form 8949, Sales and Other Dispositions of Capital
Assets, if applicable), even if there is no gain or loss. See
the Instructions for Schedule D (Form 1120).
Line 5. Other income. Enter any other taxable income
not reported on lines 1 through 4. List the type and
amount of income on an attached schedule. If the fund
has only one item of other income, describe it in
parentheses on the dotted line next to the entry space for
line 5.

Line 11. Other deductions. Enter the total of other
deductions not entered on lines 7 through 10. List the type
and amount of deduction on an attached schedule. If the
fund has only one item of other deduction, describe it in
parentheses on the dotted line next to the entry space for
line 11.
Line 12. Net operating loss (NOL) deduction . Enter
the total NOL carryovers from prior tax years, but don’t
enter more than the fund’s taxable income. See
Regulations section 1.468B-2(b)(4) for details.

Part II. Tax Computation
Line 14. Modified gross income. Modified gross
income of a designated or qualified settlement fund is its
gross income, as defined in section 61, computed with
certain modifications. See Regulations section
1.468B-2(b) for more information.
Line 16. Credits and payments. Generally, no credits or
payments are allowed other than those on lines 16a
through 16e.
Line 17. Estimated tax penalty. A fund that doesn’t
make estimated tax payments when due may be subject
to an underpayment penalty for the period of
underpayment. Generally, a fund is subject to the penalty
if its tax liability is $500 or more and it didn’t timely pay the
lesser of:
• Its tax liability for the current year, or
• Its prior year’s tax.
See section 6655 for details and exceptions, including
special rules for large funds.
Use Form 2220, Underpayment of Estimated Tax by
Corporations, to see if the fund owes a penalty and to
figure the amount of the penalty. Generally, the fund
6

Line 18. Tax due. Generally, the fund must pay any tax
due in full no later than the due date for filing its tax return
(excluding extensions). Payment of the tax due must be
made electronically. See Electronic Deposit Requirement,
earlier, for the payment options for the fund. Also, go to
IRS.gov/Payments for more detailed information.
If the fund cannot pay the full amount of tax owed, it can
apply for an installment agreement online. The fund can
apply for an installment agreement online if:
• It cannot pay the full amount shown on line 18,
• The total amount owed is $25,000 or less, and
• The fund can pay the liability in full in 24 months.
To apply using the Online Payment Agreement
Application, go to IRS.gov/OPA.
Under an installment agreement, the fund can pay what
it owes in monthly installments. There are certain
conditions that must be met to enter into and maintain an
installment agreement, such as paying the liability within
24 months and making all required deposits and timely
filing tax returns during the length of the agreement.
If the installment agreement is accepted, the fund will
be charged a fee and it will be subject to penalties and
interest on the amount of tax not paid by the due date of
the return.
Line 19. Overpayment. If there is an overpayment on
line 19, enter the amount the fund wants refunded on
line 20b. See the instructions for line 20b, later. The fund
can also choose to have all or part of the overpayment
credited to next year’s estimated tax by completing
line 20a. See the instructions for line 20a next.
Line 20a. Credited to next year’s estimated tax. The
fund can elect to apply all or part of the fund’s
overpayment to next year’s estimated tax. Enter the
amount from line 19 that the fund wants applied to next
year’s estimated tax.
Line 20b. Refunded. Enter the amount to be refunded
to the fund on line 20b. If the fund has access to U.S.
banking services, it should use direct deposit for any
refunds, whenever possible.
The benefits of a direct deposit include a faster refund,
the added security of a paperless payment, and the
savings of tax dollars associated with the reduced
processing costs.
Direct deposit of refund. If the fund wants its refund
directly deposited into its checking or savings account at
any U.S. bank or other financial institution, complete lines
20c through 20e. See the instructions for lines 20c, 20d,
and 20e, later.
The fund isn’t eligible to request a direct deposit if:
• The receiving financial institution is a foreign bank or a
foreign branch of a U.S. bank, or
• The fund has applied for an EIN but is filing its tax return
before receiving one.

Instructions for Form 1120-SF (Rev. 12-2025)

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Deductions

Don’t deduct:
• Expenses allocable to tax-exempt income (see section
265);
• Payments of claims made by the fund; and
• Expenses incurred by, or on behalf of, claimants or
transferors.

doesn’t have to file this form because the IRS can figure
the amount of any penalty and bill the fund for it. See Form
2220 for other information that may apply.
If Form 2220 is attached, check the box on line 17 and
enter the amount of any penalty on that line.

TREASURY/IRS AND OMB USE ONLY DRAFT
Line 20c. Routing number. The routing number must be
nine digits. The first two digits must be 01 through 12 or 21
through 32. Enter the financial institution’s routing number
and verify that the institution will accept a direct deposit.
Ask the fund’s financial institution for the correct routing
number to enter on line 20c if:
• The routing number on a deposit slip is different from
the routing number on the fund’s checks,
• The deposit is to a savings account that doesn’t allow
the fund to write checks, or
• The fund’s checks state they are payable through a
financial institution different from the one at which the
account is located.

Line 20e. Account number. The account number can
be up to 17 characters (both numbers and letters). Include
hyphens but omit spaces and special symbols. Enter the
number from left to right and leave any unused boxes
blank. Don’t include the check number.
If the direct deposit to the fund’s account is different
from the amount it expected, the fund will receive an
explanation in the mail about 2 weeks after the refund is
deposited.
Conditions resulting in a refund by check. If the IRS is
unable to process the request for a direct deposit, a refund
by check will be generated instead. Reasons for not
processing a request include the following.
• The name of the fund on the tax return doesn’t match
the name on the account.
• The financial institution rejects the direct deposit
because of an incorrect routing or account number.
• The fund fails to indicate the type of account the deposit
is to be made to (that is, checking or savings).

Instructions for Form 1120-SF (Rev. 12-2025)

Paperwork Reduction Act Notice. We ask for the
information on this form to carry out the Internal Revenue
laws of the United States. You are required to give us the
information. We need it to ensure that you are complying
with these laws and to allow us to figure and collect the
right amount of tax.
You aren’t required to provide the information requested
on a form that is subject to the Paperwork Reduction Act
unless the form displays a valid OMB control number.
Books or records relating to a form or its instructions must
be retained as long as their contents may become
material in the administration of any Internal Revenue law.
Generally, tax returns and return information are
confidential, as required by section 6103.
The time needed to complete and file this form will vary
depending on individual circumstances. The estimated
burden for business taxpayers filing this form is approved
under OMB control number 1545-0123 and is included in
the estimates shown in the instructions for their business
income tax return.
If you have comments concerning the accuracy of
these time estimates or suggestions for making this form
simpler, we would be happy to hear from you. You can
send us comments through IRS.gov/FormComments. Or
you can write to the Internal Revenue Service, Tax Forms
and Publications, 1111 Constitution Ave. NW, IR-6526,
Washington, DC 20224.
Don’t send Form 1120-SF to this office. Instead, see
Where To File, earlier.

7

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Line 20d. Type of account. Check the appropriate box
for the type of account. Don’t check more than one box.
The fund must check the correct box to ensure the deposit
is accepted.

Note: The IRS isn’t responsible for a lost refund if the
fund enters the wrong account information. Check with the
fund’s financial institution to get the correct routing and
account numbers and to make sure the direct deposit will
be accepted.