Formulaire 1120-S Instructions pour l'annexe K-1
Instructions de l'actionnaire pour l'annexe K-1 (formulaire 1120-S), Part du revenu, retenues, crédits, etc. (Pour l'utilisation de l'actionnaire seulement)
Rév. 2023
Formulaires associés
- Formulaire 1120-S Annexe K-1 - Part du revenu, des déductions, des crédits, etc.
Department of the Treasury
Internal Revenue Service
2023
Shareholder's Instructions
for Schedule K-1
(Form 1120-S)
Shareholder's Share of Income, Deductions, Credits, etc.
(For Shareholder's Use Only)
Section references are to the Internal Revenue Code
Future Developments
unless otherwise noted.
For the latest information about developments related to
Schedule K-1 (Form 1120-S) and its instructions, such as
legislation enacted after they were published, go to
Contents
Page
General Instructions
Purpose of Schedule K-1
The corporation uses Schedule K-1 to report your share of
the corporation's income, deductions, credits, and other
items. Keep it for your records. Don't file it with your tax
return unless backup withholding is reported in box 13
using code O. (See the instructions for Code O. Backup
withholding, later.) The corporation files a copy of
Schedule K-1 with the IRS.
Limitations on Losses, Deductions, and
For your protection, Schedule K-1 may show only the
last four digits of your identifying number (social security
number (SSN), employer identification number (EIN), or
individual taxpayer identification number (ITIN)). However,
the corporation has reported your complete identifying
number to the IRS.
You may be liable for tax on your share of the
corporation's income, whether or not distributed. Include
your share on your tax return if a return is required. Use
these instructions to help you report the items shown on
Schedule K-1 on your tax return.
Your share of S corporation income isn't
self-employment income and it isn't subject to
self-employment tax.
The amount of loss and deduction you may claim
on your tax return may be less than the amount
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CAUTION
reported on Schedule K-1. It is the shareholder's
responsibility to consider and apply any applicable
limitations. See Limitations on Losses, Deductions, and
Credits, later, for more information.
Schedule K-1 doesn't show actual dividend
distributions the corporation made to you. The corporation
must report such amounts totaling $10 or more for the
calendar year on Form 1099-DIV, Dividends and
Distributions.
Box 18. More Than One Activity for At-Risk
Box 19. More Than One Activity for Passive
Inconsistent Treatment of Items
Generally, you must report corporate items shown on your
Schedule K-1 (and any attached statements) the same
way that the corporation treated the items on its return.
Jan 9, 2024
Cat. No. 11521O
If the treatment on your original or amended return is
inconsistent with the corporation's treatment, or if the
corporation hasn't filed a return, file Form 8082, Notice of
Inconsistent Treatment or Administrative Adjustment
Request (AAR), with your original or amended return to
identify and explain any inconsistency (or to note that a
corporate return hasn't been filed).
Elections
Generally, the corporation decides how to figure taxable
income from its operations. However, certain elections are
made by you separately on your income tax return and not
by the corporation. These elections are made under the
following code sections.
Section 59(e) (deduction of certain qualified
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expenditures ratably over the period of time specified in
that section). For details, see the instructions for code J in
box 12.
If you are required to file Form 8082 but don't do so, you
may be subject to the accuracy-related penalty. This
penalty is in addition to any tax that results from making
your amount or treatment of the item consistent with that
shown on the corporation's return. Any deficiency that
results from making the amounts consistent may be
assessed immediately.
Section 263A(d) (preproductive expenses). See the
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instructions for code M in box 12.
Section 617 (deduction and recapture of certain mining
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exploration expenditures).
Section 901 (foreign tax credit).
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Errors
Additional Information
If you believe the corporation has made an error on your
Schedule K-1, notify the corporation and ask for a
corrected Schedule K-1. Don't change any items on your
copy of Schedule K-1. Be sure that the corporation sends
a copy of the corrected Schedule K-1 to the IRS. If you are
unable to reach an agreement with the corporation
regarding the inconsistency, file Form 8082.
For more information on the treatment of S corporation
income, deductions, credits, and other items, see Pub.
550, Investment Income and Expenses; and Pub. 925,
Passive Activity and At-Risk Rules.
To get forms and publications, see the instructions for
your tax return or visit the IRS website at IRS.gov.
Decedent's Schedule K-1
Limitations on Losses, Deductions,
and Credits
If you are the executor of an estate and you have received
a decedent's Schedule K-1, then you have the
There are potential limitations on corporate losses that
you can deduct on your return. These limitations and the
order in which you must apply them are as follows: the
basis limitations, the at-risk limitations, the passive activity
limitations, and the excess business loss limitations.
These limitations are discussed below.
responsibility to notify the S corporation of the name and
tax identification number (TIN) of the decedent’s estate if
the S corporation stock is part of a decedent’s estate. This
is information that the S corporation must have to properly
determine its eligibility to maintain status as a subchapter
S corporation. If a decedent died in a prior year and the S
corporation continues to send the decedent a Schedule K-
1 after being notified of the decedent’s death, then you
should request that the S corporation send a corrected
Schedule K-1. If you receive an interest in an S
Other limitations may apply to specific deductions (for
example, the section 179 expense deduction). Specific
limitations generally apply before at-risk and passive loss
limitations.
corporation by reason of a former shareholder’s death,
you must provide the S corporation with your name and
TIN. For treatment of S corporation income upon the
death of a shareholder, see Pub. 559, Survivors,
Basis Limitations
Generally, the deduction for your share of aggregate
losses and deductions reported on Schedule K-1 is
limited to the basis of your stock and loans from you to the
corporation. For details and exceptions, see section
1366(d). The basis of your stock is generally figured at the
end of the corporation's tax year. Any losses and
deductions not allowed this year because of the basis limit
can be carried forward indefinitely and deducted in a later
year subject to the basis limit for that year.
Executors, and Administrators.
Sale of S Corporation Stock
Gain or loss from the disposition of your S corporation
stock may be net investment income under section 1411
and could be subject to the net investment income tax.
See Form 8960, Net Investment Income Tax—Individuals,
Estates, and Trusts, and its instructions for information
about how to figure and report the tax.
You are responsible for keeping the information needed
to figure the basis of your stock in the corporation.
Schedule K-1 provides information to help you figure your
stock basis at the end of each corporate tax year. The
basis of your stock (generally, its cost) is adjusted
annually as follows and, except as noted, in the order
listed. In addition, basis may be adjusted under other
provisions of the Internal Revenue Code. You should
generally use Form 7203, S Corporation Shareholder
Stock and Debt Basis Limitations, to figure your aggregate
stock and debt basis.
International Boycotts
Every corporation that had operations in, or related to, a
boycotting country, company, or a national of a boycotting
country must file Form 5713, International Boycott Report.
If the corporation cooperated with an international
boycott, it must give you a copy of its Form 5713. You
must file your own Form 5713 to report the corporation's
activities and any other boycott operations that you may
have. You may lose certain tax benefits if the corporation
participated in, or cooperated with, an international
boycott. See Form 5713 and its instructions for details.
1. Basis is increased by (a) all income (including
tax-exempt income) reported on Schedule K-1, and (b)
the excess of the deduction for depletion (other than oil
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Instructions for Schedule K-1 (Form 1120-S) (2023)
and gas depletion) over the basis of the property subject
to depletion.
production of income by the corporation, and (b) amounts
in the activity for which you aren't at risk, you will have to
complete Form 6198, At-Risk Limitations, to figure your
allowable loss for the activity.
You must report on your return (if you are required
to file one) any amount required to be included in
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CAUTION
gross income for it to increase your basis.
The at-risk rules generally limit the amount of loss and
other deductions that you can claim to the amount you
could actually lose in the activity. These losses and
deductions include a loss on the disposition of assets and
the section 179 expense deduction. However, if you
acquired your stock before 1987, the at-risk rules don't
apply to losses from an activity of holding real property
placed in service before 1987 by the corporation. The
activity of holding mineral property doesn't qualify for this
exception.
2. Basis is decreased (but not below zero) by (a)
property distributions (including cash) made by the
corporation reported on Schedule K-1, box 16, code D,
minus (b) the amount of such distributions in excess of the
basis in your stock.
3. Basis is decreased (but not below zero) by (a)
nondeductible expenses, and (b) the depletion deduction
for any oil and gas property held by the corporation, but
only to the extent your share of the property's adjusted
basis exceeds that deduction.
Generally, you aren't at risk for amounts such as the
following.
4. Basis is decreased (but not below zero) by all
The basis of your stock in the corporation or the basis of
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losses and deductions reported on Schedule K-1.
your loans to the corporation if the cash or other property
used to purchase the stock or make the loans was from a
source (a) covered by nonrecourse indebtedness (except
for certain qualified nonrecourse financing, as defined in
section 465(b)(6)); (b) protected against loss by a
guarantee, stop-loss agreement, or other similar
arrangement; or (c) that is covered by indebtedness from
a person who has an interest in the activity or from a
person related to a person (except you) having such an
interest, other than a creditor.
You may elect to decrease your basis under (4) prior to
decreasing your basis under (3). If you make this election,
any amount described under (3) that exceeds the basis of
your stock and debt owed to you by the corporation is
treated as an amount described under (3) for the following
tax year.
To make the election, attach a statement to your timely
filed original or amended return that states you agree to
the carryover rule of Regulations section 1.1367-1(g) and
the name of the S corporation to which the rule applies.
Once made, the election applies to the year for which it is
made and all future tax years for that S corporation, unless
the IRS agrees to revoke your election.
The basis of each share of stock is increased or
decreased (but not below zero) based on its pro rata
share of the above adjustments. If the total decreases in
basis attributable to a share exceed that share's basis, the
excess reduces (but not below zero) the remaining bases
of all other shares of stock in proportion to the remaining
basis of each of those shares.
Basis of loans. The basis of your loans to the
corporation is generally the balance the corporation owes
you, adjusted for any reductions and restorations of loan
basis (see the instructions for box 16, code E). Any
amounts described in (3) and (4), earlier, not used to
offset amounts in (1), earlier, or to reduce your stock
basis, are used to reduce your loan basis (to the extent of
such basis prior to such reduction).
Any cash or property contributed to a corporate activity,
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or your interest in the corporate activity, that is (a) covered
by nonrecourse indebtedness (except for certain qualified
nonrecourse financing, as defined in section 465(b)(6));
(b) protected against loss by a guarantee, stop-loss
agreement, or other similar arrangement; or (c) covered
by indebtedness from a person who has an interest in the
activity or from a person related to a person (except you)
having such an interest, other than a creditor.
Any loss from a section 465 activity not allowed for this
tax year will be treated as a deduction allocable to the
activity in the next tax year.
Since at-risk limitations apply for each activity, you
should get a separate statement of income, expenses,
and other items, for each activity from the corporation.
Note. Schedule K-1, box 18, will be checked when a
statement is attached.
