Tax E Filing Research

Professional Options ($200-$1000+)

Recommendation for SKEstates Inc: For a first-time filer with a simple NNN property return, FreeTaxUSA Business or TaxAct Business are the best value. Both support Form 1120, 8825, 4562, Schedule K, and M-1 reconciliation.

Step-by-Step: Form 1120 Filing Process

Preparation (Before E-File)

1. Gather all documents:

   • EIN confirmation letter (CP 575 or 147C)
   • Form 1099-MISC from Family Dollar
   • Bank statements for all months
   • Property purchase documents (HUD Settlement Statement)
   • Property tax bills and receipts
   • Insurance premium invoices
   • HOA fee invoices
   • Cost segregation analysis

2. Calculate key numbers:

   • Total rental income (actual deposits, not just 1099)
   • Total deductions (property tax, insurance, HOA, management, depreciation)
   • Net income or NOL
   • Depreciation (Form 4562)

Form 1120 Line Items for NNN Property

Additional Required Forms

Form 8825 (Rental Real Estate Income and Expenses):

• Part I, Line 1a: Gross rents
• Part I, Line 3: Royalties (if applicable)
• Part I, Lines 4-19: Expenses (taxes, insurance, repairs, mgmt, etc.)
• Part I, Line 20: Depreciation (from 4562)
• Part I, Line 21: Total expenses
• Part I, Line 22: Net income or loss

Form 4562 (Depreciation and Amortization):

• Part I: Election to expense certain depreciable property (§179)
• Part II: Special Depreciation Allowance (bonus depreciation)
• Part III: MACRS Depreciation (building, land improvements)
• Part VI: Short-term/long-term property

Texas Franchise Tax Filing

No-Tax-Due Report

Steps:

1. Go to comptroller.texas.gov
2. Select "Franchise Tax" → "File Forms Online"
3. Click "Webfile"
4. Log in or create account (first-time requires creation)
5. Select "No-Tax-Due Report"
6. Enter:
   • EIN: 39-2384131
   • Total Revenue (from Form 1120, Line 1a through 6)
   • Entity type: Corporation
7. Review and submit
8. Save confirmation number

Required Information:

• EIN
• Texas SOS File Number
• Total Revenue from Form 1120
• Accounting method (same as federal return)

If Revenue Exceeds Threshold (~$2.47M)

• Must calculate margin tax
• May need to file Form 05-102 (Franchise Tax Report)
• Tax rate: 0.75% (most entities) or 0.375% (retail/wholesale)
• No-tax-due report still recommended as backup

Paper Filing Backup

Federal Form 1120 (Mail)

Where to Mail:

• Department of the Treasury
• Internal Revenue Service Center
• Ogden, UT 84201

What to Include:

• Form 1120 (all pages)
• Schedule K
• Schedule M-1 (if required)
• Form 8825
• Form 4562
• Any supporting schedules
• Check for tax due (if any)
• Copy of 1099-MISC (if different from reported income, include explanatory statement)

Recommended: Send via Certified Mail, Return Receipt Requested

Texas Franchise Tax (Mail)

• Texas Comptroller of Public Accounts

• P.O. Box 13528

• Austin, TX 78711-3528

• Use Form 05-102 (Franchise Tax Report)

• Mark "No Tax Due" if applicable

E-Filing vs Paper Filing

Recommendation: E-file whenever possible. The built-in validation and immediate confirmation are worth the small cost for peace of mind and audit trail.

Common Filing Errors to Avoid

1. Wrong EIN or entity name — must match IRS records exactly
2. Missing Form 8825 — required for all rental real estate income
3. Depreciation errors — most common error on NNN returns
4. Not reporting reimbursements — they are taxable income
5. Wrong tax year — first-year short period (May 27 to Dec 31, 2025 for SKEstates)
6. Missing M-1 — required when total assets or gross receipts > $250,000
7. Not signing — must be signed by authorized officer
8. Not including state filing — TX franchise tax due May 15