Arkansas AR1100S: filing the 2025 S corporation income tax return

Form AR1100S is the annual Arkansas income tax return of a corporation that has an S election in effect with the IRS. The 2025 version (revision June 24, 2025) has two pages: page 1 carries the header, income and deductions on lines 7 to 27 and the tax and payment lines 28 to 37; page 2 holds Schedule A for multistate apportionment and Schedule D for the capital gains and built-in gains tax. The election generally lets the corporation’s taxable income be taxed to its shareholders, so the return goes in together with an Arkansas Schedule AR K-1 for every shareholder and a copy of the federal return.

Who files Form AR1100S, and who files something else

Arkansas follows the federal election. Ark. Code Ann. § 26-51-409(b) treats a federal Subchapter S election as made for Arkansas too, and for tax years beginning on or after January 1, 2018 a federal S corporation can no longer choose to file in Arkansas as a C corporation. The instructions require Form AR1100S when the corporation is treated as an S corporation by the IRS and the election remains in effect, and it has to file if it is organized or registered in Arkansas or has Arkansas-source income.

Several situations lead somewhere else:

• An S corporation that elected the Arkansas pass-through entity tax does not file the AR1100S. It files the PET return instead and, when paying by check with a paper return, the Form AR1100PTV voucher.
• A qualified subchapter S subsidiary (QSSS) may not file its own Arkansas corporation return. The parent includes it on the parent’s AR1100S, checks filing status 4 and attaches a schedule listing each QSSS by name and FEIN, writing “NO FEIN” where an entity has none.
• A composite return for nonresident shareholders is filed on Form AR1000CR with the Individual Income Tax Section, (501) 682-1100, and composite estimated payments use the AR1000CRES voucher.

Filing the AR1100S does not settle the shareholders’ tax. The instructions say every resident and nonresident shareholder of an S corporation doing business in Arkansas files an individual return: AR1000 for residents, AR1000NR for nonresidents, or inclusion in an AR1000CR composite return. If a nonresident shareholder fails to report and pay, the Director may revoke the corporation’s S election and collect the tax from the corporation (ACA 26-51-409(c)(2)).

What goes in the envelope or the e-file upload

The return itself says to attach a completed copy of the federal return, to attach all AR K-1 forms, and not to staple anything. The 2025 instructions and the form’s line captions add the rest:

• A copy of the federal income tax return (ACA 26-51-409(b)(3)).
• One Schedule AR K-1 for each shareholder.
• Balance sheets as of the beginning and close of the year and a reconciliation of surplus. If the opening balance sheet differs from last year’s closing one, a reconciliation schedule.
• Schedules for line 8 (cost of goods sold, with the inventory method explained), line 11 (other income), line 16 (bad debts) and line 25 (other deductions), and federal Form 4562 for line 20.
• For multistate filers: Form AR1100ADJ for the add and deduct adjustments on Schedule A, a schedule of income directly allocated to Arkansas, and Form AR-718 if special industry or alternative apportionment applies.
• The QSSS schedule for filing status 4, and Form AR1100-WH if line 32 has an amount.
• Any Arkansas extension (Form AR1155), which the instructions say must be attached to the return.
• A copy of any IRS approval to change the accounting method or income year.

Filling in page 1 of the AR1100S

The image marks the parts of page 1 that the sections below refer to: E for the two extension checkboxes, F for the filing status, the line numbers for the lines discussed, and S for the officer’s signature. Lines 7 to 27 have two columns, TOTAL and ARKANSAS; lines 28 to 37 have only the Arkansas column.

Header boxes

The instructions list the header items that speed up processing: tax year beginning and ending dates; name, address, city, state and ZIP; date of incorporation; FEIN; NAICS code, the same one used on the federal return; date business began in Arkansas; filing status; and type of corporation, domestic (in state) or foreign (out of state), one box only. Above them, check INITIAL, AMENDED or FINAL (going out of business) when it applies, and the cooperative association box if the corporation is one.

The two boxes marked E tell DFA that federal Form 7004 or Arkansas Form AR1155 was filed. No copy of Form 7004 is needed any more.

Filing status (F) takes one box: 1 for an S corporation operating only in Arkansas, 2 for a multistate S corporation using apportionment, 3 for multistate direct accounting, which needs DFA’s prior written approval, and 4 for an S corporation with QSSS entities. A note on Schedule A says that if all the factors in its Section B are 100%, the return should be filed as status 1 and Schedule A is not completed.