Passive Activity Limitations
When determining your basis in loans to the
corporation, remember that:
Section 469 provides rules that limit the deduction of
certain losses and credits. These rules apply to
shareholders who:
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CAUTION
Distributions don't reduce loan basis, and
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Loans that a shareholder guarantees or co-signs aren't
Are individuals, estates, or trusts; and
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part of a shareholder's loan basis. Shareholders only
obtain basis from acting as a guarantee or in a similar
capacity to the extent the shareholder makes a payment
pursuant to the guarantee.
Have a passive activity loss or credit for the tax year.
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Generally, passive activities include:
1. Trade or business activities in which you didn't
materially participate, and
See the Instructions for Form 7203 for more details.
2. Activities that meet the definition of rental activities
under Temporary Regulations section 1.469-1T(e)(3) and
Regulations section 1.469-1(e)(3).
At-Risk Limitations
Generally, if you have (a) a loss or other deduction from
any activity carried on as a trade or business or for the
Passive activities don't include the following.
Instructions for Schedule K-1 (Form 1120-S) (2023)
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1. Trade or business activities in which you materially
participated.
2. Rental real estate activities in which you materially
participated if you were a real estate professional for the
tax year. You were a real estate professional only if you
met both of the following conditions.
a. More than half of the personal services you
performed in trades or businesses were performed in real
property trades or businesses in which you materially
participated.
b. You performed more than 750 hours of services in
real property trades or businesses in which you materially
participated.
certain retired or disabled farmers and to the surviving
spouses of farmers. See the Instructions for Form 8582 for
details.
Individuals. If you are an individual, you materially
participated in an activity only if one or more of the
following apply.
1. You participated in the activity for more than 500
hours during the tax year.
2. Your participation in the activity for the tax year
constituted substantially all the participation in the activity
of all individuals (including individuals who aren't owners
of interests in the activity).
3. You participated in the activity for more than 100
hours during the tax year, and your participation in the
activity for the tax year wasn't less than the participation in
the activity of any other individual (including individuals
who weren’t owners of interests in the activity) for the tax
year.
4. The activity was a significant participation activity
for the tax year, and you participated in all significant
participation activities (including activities outside the
corporation) during the year for more than 500 hours. A
significant participation activity is any trade or business
activity in which you participated for more than 100 hours
during the year and in which you didn't materially
participate under any of the material participation tests
(other than this test).
If you are married filing jointly, either you or your spouse
must separately meet both (a) and (b) of the above
conditions, without taking into account services performed
by the other spouse.
A real property trade or business is any real property
development, redevelopment, construction,
reconstruction, acquisition, conversion, rental, operation,
management, leasing, or brokerage trade or business.
Services you performed as an employee aren't treated as
performed in a real property trade or business unless you
owned more than 5% of the stock (or more than 5% of the
capital or profits interest) in the employer.
3. The rental of a dwelling unit any shareholder used
for personal purposes during the year for more than the
greater of 14 days or 10% of the number of days that the
residence was rented at fair rental value.
5. You materially participated in the activity for any 5
tax years (whether or not consecutive) during the 10 tax
years that immediately precede the tax year.
4. Activities of trading personal property for the
6. The activity was a personal service activity and you
materially participated in the activity for any 3 tax years
(whether or not consecutive) preceding the tax year. A
personal service activity involves the performance of
personal services in the fields of health, law, engineering,
architecture, accounting, actuarial science, performing
arts, consulting, or any other trade or business in which
capital isn't a material income-producing factor.
account of owners of interests in the activities.
If you have a passive activity loss or credit, use Form
8582, Passive Activity Loss Limitations, to figure your
allowable passive losses, and Form 8582-CR, Passive
Activity Credit Limitations, to figure your allowable passive
credits. See the instructions for these forms for details.
If the corporation has more than one activity, it will
attach a statement to your Schedule K-1 that identifies
each activity (trade or business activity, rental real estate
activity, rental activity other than rental real estate,
portfolio income) and specifies the income (loss),
deductions, and credits from each activity.
7. Based on all the facts and circumstances, you
participated in the activity on a regular, continuous, and
substantial basis during the tax year.
Work counted toward material participation.
Generally, any work that you or your spouse does in
connection with an activity held through an S corporation
(where you own your stock at the time the work is done) is
counted toward material participation. However, work in
connection with the activity isn't counted toward material
participation if either of the following applies.
1. The work isn't the type of work that owners of the
activity would usually do, and one of the principal
purposes of the work that you or your spouse does is to
avoid the passive loss or credit limitations.
Note. Schedule K-1, box 19, will be checked when a
statement is attached.
Material participation. You must determine if you
materially participated (a) in each trade or business
activity held through the corporation, and (b) if you were a
real estate professional (defined earlier), in each rental
real estate activity held through the corporation.
Each interest in rental real estate is a separate activity,
unless you elect to treat all interests in rental real estate as
one activity. For details on making this election, see the
Instructions for Schedule E (Form 1040), Supplemental
Income and Loss.
2. You do the work in your capacity as an investor and
you aren't directly involved in the day-to-day operations of
the activity. Examples of work done as an investor that
wouldn't count toward material participation include:
All determinations of material participation are based
a. Studying and reviewing financial statements or
on your participation during the corporation's tax year.
reports on operations of the activity,
Material participation standards for shareholders who
are individuals are listed below. Special rules apply to
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Instructions for Schedule K-1 (Form 1120-S) (2023)
b. Preparing or compiling summaries or analyses of
the finances or operations of the activity for your own use,
and
participation include approving new tenants, deciding
rental terms, approving capital or repair expenditures, and
other similar decisions.
Modified adjusted gross income (MAGI) limitation.
The maximum special allowance that single individuals
and married individuals filing a joint return can qualify for
is $25,000. The maximum is $12,500 for married
individuals who file separate returns and who lived apart
at all times during the year. The maximum special
allowance for which an estate can qualify is $25,000
reduced by the special allowance for which the surviving
spouse qualifies.
c. Monitoring the finances or operations of the activity
in a nonmanagerial capacity.
Effect of determination. Income (loss), deductions,
and credits from an activity are nonpassive if you
determine that:
You materially participated in a trade or business
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activity of the corporation, or
You were a real estate professional (defined earlier) in a
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rental real estate activity of the corporation.
If your MAGI (defined below) is $100,000 or less
($50,000 or less if married filing separately), your loss is
deductible up to the maximum special allowance referred
to in the preceding paragraph. If your MAGI is more than
$100,000 (more than $50,000 if married filing separately),
the special allowance is limited to 50% of the difference
between $150,000 ($75,000 if married filing separately)
and your MAGI. When MAGI is $150,000 or more
($75,000 or more if married filing separately), there is no
special allowance.
If you determine that you didn't materially participate in
a trade or business activity of the corporation or if you
have income (loss), deductions, or credits from a rental
activity of the corporation (other than a rental real estate
activity in which you materially participated as a real
estate professional), the amounts from that activity are
passive. Report passive income (losses), deductions, and
credits as follows.
1. If you have an overall gain (the excess of income
over deductions and losses, including any prior year
unallowed loss) from a passive activity, report the income,
deductions, and losses from the activity as indicated in
these instructions.
2. If you have an overall loss (the excess of deductions
and losses, including any prior year unallowed loss, over
income) or credits from a passive activity, report the
income, deductions, losses, and credits from all passive
activities using the Instructions for Form 8582 or Form
8582-CR, to see if your deductions, losses, and credits
are limited under the passive activity rules.
MAGI is your adjusted gross income figured without
taking into account the following amounts, if applicable.
Any passive activity loss.
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Any rental real estate loss allowed under section 469(c)
(7) to real estate professionals (defined earlier).
Any overall loss from a publicly traded partnership.
Any taxable social security or equivalent railroad
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retirement benefits.
Any deductible contributions to an IRA or certain other
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qualified retirement plans under section 219.
The student loan interest deduction.
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The deductible part of self-employment taxes.
The exclusion from income of interest from Series EE or
Special allowance for a rental real estate activity. If
you actively participated in a rental real estate activity, you
may be able to deduct up to $25,000 of the loss (or credit
equivalent to a $25,000 deduction) from the activity from
nonpassive income. This “special allowance” is an
exception to the general rule disallowing losses in excess
of income from passive activities. The special allowance
isn't available if you were married, file a separate return for
the year, and didn't live apart from your spouse at all times
during the year.
Only individuals can actively participate in a rental real
estate activity. However, a decedent's estate (including a
qualified revocable trust for which a section 645 election
has been made) is treated as actively participating for its
tax years ending less than 2 years after the decedent's
death, if the decedent would have satisfied the active
participation requirement for the activity for the tax year
the decedent died.
You aren't considered to actively participate in a rental
real estate activity if, at any time during the tax year, your
interest (including your spouse's interest) in the activity
was less than 10% (by value) of all interests in the activity.
Active participation is a less stringent requirement than
material participation. You may be treated as actively
participating if you participated, for example, in making
management decisions or arranging for others to provide
services (such as repairs) in a significant and bona fide
sense. Management decisions that can count as active
I U.S. Savings Bonds used to pay higher education
expenses.
The exclusion of amounts received under an employer's
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adoption assistance program.
Special rules for certain other activities. If you have
net income (loss), deductions, or credits from any activity
to which special rules apply, the corporation will identify
the activity and all amounts relating to it on Schedule K-1
or on an attached statement.
If you have net income subject to recharacterization
under Temporary Regulations section 1.469-2T(f) and
Regulations section 1.469-2(f), report such amounts
according to the Instructions for Form 8582.
If you have net income (loss), deductions, or credits
from either of the following activities, treat such amounts
as nonpassive and report them as indicated in these
instructions.
1. The rental of a dwelling unit any shareholder used
for personal purposes during the year for more than the
greater of 14 days or 10% of the number of days that the
residence was rented at fair rental value.
2. Trading personal property for the account of owners
of interests in the activity.
Self-charged interest. The corporation will report any
“self-charged” interest income or expense that resulted
Instructions for Schedule K-1 (Form 1120-S) (2023)
5
from loans between you and the corporation (or between
the corporation and another S corporation or partnership if
both entities have the same owners with the same
proportional interest in each entity). If there was more than
one activity, the corporation will provide a statement
allocating the interest income or expense with respect to
each activity. The self-charged interest rules don't apply to
your interest in the S corporation if the corporation made
an election under Regulations section 1.469-7(g) to avoid
the application of these rules. See the Instructions for
Form 8582 for details.
limitations, take them into account in determining your
income, loss, or credits for this year. However, except for
passive activity losses and credits, don't combine the prior
year amounts with any amounts shown on this
Schedule K-1 to get a net figure to report on your return.
Instead, report the amounts on your return on a
year-by-year basis.
If you have amounts other than those shown on
Schedule K-1 to report on Schedule E (Form
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CAUTION
1040), enter each item separately on Schedule E
(Form 1040), line 28.
Excess Business Loss Limitations
Codes. In boxes 10, 12, 13, and boxes 15 through 17, the
corporation will identify each item by entering a code in
the column to the left of the dollar amount entry space.
Attached statements. The corporation will enter an
asterisk (*) after the code, if any, in the column to the left of
the dollar amount entry space for each item for which it
has attached a statement providing additional information.
