Why is an 1120 return not producing Schedule K-1s?
Because corporations are taxed at the entity level and are not considered pass-through entities, corporate 1120 returns do not produce Schedule K-1s for shareholders to use in reporting income.
According to Publication 542, Corporations,
"A corporate distribution to a shareholder is generally treated as a distribution of earnings and profits. Any part of a distribution from either current or accumulated earnings and profits is reported to the shareholder as a dividend. Any part of a distribution that is not from earnings and profit is applied against and reduces the adjusted basis of the stock in the hands of the shareholder. To the extent the balance is more than the adjusted basis of the stock, the shareholder has a gain (usually a capital gain) from the sale or exchange of property."