Income and deductions, lines 7 to 27

Lines 7 to 27 take trade or business activity only. Rental activity and portfolio income and expenses stay off these lines; the Arkansas portion of them goes to each shareholder on the AR K-1.

Tax and payments, lines 28 to 37

The officer’s signature (S) is required. Under ACA 26-51-804(b) the president, vice-president, treasurer or another principal officer certifies the return; a receiver, trustee in bankruptcy or assignee running the business signs instead. A paid preparer signs below, gives a FEIN or PTIN, and the corporation answers whether DFA may discuss the return with that preparer.

Line 28 and Schedule D: the taxes the corporation pays itself

The S corporation pays Arkansas tax at the entity level only through lines 28 and 29.

Line 28 can apply only to a corporation that has C corporation earnings and profits at the close of the year, passive investment income above 25% of gross receipts and taxable income at year end. The worksheet in the instructions starts with Arkansas gross receipts (line 1), passive investment income (line 2) and 25% of line 1 (line 3); if line 2 is less than line 3, there is no tax. Otherwise lines 4 to 10 work out the excess net passive income, and line 11 is 4.3% of line 10. Taxable income on worksheet line 9 follows IRC 1374(d) and is figured on lines 9 to 27 of page 1 or on Schedule A of Form AR1100CT; that AR1100CT computation is attached with the worksheet.

Schedule D on page 2 has two parts. The instructions say a corporation whose Arkansas net capital gain is $25,000 or less does not owe the capital gains tax, and $25,000 is printed as the statutory minimum on Part A, line 4.

• Part A, for elections made before 1987: taxable income and the tax on it (lines 1 and 2), net long-term capital gain less net short-term capital loss (line 3), the $25,000 minimum (line 4), 4.3% of the remainder (lines 5 and 6), and the smaller of line 2 or line 6 on line 7.
• Part B, for elections made after December 31, 1986: taxable income (line 1), recognized built-in gain (line 2), the smaller of the two (line 3), the Section 1374(b)(2) deduction (line 4), and 4.3% of what is left on line 6.

Multistate corporations multiply Part A line 3 and Part B line 2 by the Schedule A apportionment percentage. Both parts send the reader to the IRS instructions to decide whether the corporation is liable at all.

Schedule A for a multistate S corporation

A multistate S corporation that apportions its income completes Schedule A on page 2. Part A starts from page 1, line 27, Total column, then adds and deducts the federal to Arkansas adjustments from Form AR1100ADJ (lines 2 and 3) to reach total apportionable income on line 4. Examples in the instructions: Arkansas income taxes deducted, federal bonus depreciation and partnership losses are added; Arkansas depreciation, Arkansas charitable contributions and partnership income are deducted.

Part B is a single sales factor, required for all multistate taxpayers since tax years beginning in 2021 unless an alternative method is required or approved in advance. Column A is Arkansas, column B is everywhere, and column C is A divided by B, carried to six decimal places (the instructions’ example is 26.123456%). Receipts are gross, not net.

• Lines 1a and 1b: destination sales to Arkansas buyers, shipped from inside or outside the state.
• Line 1c: sales shipped from Arkansas to a buyer in a state where the corporation is not taxable. The throwback is being phased out under Act 485 of 2023, and for 2025 the instructions put 71.42% of these sales in Arkansas.
• Lines 3d to 3j: capital and ordinary gains, dividends, interest, rents, royalties, services, and other business gross receipts with a schedule. Line 3k totals everything.
• Line 4: check the box and carry the percentage from Form AR-718, line 5, column C, when special industry or alternative apportionment applies. The instructions list construction contractors, broadcasters, publishers, airlines, bus and trucking companies, pipelines, railroads and private railcar operators.
• Line 5: the Arkansas percentage, from line 3k column C or from AR-718.

Part C multiplies Part A line 4 by Part B line 5 (line 1), adds income directly allocated to Arkansas (line 2) and gives total income taxable to Arkansas on line 3, which is also entered on page 1, line 27, Arkansas column. Partnership income is handled in two steps: it is deducted on Part A line 3 (a partnership loss is added on line 2), and the Arkansas share from the partnership’s AR K-1 goes on Part C line 2, with Forms AR K-1 and, if withholding is claimed, AR1099PT attached.