For those informational items that can't be reported as a
single dollar amount, the corporation will enter an asterisk
in the left column and enter “STMT” in the dollar amount
entry space to indicate the information is provided on an
attached statement.
Losses attributable to your trade or business may be
limited, pursuant to section 461(l). See Form 461,
Limitation on Business Losses, and its instructions for
more information.
Specific Instructions
Part III. Shareholder's Share of
Current Year Income, Deductions,
Credits, and Other Items
The amounts shown in boxes 1 through 17 reflect your
share of income, loss, deductions, credits, and other
items, from corporate business or rental activities without
reference to limitations on losses, credits, or other items
that may have to be adjusted because of:
Income (Loss)
Box 1. Ordinary Business Income (Loss)
The amount reported in box 1 is your share of the ordinary
income (loss) from trade or business activities of the
corporation. Generally, where you report this amount on
Form 1040 or 1040-SR depends on whether the amount is
from an activity that is a passive activity to you. If you are
an individual shareholder filing a 2023 Form 1040 or
1040-SR, find your situation below and report your box 1
income (loss) as instructed after applying the basis and
at-risk limitations on losses. See Limitations on Losses,
Deductions, and Credits, earlier. If the corporation had
more than one trade or business activity, it will attach a
statement identifying the income or loss from each activity.
1. Report box 1 income (loss) from corporate trade or
business activities in which you materially participated on
Schedule E (Form 1040), line 28, column (i) or (k).
2. Report box 1 income (loss) from corporate trade or
business activities in which you didn't materially
participate, as follows.
1. The adjusted basis of your stock and debt in the
corporation,
2. The at-risk limitations,
3. The passive activity limitations, and
4. The excess business loss limitations.
For information on these provisions, see Limitations on
Losses, Deductions, and Credits, earlier.
Other limitations may apply to specific deductions (for
example, the section 179 expense deduction). Generally,
specific limitations apply before the at-risk and passive
loss limitations.
If you are an individual, and the above limitations don't
apply to the amounts shown on your Schedule K-1, take
the amounts shown and report them on the appropriate
lines of your tax return. If any of the above limitations
apply, adjust the amounts on Schedule K-1 before you
report them on your return.
a. If income is reported in box 1, report the income on
Schedule E (Form 1040), line 28, column (h).
When applicable, the passive activity limitations on
losses are applied after the limitations on losses for a
shareholder's basis in stock and debt and the
shareholder's at-risk amount.
b. If a loss is reported in box 1, follow the Instructions
for Form 8582 to figure how much of the loss can be
reported on Schedule E (Form 1040), line 28, column (g).
If you file your tax return on a calendar year basis, but
the corporation files a return for a fiscal year, report the
amounts on your tax return for the year in which the
corporation's fiscal year ends. For example, if the
corporation's tax year ends in February 2024, report the
amounts on your 2024 tax return.
Box 2. Net Rental Real Estate Income (Loss)
Generally, the income (loss) reported in box 2 is a passive
activity amount for all shareholders. However, the income
(loss) in box 2 isn't from a passive activity if you were a
real estate professional (defined earlier) and you
materially participated in the activity. If the corporation had
more than one rental real estate activity, it will attach a
statement identifying the income or loss from each activity.
If you have losses, deductions, or credits from a prior
year that weren’t deductible or usable because of certain
limitations, such as the basis limitations or the at-risk
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Instructions for Schedule K-1 (Form 1120-S) (2023)
If you are filing a 2023 Form 1040 or 1040-SR, use the
following instructions to determine where to report a box 2
amount after applying the basis and at-risk limitations on
losses. See Limitations on Losses, Deductions, and
Credits, earlier.
gain or loss on the sale of property that produces such
income or is held for investment.
Box 4. Interest Income
Report interest income on Form 1040 or 1040-SR, line 2b.
1. If you have a loss from a passive activity in box 2
and you meet all the following conditions, report the loss
on Schedule E (Form 1040), line 28, column (g).
a. You actively participated in the corporate rental real
estate activities. See Special allowance for a rental real
estate activity, earlier.
Box 5a. Ordinary Dividends
Report ordinary dividends on Form 1040 or 1040-SR,
line 3b. The amount in box 5a may be attributable to
previously taxed earnings and profits (PTEP) in annual
PTEP accounts that you have with respect to a foreign
corporation. You will need to determine the amount of the
ordinary dividends that are attributable to PTEP in your
annual PTEP accounts.
b. Rental real estate activities with active participation
were your only passive activities.
c. You have no prior year unallowed losses from these
activities.
Box 5b. Qualified Dividends
Report any qualified dividends on Form 1040 or 1040-SR,
line 3a. The amount in box 5b may be attributable to PTEP
in annual PTEP accounts that you have with respect to a
foreign corporation. You will need to determine the amount
of the qualified dividends that are attributable to PTEP in
your annual PTEP accounts.
d. If you are a married person filing separately, you
lived apart from your spouse all year.
e. Your total loss from the rental real estate activities
wasn't more than $25,000 (not more than $12,500 if
married filing separately).
f. You have no current or prior year unallowed credits
Qualified dividends are excluded from investment
from a passive activity.
income, but you may elect to include part or all of
these amounts in investment income. See the
TIP
g. Your MAGI wasn't more than $100,000 (not more
than $50,000 if married filing separately and you lived
apart from your spouse all year).
2. If you have a loss from a passive activity in box 2
and you don't meet all the conditions in (1) above, follow
the Instructions for Form 8582 to figure how much of the
loss you can report on Schedule E (Form 1040), line 28,
column (g).
instructions for line 4g of Form 4952, Investment Interest
Expense Deduction, for important information on making
this election.
Box 6. Royalties
Report royalties on Schedule E (Form 1040), line 4.
3. If you were a real estate professional and you
materially participated in the activity, report box 2 income
(loss) on Schedule E (Form 1040), line 28, column (i) or
(k).
4. If you have income from a passive activity in box 2,
report the income on Schedule E (Form 1040), line 28,
column (h).
Box 7. Net Short-Term Capital Gain (Loss)
After applying the limitations on losses and deductions,
report the net short-term capital gain (loss) on Schedule D
(Form 1040), Capital Gains and Losses, line 5. See
Box 8a. Net Long-Term Capital Gain (Loss)
After applying the limitations on losses and deductions,
report the net long-term capital gain (loss) on Schedule D
(Form 1040), line 12. See Limitations on Losses,
Deductions, and Credits, earlier.
Box 3. Other Net Rental Income (Loss)
The amount in box 3 is a passive activity amount for all
shareholders. If the corporation had more than one rental
activity, it will attach a statement identifying the income or
loss from each activity. After applying the limitations on
losses and deductions, report the income or loss as
follows.
Box 8b. Collectibles (28%) Gain (Loss)
After applying the limitations on losses and deductions,
report collectibles gain or loss on line 4 of the 28% Rate
Gain Worksheet—Line 18 in the Instructions for
Schedule D (Form 1040). See Limitations on Losses,
Deductions, and Credits, earlier.
1. If box 3 is a loss, follow the Instructions for Form
8582 to figure how much of the loss can be reported on
Schedule E (Form 1040), line 28, column (g).
2. If income is reported in box 3, report the income on
Box 8c. Unrecaptured Section 1250 Gain
Schedule E (Form 1040), line 28, column (h).
There are three types of unrecaptured section 1250 gain.
Report your share of this unrecaptured gain on the
Unrecaptured Section 1250 Gain Worksheet—Line 19 in
the Instructions for Schedule D (Form 1040) as follows.
earlier.
Portfolio Income
Report unrecaptured section 1250 gain from the sale or
•
Portfolio income or loss (shown in boxes 4 through 8b and
in box 10, code A) isn't subject to the passive activity
limitations. Portfolio income includes income (not derived
in the ordinary course of a trade or business) from
interest, ordinary dividends, annuities, or royalties, and
exchange of the corporation's business assets on line 5.
Report unrecaptured section 1250 gain from the sale or
•
exchange of an interest in a partnership on line 10.
Instructions for Schedule K-1 (Form 1120-S) (2023)
7
Report unrecaptured section 1250 gain from an estate,
If there was a gain (loss) from a casualty or theft to
property not used in a trade or business or for
•
trust, regulated investment company (RIC), or real estate
investment trust (REIT) on line 11.
income-producing purposes, the corporation will provide
you with the information you need to complete Form 4684.
If the corporation reports only unrecaptured section
1250 gain from the sale or exchange of its business
assets, it will enter a dollar amount in box 8c. If it reports
the other two types of unrecaptured gain, it will provide an
attached statement that shows the amount for each type
of unrecaptured section 1250 gain.
Code C. Section 1256 contracts and straddles. The
corporation will report any net gain or loss from section
1256 contracts. Report this amount on Form 6781, Gains
and Losses From Section 1256 Contracts and Straddles.
Code D. Mining exploration costs recapture. The
corporation will give you a statement that shows the
information needed to recapture certain mining
exploration costs (section 617).
Code E. Section 951A(a) income inclusions. If the
corporation (and its shareholders, as applicable) has
elected under Proposed Regulations section 1.958-1(e)
(2) to be treated as an entity for purposes of section 951A,
this is your share of the corporation's global intangible
low-taxed income amount. Report this amount on
Schedule 1 (Form 1040), Additional Income and
Adjustments to Income, line 8o, or the comparable line of
your income tax return, as an addition to any amount of
global intangible low-taxed income (GILTI) under section
951A otherwise computed on Form 8992, U.S.
Shareholder Calculation of Global Intangible Low-Taxed
Income (GILTI).
Box 9. Net Section 1231 Gain (Loss)
The amount in box 9 is generally passive if it is from a:
Rental activity, or
•
Trade or business activity in which you didn't materially
•
participate.
However, an amount from a rental real estate activity
isn't from a passive activity if you were a real estate
professional (defined earlier) and you materially
participated in the activity.
If the amount is either (a) a loss that isn't from a passive
activity, or (b) a gain, report it on Form 4797, Sales of
Business Property, line 2, column (g), after applying the
basis and at-risk limitations on losses. See Limitations on
Losses, Deductions, and Credits, earlier. Don't complete
columns (b) through (f) on line 2 of Form 4797. Instead,
enter “From Schedule K-1 (Form 1120-S)” across these
columns.
If the amount is a loss from a passive activity, see
Passive Loss Limitations in the Instructions for Form 4797.
After applying the limitations on losses and deductions,
report the loss following the Instructions for Form 8582 to
figure how much of the loss is allowed on Form 4797. If
the corporation had net section 1231 gain (loss) from
more than one activity, it will attach a statement that will
identify the section 1231 gain (loss) from each activity.
This information will be provided in box 10 using
code E only if the corporation (and its
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CAUTION
shareholders, if applicable) has elected to be
treated as an entity for purposes of section 951A under
Proposed Regulations section 1.958-1(e)(2). If no election
has been made under the proposed regulations, see the
instructions for Part V of Schedule K-3 (Form 1120-S),
Shareholder's Share of Income, Deductions, Credits,
etc.—International.
