Reject Code: F1120-353-03 If Form 1120, Item D, 'TotalAssetsAmt' is less than 250000 and if the sum of (Line 1a "GrossReceiptsOrSalesAmt" and (Lines 4, 'TotDividensInclusionRcvdAmt', Line 5 'TaxableInterestAmt', Line 6 'GrossRentsAmt', Line 7 'GrossRoyaltiesAmt', Line 8 'CapitalGainNetIncomeAmt', Line 9 'TotalOridinaryGainLossAmt', through Line 10 'OtherIncomeAmt')) is less than 250,000, then Form 1120, Schedule K, Line 13, 'TotalRcptsAssetsLessThanLmtInd' must have a choice of "Yes" indicated.
IRS Reject Code F1120-353-03 occurs when Form 1120, Line D, Total Assets and the sum of income lines 4 through 10 total less than $250,000 but Schedule K, Line 13, "Are the corporation's total receipts and assets at the end of the tax year less than $250,000?" is marked No. To correct reject code F1120-259-01, change the question on Schedule K to Yes.
In the images below, Form 1120, line D and line 11 do not add up to greater than $250,000, so Schedule K, line 13 on the printed form, (menu line 17 in the Schedule K menu) needs to be changed to Yes:
Additional Information:
IRS: Instructions for Form 1120
Creating a Basic 1120 Corporation Tax Return