Depreciation and Section 179: where the 2025 documents differ

Arkansas does not follow federal bonus depreciation, and the AR1100REC instructions add that the provisions of P.L. 119-21, the One Big Beautiful Bill Act, have not been adopted. When the Arkansas Section 179 deduction differs from the federal one, the booklet asks for a Form 4562 schedule showing the Arkansas computation. Section 179 carryforwards from earlier years count only if Arkansas depreciation was not claimed in those years.

Two DFA documents disagree on the details. The line 20 instructions in the 2025 S corporation booklet give a Section 179 limit of $1,220,000 with the phaseout starting at $3,050,000 for tax years beginning on or after January 1, 2024, and say Form AR1100REC must be completed by any taxpayer filing a corporation income tax or pass-through entity tax return that claims Section 179. The same booklet’s reminders on page 5, and the AR1100REC instructions revised September 19, 2025 under “Current limitations (2025)”, give $1,250,000 and $3,130,000. The AR1100REC instructions also say S corporations are not required to complete AR1100REC but may attach it, and that an S corporation reports its Section 179 expense on AR K-1, line 13a. Until DFA reconciles the two, a corporation claiming Section 179 can ask the Corporation Income Tax Section at (501) 682-4775 or corporate.income@dfa.arkansas.gov which limit and attachment apply.

The shareholders’ Schedule AR K-1

The AR K-1 is required with the return, one for each shareholder. Items A and B identify the corporation, items C and D the shareholder, item E asks whether the shareholder is an Arkansas resident (and the state of residence if not; it may not be left blank), item F gives the percentage of stock owned, and item H the Arkansas apportionment percentage, which should match the return. Boxes 1 to 20 carry the shareholder’s share of each item, including the Section 179 deduction in box 13 and Arkansas withholding or other payments in box 20. The booklet says each amount is the Arkansas total for the item multiplied by the shareholder’s ownership percentage.

What changed for 2025

The “What’s New for 2025” page of the S corporation instructions lists these acts:

• Act 696 of 2025 exempts USDA relief payments under the American Relief Act of 2025 from income tax.
• Act 701 of 2025 amends the Wood Energy Products and Forest Tax Credit.
• Act 838 of 2025 amends the Natural State Opportunity Zone incentive.
• Act 881 of 2025 creates a credit for relocating a corporate headquarters to Arkansas, and Act 882 a credit for modernization and automation.
• Act 719 of 2025 brings market-based sourcing for services and intangibles, apportionable income in place of business income, alternative apportionment rules on the MTC model, and a $250,000 receipts nexus threshold. These take effect for tax years beginning on or after January 1, 2026, so the 2025 Schedule A still uses the current rules.

The 2025 AR K-1 instructions also note that the column order has changed: column (a) now holds the full amounts for Arkansas residents and column (b) the amounts allocated or apportioned to Arkansas for nonresidents and part-year residents.

Due date, extensions and payment

The AR1100S is due on or before the 15th day of the fourth month after the tax year closes: April 15, 2026 for a calendar 2025 return. With an automatic federal extension on Form 7004, the Arkansas return is due on the federal extended due date, and the box at the top of the return is checked. Form AR1155 requests 180 days from the original Arkansas due date, or 60 days beyond the federal extended date; the Form AR1155 guide covers both choices.

No extension moves the payment date. Tax not paid by the original due date carries interest at 10% a year, figured at a daily rate of .00027397, and a failure to pay penalty. The 2025 instructions list these penalties:

• Failure to file on time, and failure to pay on time: 5% per month each, up to 35%.
• Underestimate: 10% of the underestimated amount.
• Failure to file a return, and failure to comply: $50 each.
• Failure to make a required EFT payment: 5% of the tax due.
• Incomplete electronic payment: 10% of the draft or $20, whichever is greater.

A balance due on line 34 is paid by check or money order payable to “Department of Finance and Administration”, with the corporation’s FEIN written on it and attached to the return, or online through ATAP. Payments sent with the return cannot be made by EFT. A check for an e-filed return, or one mailed with a paper AR1100S, travels with the Form AR1100CTV voucher, whose instructions name the AR1100S. Estimated tax is required from any taxpayer who can reasonably expect to owe more than $1,000.

Amended returns and IRS changes

An amended return uses the same form with the AMENDED box checked, the amended total tax on line 30 and the tax paid or refunded so far on line 33. A federal Revenue Agent Report must be reported to Arkansas within 180 days of receipt, and an amended return filed on or after the 181st day after the IRS notice cannot produce a refund (ACA 26-18-306(b)(3)(B)). If an RAR is not disclosed, the assessment period stays open for three years.