Code F. Inclusions of subpart F income. The
corporation will provide your share of its section 951(a)(1)
(A) inclusions. Report this amount on your Form 1040,
1040-SR, or relevant income tax return.
Code G. Section 951(a)(1)(B) inclusions. The
corporation will provide your share of its section 951(a)(1)
(B) inclusions. Report this amount on your Form 1040,
1040-SR, or relevant income tax return.
Box 10. Other Income (Loss)
Losses reported in box 10 may be limited. See
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CAUTION
earlier.
Code A. Other portfolio income (loss). The
corporation will report portfolio income other than interest,
ordinary dividend, royalty, and capital gain (loss) income,
and attach a statement to tell you what kind of portfolio
income is reported.
If the corporation held a residual interest in a real estate
mortgage investment conduit (REMIC), it will report on the
statement your share of REMIC taxable income (net loss)
that you report on Schedule E (Form 1040), line 38,
column (d). The statement will also report your share of
any “excess inclusion” that you report on Schedule E
(Form 1040), line 38, column (c), and your share of
section 212 expenses that you report on Schedule E
(Form 1040), line 38, column (e).
If Regulations section 1.958-1(d) applies for the
tax year (for example, if the corporation did not
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CAUTION
elect to be treated as an entity under Proposed
Regulations section 1.958-1(e)(2)), no information will be
provided in box 10 using codes F or G. Instead, the
corporation will provide information needed to figure your
section 951(a) inclusions in Part V of Schedule K-3 (Form
1120-S).
Code H. Reserved for future use.
Code I. Gain (loss) from disposition of oil, gas, geo-
thermal, or other mineral properties. The corporation
will attach a statement that provides a description of the
property, your share of the amount realized from the
disposition, your share of the corporation's adjusted basis
in the property (for other than oil or gas properties), and
your share of the total intangible drilling costs,
Code B. Involuntary conversions. This is your net loss
from involuntary conversions due to casualty or theft. The
corporation will give you a statement that shows the
amounts to be reported on Form 4684, Casualties and
Thefts, line 34, columns (b)(i), (b)(ii), and (c).
8
Instructions for Schedule K-1 (Form 1120-S) (2023)
development costs, and mining exploration costs (section
59(e) expenditures) passed through for the property. You
must figure your gain or loss from the disposition by
increasing your share of the adjusted basis by the
You must purchase other QSB stock (as defined in the
•
Instructions for Schedule D (Form 1040)) during the
60-day period that began on the date the QSB stock was
sold by the corporation.
intangible drilling costs, development costs, or mine
exploration costs for the property that you capitalized (that
is, costs that you didn't elect to deduct under section
59(e)). Report a loss in Part I of Form 4797. Report a gain
in Part III of Form 4797 in accordance with the instructions
for line 28. See Regulations section 1.1254-4 for details.
See Form 8949, Schedule D (Form 1040), and the
related instructions for details on how to report the gain
and the amount of the allowable postponed gain.
Code O. Sale or exchange of QSB stock with section
1202 exclusion. Gain from the sale or exchange of QSB
stock eligible for the section 1202 exclusion. The
corporation should also give you (a) the name of the
corporation that issued the QSB stock, (b) your share of
the corporation's adjusted basis and sales price of the
QSB stock, and (c) the dates the QSB stock was bought
and sold. The following additional limitations apply at the
shareholder level.
Code J. Recoveries of tax benefit items. A tax benefit
item is an amount you deducted in a prior tax year that
reduced your income tax. Report income from recoveries
of tax benefit items on Schedule 1 (Form 1040), line 8z, to
the extent it reduced your tax in the prior year.
Code K. Gambling gains and losses.
You must have held an interest in the corporation when
•
If the corporation wasn't engaged in the trade or
•
the corporation acquired the QSB stock and at all times
thereafter until the corporation disposed of the QSB stock.
business of gambling, (a) report gambling winnings on
Schedule 1 (Form 1040), line 8b, and (b) deduct gambling
losses to the extent of winnings on Schedule A (Form
1040), Itemized Deductions, line 16.
Your share of the eligible section 1202 gain can't
•
exceed the amount that would have been allocated to you
based on your interest in the corporation at the time the
QSB stock was acquired.
If the corporation was engaged in the trade or business
•
of gambling, (a) report gambling winnings on Schedule E
(Form 1040), line 28, column (k), and (b) deduct gambling
losses (to the extent of winnings) on Schedule E (Form
1040), line 28, column (i).
See Form 8949, Sales and Other Dispositions of
Capital Assets, Schedule D (Form 1040), and the related
instructions for details on how to report the gain and the
amount of the allowable exclusion.
Code L. Reserved for future use.
Codes P through R. Reserved for future use.
Code M. Gain eligible for section 1045 rollover (re-
placement stock purchased by the corporation). The
corporation should give you (a) the name of the
corporation that issued qualified small business (QSB)
stock (as defined in the Instructions for Schedule D (Form
1040)), (b) your share of the corporation's adjusted basis
and sales price of the QSB stock, and (c) the dates the
QSB stock was bought and sold. To qualify for the section
1045 rollover:
Code S. Non-portfolio capital gain (loss). Net
short-term capital gain (loss) and net long-term capital
gain (loss) from Schedule D (Form 1120-S), Capital Gains
and Losses and Built-in Gains that isn't portfolio income.
An example is gain or loss from the disposition of
nondepreciable personal property used in a trade or
business activity of the corporation. Report total net
short-term gain (loss) on Schedule D (Form 1040), line 5.
Report the total net long-term gain (loss) on Schedule D
(Form 1040), line 12.
You must have held an interest in the corporation during
•
the entire period in which the corporation held the QSB
stock (more than 6 months prior to the sale), and
Codes T through X. Reserved for future use.
Your share of the gain eligible for the section 1045
•
Code ZZ. Other income (loss). Amounts with code ZZ
are other items of income, gain, or loss not included in
boxes 1 through 9 or in box 10 using codes A through S.
The corporation should give you a description and the
amount of your share for each of these items.
rollover can't exceed the amount that would have been
allocated to you based on your interest in the corporation
at the time the QSB stock was acquired.
See Form 8949, Sales and Other Dispositions of
Capital Assets, Schedule D (Form 1040), and the related
instructions for details on how to report the gain and the
amount of the allowable postponed gain.
Report loss items that are passive activity amounts to
you following the Instructions for Form 8582.
Code N. Gain eligible for section 1045 rollover (re-
placement stock not purchased by the corporation).
The corporation should also give you (a) the name of the
corporation that issued the QSB stock, (b) your share of
the corporation's adjusted basis and sales price of the
QSB stock, and (c) the dates the QSB stock was bought
and sold. To qualify for the section 1045 rollover:
Deductions
There are potential limitations on corporate losses
you can deduct on your return. These limitations
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CAUTION
and the order in which you must apply them are as
follows: the basis limitations, the at-risk limitations, the
passive activity limitations, and the excess business loss
limitations. See Limitations on Losses, Deductions, and
Credits, earlier.
You must have held an interest in the corporation during
•
the entire period in which the corporation held the QSB
stock (more than 6 months prior to the sale),
Your share of the gain eligible for the section 1045
•
Box 11. Section 179 Deduction
Use this amount, along with the total cost of section 179
property placed in service during the year from other
rollover can't exceed the amount that would have been
allocated to you based on your interest in the corporation
at the time the QSB stock was acquired, and
Instructions for Schedule K-1 (Form 1120-S) (2023)
9
sources, to complete Part I of Form 4562, Depreciation
and Amortization. The corporation will report on an
attached statement your share of the cost of any qualified
enterprise zone property or qualified real property it
placed in service during its tax year. Report the amount
from line 12 of Form 4562 allocable to a passive activity
using the Instructions for Form 8582. If the amount isn't a
passive activity deduction, report it on Schedule E (Form
1040), line 28, column (j), after applying the basis and
at-risk limitations on losses. See Limitations on Losses,
Deductions, and Credits, earlier.
If the corporation claims a qualified conservation
contribution, the corporation will provide you with your
relevant basis. You must report this on your own Form
8283, line 3, column (h). The corporation may need
information from you to calculate relevant basis.
If the corporation is the entity where the noncash
charitable contribution was originally reported, you input
the entity name and identifying number on your own Form
8283. See the Instructions for Form 8283 for more details.
If the corporation is not the entity where the noncash
charitable contribution was originally reported, the
corporation will provide you the entity name and
identifying number that the noncash charitable
contribution was originally reported. Input this information
on your own Form 8283.
Code A. Cash contributions (60%). Report this
amount, subject to the 60% AGI limitation, on Schedule A
(Form 1040), line 11.
Code B. Cash contributions (30%). Report this
amount, subject to the 30% AGI limitation, on Schedule A
(Form 1040), line 11.
Box 12. Other Deductions
Deductions reported in box 12 may be limited.
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CAUTION
Credits, earlier.
Contributions. Codes A through G. The corporation
will give you a statement that shows charitable
contributions subject to the 100%, 60%, 50%, 30%, and
20% adjusted gross income (AGI) limitations.
Code C. Noncash contributions (50%). Report this
amount, subject to the 50% AGI limitation, on Schedule A
(Form 1040), line 12.
If the corporation made a property contribution, it will
report on an attached statement your share of both the fair
market value (FMV) and adjusted basis of the property.
Use these amounts to adjust your stock basis. If the
corporation made a qualified conservation contribution, it
will report the FMV of the underlying property before and
after the donation, the type of legal interest contributed,
and a description of the conservation purpose furthered
by the donation. If the corporation made a contribution of
real property located in a registered historic district, it will
report any information you will need to take a deduction.
For more details, see Pub. 526, Charitable
Contributions, and the Instructions for Schedule A (Form
1040). If your contributions are subject to more than one
of the AGI limitations, see Pub. 526.
Charitable contribution deductions aren't taken into
account in figuring your passive activity loss for the year.
Don't enter them on Form 8582.
Food inventory contributions. The corporation will
report on an attached statement your share of qualified
food inventory contributions. The food inventory
contribution isn't included in the amount reported in
box 12 using code C. The corporation will also report your
share of the corporation's net income from the business
activities that made the food inventory contribution(s).
Your deduction for food inventory contributions made
during 2023 can't exceed 15% of your aggregate net
income for the tax year from the business activities from
which the food inventory contribution was made (including
your share of net income from partnership or
S corporation businesses that made food inventory
contributions). Amounts that exceed the 15% limitation
may be carried over for up to 5 years. Report this amount,
subject to the 50% AGI limitation, on Schedule A (Form
1040), line 12.
Code D. Noncash contributions (30%). Report this
amount, subject to the 30% AGI limitation, on Schedule A
(Form 1040), line 12.
Code E. Capital gain property to a 50% limit organi-
zation (30%). Report this amount, subject to the 30%
AGI limitation, on Schedule A (Form 1040), line 12. See
Worksheet 2. Applying the Deduction Limits in Pub. 526.
Code F. Capital gain property (20%). Report this
amount, subject to the 20% AGI limitation, on Schedule A
(Form 1040), line 12.
Code G. Contributions (100%). The corporation will
report on an attached statement your share of qualified
conservation contributions of property used in agriculture
or livestock production. This contribution isn't included in
the amount reported in box 12 using code C. If you are a
farmer or rancher, you qualify for a 100% AGI limitation for
this contribution. Otherwise, your deduction for this
contribution is subject to a 50% AGI limitation. Report this
amount, subject to your applicable limitation, on
The corporation will report your share of qualified
conservation contributions of property. A corporation’s
charitable conservation contribution (or a corporation’s
distributive share of a charitable conservation contribution
from a lower-tier partnership) is not treated as a qualified
conservation contribution if the amount of such
contribution (or such distributive share) exceeds 2.5 times
the sum of each shareholder’s relevant basis in the
corporation. See Qualified Conservation Contribution in
Pub. 526 and Disallowance of Conservation Contribution
deductions by certain pass-through entities in the
Instructions for Form 8283.
Form 8283. If you received a copy of Form 8283,
Noncash Charitable Contributions, from the corporation,
attach the copy to your tax return. Use the amount shown
on your Schedule K-1, not the amount shown on the Form
8283, to figure your deduction.
You must fill out your own Form 8283 with the
information the corporation provides you and attach the
Form 8283 the corporation provides you to your return.
See the Instructions for Form 8283 for more details.
10
Instructions for Schedule K-1 (Form 1120-S) (2023)
Schedule A (Form 1040), line 12. See Pub. 526 for more
information on qualified conservation contributions.
Schedule A (Form 1040), line 16. See the instructions for
Schedule A (Form 1040), line 16, for details.
These deductions aren't taken into account in figuring
your passive activity loss for the year. Don't enter them on
Form 8582.
Code M. Preproductive period expenses. You may be
able to deduct these expenses currently or you may need
to capitalize them under section 263A. See Pub. 225,
Farmer's Tax Guide, and Regulations section 1.263A-4 for
details.
Code H. Investment interest expense. Report this
amount on Form 4952, line 1.
If the corporation has investment income or other
investment expense, it will report your share of these
items in box 17 using codes A and B. Include investment
income and expenses from other sources to figure how
much of your total investment interest is deductible.
For more information on the special provisions that
apply to investment interest expense, see Form 4952 and
Pub. 550.
Code I. Deductions—Royalty income. Report
deductions allocable to royalties on Schedule E (Form
1040), line 19. For this type of expense, enter “From
Schedule K-1 (Form 1120-S).”
These deductions aren't taken into account in figuring
your passive activity loss for the year. Don't enter them on
Form 8582.
Code N. Reserved for future use.
Code O. Reforestation expense deduction. The
corporation will provide a statement that describes the
qualified timber property for these reforestation expenses.
The expense deduction is limited to $10,000 ($5,000 if
married filing separately) for each qualified timber
property, including your share of the corporation's
expense and any reforestation expenses you separately
paid or incurred during the tax year.
If you didn't materially participate in the activity, use
Form 8582 to figure the amount to report on Schedule E
(Form 1040), line 28, column (g). If you materially
participated in the reforestation activity, report the
deduction on Schedule E (Form 1040), line 28, column (i).
Code J. Section 59(e)(2) expenditures. The
corporation will show on an attached statement the type
and the amount of qualified expenditures for which you
may make a section 59(e) election. The statement will
also identify the property for which the expenditures were
paid or incurred. If there is more than one type of
expenditure, the amount of each type will also be listed.
Codes P through V. Reserved for future use.
Code W. Soil and water conservation. Soil and water
conservation expenditures and endangered species
recovery expenditures. See section 175 for limitations on
the amount you are allowed to deduct.
Code X. Film, television, and theatrical production
expenditures. The corporation will provide a statement
that describes the film, television, or live theatrical
production generating these expenses. If you didn't
materially participate in the activity, use Form 8582 to
determine the amount that can be reported on Schedule E
(Form 1040), line 28, column (g). If you materially
participated in the production activity, report the deduction
on Schedule E (Form 1040), line 28, column (i).
Code Y. Expenditures for removal of barriers.
Expenditures for the removal of architectural and
transportation barriers to the elderly and disabled that the
corporation elected to treat as a current expense. The
deductions are limited by section 190(c) to $15,000 per
year from all sources.
Code Z. Itemized deductions. Itemized deductions that
Form 1040 or 1040-SR filers report on Schedule A (Form
1040).
If you deduct these expenditures in full in the current
year, they are treated as adjustments or tax preference
items for purposes of alternative minimum tax. However,
you may elect to amortize these expenditures over the
number of years in the applicable period rather than
deduct the full amount in the current year. If you make this
election, these items aren't treated as adjustments or tax
preference items.
Under the election, you can deduct circulation
expenditures ratably over a 3-year period. Research and
experimental expenditures and mining exploration and
development costs can be amortized over a 10-year
period. Intangible drilling and development costs can be
amortized over a 60-month period. The amortization
periods begin with the month in which such costs were
paid or incurred.
Make the election on Form 4562. If you make the
election, report the current year amortization of section
59(e) expenditures from Part VI of Form 4562 on
Schedule E (Form 1040), line 28. If you don't make the
election, report the section 59(e)(2) expenditures on
Schedule E (Form 1040), line 28, and figure the resulting
adjustment or tax preference item (see Form 6251,
Alternative Minimum Tax—Individuals). Whether you
deduct the expenditures or elect to amortize them, report
the amount on a separate line in column (i) of line 28 if you
materially participated in the activity. If you didn't
materially participate, follow the Instructions for Form 8582
to figure how much of the deduction can be reported in
column (g).
Code AA. Contributions to a capital construction
fund (CCF). The deduction for a CCF investment isn't
taken on Schedule E (Form 1040). Instead, you subtract
the deduction from the amount that would normally be
entered as taxable income on Form 1040 or 1040-SR,
line 15. In the margin to the left of line 15, enter “CCF” and
the amount of the deduction.
Code AB. Penalty on early withdrawal of savings.
Code K. Reserved for future use.
Report this amount on Schedule 1 (Form 1040), line 18.
Code L. Deductions—Portfolio income (other).
Code AC. Interest expense allocated to debt financed
Generally, you should report these amounts on
distributions. The manner in which you report such
Instructions for Schedule K-1 (Form 1120-S) (2023)
11
interest expense depends on your use of the distributed
debt proceeds. If the proceeds were used in a trade or
business activity, report the interest on Schedule E (Form
1040), line 28. In column (a), enter the name of the
corporation and “interest expense.” If you materially
participated in the trade or business activity, enter the
interest expense in column (i). If you didn't materially
participate in the activity, follow the Instructions for Form
8582 to figure the interest expense you can report in
column (g). Material participation is defined earlier under
Passive Activity Limitations. If the proceeds were used in
an investment activity, report the interest on Form 4952. If
the proceeds are used for personal purposes, the interest
is generally not deductible.
Keep a separate record of the low-income housing
credit from each separate source so that you can correctly
figure any recapture of low-income housing credit that
may result from the disposition of all or part of your stock
in the corporation. For more information on recapture, see
the Instructions for Form 8611, Recapture of Low-Income
Housing Credit.
Code E. Qualified rehabilitation expenditures (rental
real estate). The corporation will report your share of the
qualified rehabilitation expenditures and other information
you need to complete Form 3468 related to rental real
estate activities using code E. Your share of qualified
rehabilitation expenditures from property not related to
rental real estate activities will be reported in box 17 using
code C. See the Instructions for Form 3468 for details. If
the corporation is reporting expenditures from more than
one activity, an attached statement will separately identify
the expenditures from each activity.
Combine the expenditures (for Form 3468 reporting)
from box 13, code E, and from box 17, code C. The
expenditures related to rental real estate activities (box 13,
code E) are reported on Schedule K-1 separately from
other qualified rehabilitation expenditures (box 17, code
C) because they are subject to different passive activity
limitation rules. See the Instructions for Form 8582-CR for
details.
Codes AD through AJ. Reserved for future use.
Code ZZ. Other deductions. Amounts with code ZZ are
other deductions not included in box 12 using codes A
through AC. The corporation will give you a description
and the amount of your share for each of these items.
Box 13. Credits
If you have credits that are passive activity credits to
you, you must complete Form 8582-CR in addition to the
credit forms identified below. See Passive Activity
Limitations, earlier, and the Instructions for Form 8582-CR
for details.
Code F. Other rental real estate credits. The
corporation will identify the type of credit and any other
information you need to figure these credits from rental
real estate activities (other than the low-income housing
credit and qualified rehabilitation expenditures). These
credits may be limited by the passive activity limitations. If
the credits are from more than one activity, the corporation
will identify the credits from each activity on an attached
the Instructions for Form 8582-CR for details.
In general, shareholders whose only sources for a
credit listed on Form 3800, General Business
Credit, Part III, are partnerships, S corporations,
TIP
estates, trusts, and cooperatives, aren't required to
complete the applicable credit form or attach it to their
return. Instead, they can report the credit amounts
reported to them by these pass-through entities directly on
Form 3800, Part III, and enter the EIN of the entity in
column (d) of Part III. However, when applicable, all
shareholders must complete and attach the following
credit forms to their return.
Code G. Other rental credits. The corporation will
identify the type of credit and any other information you
need to figure these rental credits. These credits may be
limited by the passive activity limitations. If the credits are
from more than one activity, the corporation will identify
the credits from each activity on an attached statement.
Instructions for Form 8582-CR for details.
Form 3468, Investment Credit (Form 3800, Part III,
•
line 1a).
Form 8864, Biodiesel, Renewable Diesel, or
•
Sustainable Aviation Fuels Credit (Form 3800, Part III,
line 1l).
Code H. Undistributed capital gains credit. Code H
represents taxes paid on undistributed capital gains by a
regulated investment company or real estate investment
trust. Report these taxes on Schedule 3 (Form 1040),
Additional Credits and Payments, line 13a. Reduce the
basis of your stock by this tax.
See the Instructions for Form 3800 for more details.
Code A. Zero-emission nuclear power production
credit. Report this amount in Part II of Form 7213,
Nuclear Power Production Credit, or Form 3800, Part III,
Code B. Production from advanced nuclear power fa-
cilities credit. Report this amount in Part I of Form 7213,
Code I. Biofuel producer credit. Report this amount on
line 3 of Form 6478, Biofuel Producer Credit, or Form
Codes C and D. Low-income housing credit. If section
42(j)(5) applies, the corporation will report your share of
the low-income housing credit using code C. If section
42(j)(5) doesn't apply, your share of the credit will be
reported using code D. Any allowable low-income housing
credit reported using code C or code D is reported on
Form 8586, Low-Income Housing Credit, line 4, or Form
Code J. Work opportunity credit. Report this amount
on line 3 of Form 5884, Work Opportunity Credit, or Form
Code K. Disabled access credit. Report this amount on
line 7 of Form 8826, Disabled Access Credit, or Form
12
Instructions for Schedule K-1 (Form 1120-S) (2023)
Code L. Empowerment zone employment credit.
Report this amount on line 3 of Form 8844, Empowerment
Zone Employment Credit, or Form 3800, Part III, line 3
Code M. Credit for increasing research activities.
Report this amount on line 37 of Form 6765, Credit for
Increasing Research Activities, or Form 3800, Part III,
Code Z. Orphan drug credit. Report this amount on
Form 8820, Orphan Drug Credit, or Form 3800, Part III,
Code AA. Enhanced oil recovery credit. Report this
amount on Form 8830, Enhanced Oil Recovery Credit, or
Code AB. Renewable electricity production credit.
The corporation will provide a statement showing the
allocation of the credit for production during the 4-year
period beginning on the date the facility was placed in
service and for production after that period. Report this
amount on Form 8835, Renewable Electricity Production
Code AC. Biodiesel, renewable diesel, or sustainable
aviation fuels credit. If this credit includes the small
agri-biodiesel producer credit or the sustainable aviation
fuels credit, the corporation will provide additional
information on an attached statement. If no statement is
attached, report this amount on Form 8864, line 10. If a
statement is attached, see the instructions for Form 8864,
line 10.
The S corporation will provide information necessary to
•
determine if it is an eligible small business under section
38(c)(5)(A). If you and the S corporation are eligible small
businesses, report the credit on line 4i. For more
information, see the Instructions for Form 3800.
All others, report the credit on line 1c.
•
Code N. Credit for employer social security and Med-
icare taxes. Report this amount on line 5 of Form 8846,
Credit for Employer Social Security and Medicare Taxes
Paid on Certain Employee Tips, or Form 3800, Part III,
Code O. Backup withholding. This is your share of the
credit for backup withholding on dividends, interest
income, and other types of income. Include this amount in
the total you enter on Form 1040 or 1040-SR, line 25c,
and attach a copy of your Schedule K-1 to your tax return.
Instead of attaching a copy of your Schedule K-1 to your
tax return, you can include a statement with your return
that provides the corporation's name, address, EIN, and
backup withholding amount.
Code P. Unused investment credit from the qualifying
advanced coal project credit or qualifying gasifica-
tion project credit allocated from cooperatives.
Report this amount on Form 3468, Part II, line 6.
Code Q. Unused investment credit from the qualify-
ing advanced energy project credit allocated from
cooperatives. Report this amount on Form 3468, Part III,
line 2.
Code AD. New markets credit. Report this amount on
Form 8874, New Markets Credit, or Form 3800, Part III,
Code AE. Credit for small employer pension plan
startup costs. Report this amount on Form 8881, Credit
for Small Employer Pension Plan Startup Costs,
Auto-Enrollment, and Military Spouse Retirement Plan,
Code AF. Credit for small employer auto-enrollment.
Report this amount on Form 8881, Part II, or Form 3800,
Code AG. Credit for military spouse participation.
Report this amount on Form 8881, Part III, or Form 3800,
Code AH. Credit for employer-provided childcare fa-
cilities and services. Report this amount on Form 8882
Code AI. Low sulfur diesel fuel production credit.
Report this amount on Form 8896, Low Sulfur Diesel Fuel
earlier).
Code AJ. Qualified railroad track maintenance credit.
Report this amount on Form 8900, Qualified Railroad
Track Maintenance Credit, or Form 3800, Part III, line 4g
Code AK. Credit for oil and gas production from mar-
ginal wells. Report this amount on Form 8904, Credit for
Oil and Gas Production From Marginal Wells, or Form
Code AL. Distilled spirits credit. Report this amount on
Form 8906, Distilled Spirits Credit, or Form 3800, Part III,
Code AM. Energy efficient home credit. Report this
amount on Form 8908, Energy Efficient Home Credit, or
Code R. Unused investment credit from the ad-
vanced manufacturing investment credit allocated
from cooperatives. Report this amount on Form 3468,
Part IV, line 2.
Code S. Reserved for future use.
Code T. Unused investment credit from the energy
credit allocated from cooperatives. Report this amount
on Form 3468, Part VI, line 31.
Code U. Unused investment credit from the rehabili-
tation credit allocated from cooperatives. Report this
amount on Form 3468, Part VII, line 2.
Code V. Advanced manufacturing production credit.
Report on Form 7207, Advanced Manufacturing
earlier).
Codes W and X. Reserved for future use.
Code Y. Clean hydrogen production credit. Report
this amount on Form 7210, Clean Hydrogen Production
Instructions for Schedule K-1 (Form 1120-S) (2023)
13
credit and any other information you need to figure credits
other than those reported with codes A through BC. Most
credits identified by code ZZ will be reported on Form
Code AN. Alternative motor vehicle credit. Report this
amount on Form 8910, Alternative Motor Vehicle Credit, or
Code AO. Alternative fuel vehicle refueling property
credit. Report this amount on Form 8911, Alternative
Fuel Vehicle Refueling Property Credit, Part II, or Form
Code AP. Clean renewable energy bond credit.
Report this amount on Form 8912, Credit to Holders of
Tax Credit Bonds.
Box 14. International Transactions
If the S corporation checked the box, see the attached
Schedule K-3 with respect to items of international tax
relevance. If the S corporation did not check the box, the S
corporation attached a statement to the Schedule K-1 (or
issued a statement prior to furnishing the Schedule K-1)
notifying the shareholder that the shareholder will not
receive Schedule K-3 from the S corporation unless the
shareholder requests the schedule.
Code AQ. New clean renewable energy bond credit.
Report this amount on Form 8912.
Code AR. Qualified energy conservation bond credit.
For additional information, see the Shareholder's
Instructions for Schedule K-3 (Form 1120-S).
Report this amount on Form 8912.
Code AS. Qualified zone academy bond credit.
Report this amount on Form 8912.
Box 15. Alternative Minimum Tax (AMT) Items
Code AT. Qualified school construction bond credit.
Report this amount on Form 8912.
Use the information reported in box 15 (as well as your
adjustments and tax preference items from other sources)
to prepare your Form 6251, Alternative Minimum
Tax—Individuals, or Schedule I (Form 1041), Alternative
Minimum Tax—Estates and Trusts.
Code A. Post-1986 depreciation adjustment. This
amount is your share of the corporation's post-1986
depreciation adjustment. If you are an individual
shareholder, report this amount on Form 6251, line 2l.
Code B. Adjusted gain or loss. This amount is your
share of the corporation's adjusted gain or loss. If you are
an individual shareholder, report this amount on Form
6251, line 2k.
Code C. Depletion (other than oil & gas). This amount
is your share of the corporation's depletion adjustment. If
you are an individual shareholder, report this amount on
Form 6251, line 2d.
Codes D and E. Oil, gas, & geothermal proper-
ties—Gross income and deductions. The amounts
reported on these lines include only the gross income
(code D) from, and deductions (code E) allocable to, oil,
gas, and geothermal properties included in box 1 of
Schedule K-1. The corporation should have attached a
statement that shows any income from, or deductions
allocable to, such properties that are included in boxes 2
through 12, 16, and 17 of Schedule K-1. Use the amounts
reported here and any other reported amounts to help you
figure the net amount to enter on Form 6251, line 2t.
Code AU. Build America bond credit. Report this
amount on Form 8912.
Code AV. Credit for employer differential wage pay-
ments. Report this amount on Form 8932, Credit for
Employer Differential Wage Payments, or Form 3800, Part
Code AW. Carbon oxide sequestration credit. Report
this amount on Form 8933, Carbon Oxide Sequestration
Code AX. Carbon oxide sequestration credit recap-
ture. The corporation will provide any information you
need to figure your recapture tax. Report the carbon oxide
sequestration credit recapture amount on Form 8933, Part
III, Section D, line 22.
Code AY. New clean vehicle credit. Report this amount
on Form 8936, Clean Vehicle Credits, Part II, or Form
Code AZ. Qualified commercial clean vehicle credit.
Report this amount on Form 8936, Part V, or Form 3800,
Code BA. Credit for small employer health insurance
premiums. Report this amount on Form 8941, Credit for
Small Employer Health Insurance Premiums, or Form
Code BB. Employer credit for paid family and medi-
cal leave. Report in Form 8994, Employer Credit for Paid
Family and Medical Leave, or Form 3800, Part III, line 4j
Code BC. Eligible credits from transferor(s) under
section 6418. On a statement attached to Schedule K-1,
the corporation will identify the type of transferred credits
and any other information you need to file your tax returns.
Report this amount on Form 3800. See the Instructions for
Form 3800, Parts III and V, for additional information.
Code F. Other AMT items. Report the information on the
statement attached by the corporation on the applicable
lines of Form 6251 or Schedule I (Form 1041).
Box 16. Items Affecting Shareholder Basis
Code A. Tax-exempt interest income. Report on your
return, as an item of information, your share of the
tax-exempt interest received or accrued by the corporation
during the year. Individual shareholders include this
amount on Form 1040 or 1040-SR, line 2a. Generally, you
must increase the basis of your stock by this amount.
Codes BD through BG. Reserved for future use.
Code ZZ. Other credits. On a statement attached to
Schedule K-1, the corporation will identify the type of
14
Instructions for Schedule K-1 (Form 1120-S) (2023)
information on the statement to complete the applicable
energy credit in Part VI of Form 3468. See the Instructions
for Form 3468 for details.
Code B. Other tax-exempt income. Generally, you must
increase the basis of your stock by the amount shown, but
don't include it in income on your tax return.
Codes E and F. Recapture of low-income housing
credit. The corporation will identify by code E your share
of any recapture of a low-income housing credit from its
investment in partnerships to which the provisions of
section 42(j)(5) apply. All other recapture of low-income
housing credits will be identified by code F.
Keep a separate record of each type of recapture so
that you will be able to correctly figure any credit recapture
that may result from the disposition of all or part of your
corporate stock. For details, see Form 8611.
Code G. Recapture of investment credit. The
corporation will provide any information you need to figure
your recapture tax on Form 4255, Recapture of Investment
Credit. See the Form 3468 on which you took the original
credit for other information you need to complete Form
4255.
You may also need Form 4255 if your proportionate
stock interest in the corporation is reduced by more than
one-third after you were allocated part of an investment
credit.
Code C. Nondeductible expenses. The nondeductible
expenses paid or incurred by the corporation aren't
deductible on your tax return. Generally, you must
decrease the basis of your stock by this amount.
Code D. Distributions. Reduce the basis of your stock
(as explained earlier) by distributions, not reported on
Form 1099-DIV, of property or money. This amount will
include any amounts included in income with respect to
new clean renewable energy, qualified energy
conservation, qualified school construction, build
America, or (for bonds issued after October 3, 2008)
qualified zone academy bonds. If these distributions
exceed the basis of your stock, the excess is treated as
capital gain from the sale or exchange of property and is
reported on Form 8949 and Schedule D (Form 1040).
Code E. Repayment of loans from shareholders. If
these payments are made on a loan with a reduced basis,
the repayments must be allocated in part to a return of
your basis in the loan and in part to the receipt of income.
See Regulations section 1.1367-2 for information on
reduction in basis of a loan and restoration in basis of a
loan with a reduced basis. See Rev. Rul. 64-162, 1964-1
(Part 1) C.B. 304, and Rev. Rul. 68-537, 1968-2 C.B. 372,
for details.
Code H. Recapture of other credits. On a statement
attached to Schedule K-1, the corporation will report any
information you need to figure the recapture of other
credits including the new markets credit, Indian
employment credit, credit for employer-provided childcare
facilities and services, alternative motor vehicle credit,
alternative fuel vehicle refueling property credit, and
qualified plug-in electric drive motor vehicle credit.
Code F. Foreign taxes paid or accrued. Report this
amount on Form 7203, line 46(a). Do not use this amount
to complete your Form 1116. See Schedule K-3 to
complete your Form 1116.
Code I. Look-back interest—Completed long-term
contracts. The corporation will report any information
you need to figure the interest due or to be refunded under
the look-back method of section 460(b)(2) on certain
long-term contracts. Use Form 8697, Interest Computation
Under the Look-Back Method for Completed Long-Term
Contracts, to report any such interest.
Code J. Look-back interest—Income forecast meth-
od. The corporation will report any information you need
to figure the interest due or to be refunded under the
look-back method of section 167(g)(2) for certain property
placed in service after September 13, 1995, and
depreciated under the income forecast method. Use Form
8866, Interest Computation Under the Look-Back Method
for Property Depreciated Under the Income Forecast
Method, to report any such interest.
Code K. Dispositions of property with section 179
deductions. The corporation will report your share of
gain or loss on the sale, exchange, or other disposition of
property for which a section 179 expense deduction was
passed through to shareholders with code K. If the
corporation passed through a section 179 expense
deduction for the property, you must report the gain or
loss, if any, and any recapture of the section 179 expense
deduction for the property on your income tax return (see
the Instructions for Form 4797 for details). The corporation
will provide all the following information.
Box 17. Other Information
Code A. Investment income. Report this amount on
Form 4952, line 4a.
Code B. Investment expenses. Report this amount on
Form 4952, line 5.
Code C. Qualified rehabilitation expenditures (other
than rental real estate). The corporation will report your
share of qualified rehabilitation expenditures and other
information you need to complete Form 3468 for property
not related to rental real estate activities in box 17 using
code C. Your share of qualified rehabilitation expenditures
related to rental real estate activities is reported in box 13
using code E. See the Instructions for Form 3468 for
details. If the corporation is reporting expenditures from
more than one activity, the attached statement will
separately identify the expenditures from each activity.
Combine the expenditures (for Form 3468 reporting)
from box 13, code E, and from box 17, code C. The
expenditures related to rental real estate activities (box 13,
code E) are reported on Schedule K-1 separately from
other qualified rehabilitation expenditures (box 17, code
C) because they are subject to different passive activity
limitation rules. See the Instructions for Form 8582-CR for
details.
Code D. Basis of energy property. If the corporation
1. Description of the property.
provides an attached statement for code D, use the
Instructions for Schedule K-1 (Form 1120-S) (2023)
15
2. Date the property was acquired and placed in
service.
Mortgages, debts, and other liabilities the buyer
•
assumed or took the property subject to.
Gross profit.
•
•
•
•
3. Date of the sale or other disposition of the property.
4. Your share of the gross sales price or amount
Contract price.
Gross profit percentage.
realized.
Current year payments and deemed payments received
5. Your share of the cost or other basis plus the
during the year, not including interest whether stated or
unstated.
expense of sale.
Origination year payments and deemed payments
•
6. Your share of the depreciation allowed or allowable.
received during the year, not including interest whether
stated or unstated.
7. Your share of the section 179 expense deduction (if
any) passed through for the property and the corporation's
tax year(s) in which the amount was passed through.
Payments received in prior years, not including interest
•
whether stated or unstated.
To figure the depreciation allowed or allowable for Form
4797, line 22, add to the amount from item (6) above the
amount of your share of the section 179 expense
deduction, reduced by any unused carryover of the
deduction for this property. This amount may be different
than the amount of section 179 expense you deducted for
the property if your interest in the corporation has
changed.
Installment sale income.
•
•
Character of the income—capital or ordinary.
See section 453A(c) for information on how to compute
the interest charge on the deferred tax liability. The section
453A interest charge is reported on the Other taxes line of
your tax returns. See Interest on Deferred Tax in Pub. 537
for additional details on how to compute the section
453A(c) interest.
8. If the disposition is due to a casualty or theft, any
Code O. Section 1260(b) information. The corporation
will report any information you need to figure the interest
due under section 1260(b). If the corporation had gain
from certain constructive ownership transactions, your tax
liability must be increased by the interest charge on any
deferral of gain recognition under section 1260(b). Report
the interest on Schedule 2 (Form 1040), line 17z. Enter
“1260(b)” and the amount of the interest in the space to
the left of line 17z. See section 1260(b) for details on how
to figure the interest.
Code P. Interest allocable to production expendi-
tures. The corporation will report any information you
need relating to interest you are required to capitalize
under section 263A for production expenditures. See
Regulations sections 1.263A-8 through 1.263A-15 for
details.
information you need to complete Form 4684.
9. If the sale was an installment sale, any information
you need to complete Form 6252, Installment Sale
Income. The corporation will separately report your share
of all payments received for the property in the following
tax years. See the Instructions for Form 6252 for details.
Code L. Recapture of section 179 deduction. The
corporation will report your share of any recapture of
section 179 expense deduction if business use of any
property for which the section 179 expense deduction was
passed through to shareholders dropped to 50% or less
before the end of the recapture period. If this occurs, the
corporation must provide the following information.
1. Your share of the depreciation allowed or allowable
(not including the section 179 expense deduction).
2. Your share of the section 179 expense deduction (if
any) passed through for the property and the corporation's
tax year(s) in which the amount was passed through.
Reduce this amount by the portion, if any, of your unused
(carryover) section 179 expense deduction for this
property.
Code Q. Capital construction fund (CCF) nonquali-
fied withdrawals. The corporation will report your share
of nonqualified withdrawals from a CCF. These
withdrawals are taxed separately from your other gross
income at the highest marginal ordinary income or capital
gains tax rate. Attach a statement to your federal income
tax return to show your computation of both the tax and
interest for a nonqualified withdrawal. Include the tax and
interest on Schedule 2 (Form 1040), line 21. In the space
to the left of line 21, enter the amount of tax and interest
and “CCF.” See Pub. 595 for details.
Code M. Section 453(l)(3) information. The
corporation will report any information you need to figure
the interest due under section 453(l)(3) with respect to the
disposition of certain timeshares and residential lots on
the installment method. Report the interest on Schedule 2
(Form 1040), line 14. See section 453(l)(3) for details on
how to figure the interest.
Code R. Depletion information—Oil and gas. This is
your share of gross income from the property, share of
production for the tax year, and other information needed
to figure your depletion deduction for oil and gas wells.
The corporation should also allocate to you a
proportionate share of the adjusted basis of each
corporate oil or gas property.
Reduce the basis of your stock by the amount of this
deduction up to the extent of your adjusted basis in the
property.
Code N. Section 453A(c) information. The corporation
will report any information you need to figure the interest
charge under section 453A(c) with respect to certain
installment sales. See Pub. 537, Installment Sales. This
information will include the following from each Form 6252
where line 5 is greater than $150,000.
Description of property.
•
•
•
•
Date acquired.
Date property sold.
Codes S and T. Reserved for future use.
Selling price, including mortgages and other debts (not
including interest, whether stated or unstated).
16
Instructions for Schedule K-1 (Form 1120-S) (2023)
information on where to report them, see the instructions
for Form 8995 or Form 8995-A.
Code U. Net investment income. The corporation may
use code U to report information you may need to
determine your net investment income tax under section
1411, including information regarding income from
controlled foreign corporations (CFCs) and passive
foreign investment companies (PFICs), the stock of which
is owned by the corporation. Any information not provided
elsewhere on Schedule K-3 (or an attachment to
Schedule K-3) is provided using code U. For CFCs and
PFICs that you treat as qualified electing funds (QEFs),
the information that is relevant to you will depend on
whether you, the corporation, or a subsidiary
W-2 wages. The amounts reported reflect your pro rata
share of the S corporation’s W-2 wages allocable to the
QBI of each qualified trade or business, or aggregation.
See the instructions for Form 8995 or Form 8995-A.
Unadjusted basis immediately after acquisition
(UBIA) of qualified property. The amounts reported
reflect your pro rata share of the S corporation’s UBIA of
qualified property of each qualified trade or business, or
aggregation. See the instructions for Form 8995 or Form
8995-A.
pass-through entity has made an election under
Regulations section 1.1411-10(g) with respect to the CFC
or QEF. For example, if the corporation made an election
under Regulations section 1.1411-10(g) for a CFC, the
stock of which is owned by the corporation, and the
relevant income and deduction items derived from that
CFC are reported elsewhere on Schedule K-1, you will not
need the information provided using code U to complete
your Form 8960.
Follow the Instructions for Form 8960 to figure and
report your net investment income and adjusted gross
income or modified adjusted gross income. See
Regulations sections 1.1411-1 through 1.1411-10 for
more details.
Section 199A dividends. The amount reported
reflects your pro rata share of the S corporation’s net
section 199A dividends. See the instructions for Form
8995 or Form 8995-A.
Patrons of specified agricultural and horticultural
cooperatives. If the S corporation was a patron of an
agricultural or horticultural cooperative (specified
cooperative), you must use Form 8995-A to figure your
QBI deduction. In addition, you must complete
Schedule D (Form 8995-A), Special Rules for Patrons of
Agricultural or Horticultural Cooperatives, to determine
your patron reduction.
QBI items allocable to qualified payments from
specified cooperatives subject to
shareholder-specific determinations. The amounts
reported to you reflect your pro rata share of items from
the S corporation’s trade(s) or business(es), or
aggregation(s), and include items that may not be
includible in your calculation of the QBI deduction and
patron reduction. When determining QBI items allocable
to qualified payments, you must include only qualified
items that are included or allowed in determining taxable
income for the tax year. To determine your QBI items
allocable to qualified payments, see the Instructions for
Form 8995-A.
W-2 wages allocable to qualified payments from
specified cooperatives. The amounts reported reflect
your pro rata share of the S corporation’s W-2 wages
allocable to qualified payments of each qualified trade or
business, or aggregation. See the Instructions for Form
8995-A.
Code V. Section 199A information. Generally, you may
be allowed a deduction of up to 20% of your net qualified
business income (QBI) plus 20% of your qualified REIT
dividends, also known as section 199A dividends, and
qualified publicly traded partnership (PTP) income from
your S corporation. The S corporation will provide the
information you need to figure your deduction. You will use
one of these two forms to figure your QBI deduction.
1. Use Form 8995, Qualified Business Income
Deduction Simplified Computation, if:
a. You have QBI, section 199A dividends, or PTP
income (defined below);
b. Your 2023 taxable income before the QBI deduction
is equal to or less than $182,100 ($364,200 if married
filing jointly); and
c. You aren’t a patron in a specified agricultural or
Section 199A(g) deduction from specified
cooperatives. The amount reported reflects your pro rata
share of the S corporation’s net section 199A(g)
deduction. See the Instructions for Form 8995-A.
horticultural cooperative.
2. Use Form 8995-A, Qualified Business Income
Deduction, if you don’t meet all three of these
requirements.
Codes W through Z. Reserved for future use.
QBI pass-through entity reporting information. Use
the information provided to you by your S corporation to
complete the appropriate form identified above.
Code AA. Excess taxable income. If the S corporation
is required to file Form 8990, Limitation on Business
Interest Expense Under Section 163(j), it may determine it
has excess taxable income. Report this amount of excess
taxable income on Form 8990, Schedule B, line 45(c), if
you are required to file Form 8990. See the Instructions for
Form 8990 for details.
Code AB. Excess business interest income. If the S
corporation is required to file Form 8990, it may determine
it has excess business interest income. Report this
amount of excess business interest income on Form 8990,
Schedule B, line 45(d), if you are required to file Form
8990. See the Instructions for Form 8990 for details.
QBI or qualified PTP items subject to
shareholder-specific determinations. The amounts
reported to you reflect your pro rata share of items from
the S corporation’s trade(s) or business(es), or
aggregation(s), and may include items that aren’t
includible in your calculation of the QBI deduction. When
determining QBI or qualified PTP income, you must
include only those items that are qualified items of
income, gain, deduction, and loss included or allowed in
determining taxable income for the tax year. To determine
your QBI or your qualified PTP income amounts and for
Instructions for Schedule K-1 (Form 1120-S) (2023)
17
amounts to report on Form 3468, Part II, Section B, lines
4a and 5a.
Code AT. Qualifying advanced energy project proper-
ty. Use the amounts the corporation provides you to
figure the amounts to report on Form 3468, Part III, line 1a.
Code AC. Gross receipts for section 448(c). Use the
gross receipts amount to figure the business interest
expense you can deduct, if applicable. See section 163(j)
and the Instructions for Form 8990 for details.
Codes AD through AI. Reserved for future use.
Code AU. Advanced manufacturing investment prop-
erty. Use the amounts the corporation provides you to
figure the amount to report on Form 3468, Part IV, line 1b.
Code AJ. Excess business loss limitation. If the
corporation has deductions attributable to a business
activity, it will provide a statement showing the aggregate
gross income or gain and the aggregate deductions from
the business activity that you need to figure any excess
business loss limitation. See section 461(l) and the
Instructions for Form 461 for details.
Code AV. Reserved for future use.
Code AW. Reportable transactions. Any information
you need to complete a disclosure statement for
reportable transactions in which the corporation
participates. If the corporation participates in a transaction
that must be disclosed on Form 8886, Reportable
Transaction Disclosure Statement, both you and the
corporation may be required to file Form 8886 for the
transaction. The determination of whether you are
required to disclose a transaction of the corporation is
based on the category(ies) under which the transaction
qualifies for disclosure and is determined by you and the
corporation. You may have to pay a penalty if you are
required to file Form 8886 and don't do so. See the
Instructions for Form 8886 for details.
Codes AK through AM. Reserved for future use.
Code AN. Farming and fishing income. If you are an
individual shareholder, report this income, as an item of
information, on Schedule E (Form 1040), Part V, line 42.
Don't report this income elsewhere on Form 1040 or
1040-SR.
For a shareholder that is an estate or trust, report this
income to the beneficiaries, as an item of information, on
Schedule K-1 (Form 1041), Beneficiary’s Share of
Income, Deductions, Credits, etc. Don't report it elsewhere
on Form 1041.
Codes AX through BD. Reserved for future use.
Code AO. Reserved for future use.
Code ZZ. Other information. Any other information you
may need to file your return not shown elsewhere on
Schedule K-1 or Schedule K-3.
Code AP. Inversion gain. The corporation will provide a
statement showing the amounts of each type of income or
gain that is included in inversion gain. The corporation has
included inversion gain in income elsewhere on
The corporation should give you a description and the
amount of your share for each of these items.
Schedule K-1. Inversion gain is also reported under code
AP because your taxable income and alternative minimum
taxable income can't be less than the inversion gain. Also,
your inversion gain (a) isn't taken into account in figuring
the net operating loss (NOL) for the tax year or the NOL
that can be carried over to each tax year, (b) may limit your
credits, and (c) is treated as income from sources within
the United States for the foreign tax credit. See section
7874 for details.
Box 18. More Than One Activity for At-Risk
Purposes
When the corporation has more than one activity for
at-risk purposes, it will check this box and attach a
statement. Use the information in the attached statement
to correctly determine your at-risk limitations. For more
Codes AQ and AR. Reserved for future use.
Code AS. Qualifying advanced coal project property
and qualifying gasification project property.
Box 19. More Than One Activity for Passive
Activity Purposes
When the corporation has more than one activity for
passive activity purposes, it will check this box and attach
a statement. Use the information in the attached
statement to correctly determine your passive activity
limitations. For more information, see Passive Activity
Limitations, earlier.
For qualified investment in qualifying advanced coal
•
project property, use the amounts the corporation
provides you to figure the amounts to report on Form
3468, Part II, Section A, lines 1a, 2a, and 3a.
For qualified investment in qualifying gasification, use
•
the amounts the corporation provides you to figure the
18
Instructions for Schedule K-1 (Form 1120-S) (2023)
List of Codes
This list identifies the codes used on
Schedule K-1 for all shareholders.
For detailed reporting and filing
information, see the specific line
instructions, earlier, and the
instructions for your income tax
return.
Deductions—Portfolio income
(other)
Preproductive period
expenses
Reserved for future use
Reforestation expense
deduction
Unused investment credit from
the qualifying advanced
energy project credit allocated
from cooperatives
Unused investment credit from
the advanced manufacturing
investment credit allocated
from cooperatives
Reserved for future use
Unused investment credit from
the energy credit allocated
from cooperatives
Unused investment credit from
the rehabilitation credit
allocated from cooperatives
Advanced manufacturing
production credit
N
P – V Reserved for future use
S
Box 10. Other income (loss)
Soil and water conservation
Film, television, and theatrical
production expenditures
Expenditures for removal of
barriers
Code
Other portfolio income (loss)
Involuntary conversions
Section 1256 contracts and
straddles
Itemized deductions
Contributions to a capital
construction fund (CCF)
Penalty on early withdrawal of
savings
Interest expense allocated to
debt financed distributions
Mining exploration costs
recapture
Section 951A(a) income
inclusions
W – X Reserved for future use
Clean hydrogen production
credit
Orphan drug credit
Enhanced oil recovery credit
Renewable electricity
production credit
Biodiesel, renewable diesel,
or sustainable aviation fuels
credit
Inclusions of subpart F income
Section 951(a)(1)(B)
inclusions
AD – AJ Reserved for future use
ZZ Other deductions
H
Reserved for future use
Gain (loss) from disposition of
oil, gas, geothermal, or other
mineral properties
Box 13. Credits
Zero-emission nuclear power
production credit
L
Recoveries of tax benefit items
Gambling gains and losses
Reserved for future use
Gain eligible for section 1045
rollover (replacement stock
purchased by the corporation)
Gain eligible for section 1045
rollover (replacement stock
not purchased by the
corporation)
New markets credit
Production from advanced
nuclear power facilities credit
Low-income housing credit
(section 42(j)(5)) from
post-2007 buildings
Low-income housing credit
(other) from post-2007
buildings
Qualified rehabilitation
expenditures (rental real
estate)
Other rental real estate credits
Other rental credits
Undistributed capital gains
credit
Biofuel producer credit
Work opportunity credit
Disabled access credit
Empowerment zone
Credit for small employer
pension plan startup costs
Credit for small employer
auto-enrollment
Credit for military spouse
participation
Credit for employer-provided
childcare facilities and services
Low sulfur diesel fuel
production credit
Qualified railroad track
maintenance credit
Credit for oil and gas
production from marginal wells
Distilled spirits credit
Energy efficient home credit
Alternative motor vehicle credit
Alternative fuel vehicle
refueling property credit
Clean renewable energy bond
credit
New clean renewable energy
bond credit
Qualified energy conservation
bond credit
Sale or exchange of QSB
stock with section 1202
exclusion
P – R Reserved for future use
Non-portfolio capital gain
(loss)
T – X Reserved for future use
ZZ Other income (loss)
Box 12. Other deductions
employment credit
Credit for increasing research
activities
Cash contributions (60%)
Cash contributions (30%)
Noncash contributions (50%)
Noncash contributions (30%)
Capital gain property to a 50%
limit organization (30%)
Credit for employer social
security and Medicare taxes
Backup withholding
Unused investment credit from
the qualifying advanced coal
project credit or qualifying
gasification project credit
allocated from cooperatives
K
Capital gain property (20%)
Contributions (100%)
Investment interest expense
Deductions—Royalty income
Section 59(e)(2) expenditures
Reserved for future use
Qualified zone academy bond
credit
Qualified school construction
bond credit
Build America bond credit
19
Credit for employer differential
wage payments
Carbon oxide sequestration
credit
Other tax-exempt income
Nondeductible expenses
Distributions
Repayment of loans from
shareholders
Interest allocable to
production expenditures
Capital construction fund
(CCF) nonqualified
withdrawals
Depletion information—Oil
and gas
Carbon oxide sequestration
credit recapture
New clean vehicle credit
Qualified commercial clean
vehicle credit
Credit for small employer
health insurance premiums
Employer credit for paid family
and medical leave
Eligible credits from
transferor(s) under section
6418
Foreign taxes paid or accrued
S – T Reserved for future use
W – Z Reserved for future use
Box 17. Other information
Net investment income
Section 199A information
Investment income
Investment expenses
Qualified rehabilitation
expenditures (other than
rental real estate)
Basis of energy property
Recapture of low-income
housing credit (section 42(j)
(5))
Recapture of low-income
housing credit (other)
Recapture of investment credit
Recapture of other credits
Look-back
interest—Completed
long-term contracts
Look-back interest—Income
forecast method
Dispositions of property with
section 179 deductions
Recapture of section 179
deduction
Section 453(l)(3) information
Section 453A(c) information
Section 1260(b) information
Excess taxable income
Excess business interest
income
Gross receipts for section
448(c)
BD – BG Reserved for future use
ZZ Other credits
AD – AI Reserved for future use
AJ Excess business loss limitation
AK – AM Reserved for future use
Box 15. Alternative minimum tax
(AMT) items
AO
Farming and fishing income
Reserved for future use
Inversion gain
Post-1986 depreciation
adjustment
Adjusted gain or loss
Depletion (other than oil & gas)
Oil, gas, & geothermal—Gross
income
Oil, gas, &
geothermal—Deductions
Other AMT items
AQ – AR Reserved for future use
Qualifying advanced coal
project property and qualifying
gasification project property
Qualifying advanced energy
project property
Advanced manufacturing
investment property
AV
Reserved for future use
Reportable transactions
Box 16. Items affecting share-
holder basis
AX – BD Reserved for future use
ZZ Other information
Tax-exempt interest income
20