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Obrazac 1120-S Upute za raspored K-1

Upute dioničara 2021 za raspored K-1 (obrazac 1120-S)

Upute dioničara za raspored K-1 (obrazac 1120-S), udio dioničara u prihodu, odbitke, kredite itd. (Samo za upotrebu dioničara)

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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 . . . . . . . . . . . . . . . . . . . . . . . . . 1  
Purpose of Schedule K-1 . . . . . . . . . . . . . . . . . . 1  
Inconsistent Treatment of Items . . . . . . . . . . . . . . 1  
Errors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2  
Decedent's Schedule K-1 . . . . . . . . . . . . . . . . . . 2  
Sale of S Corporation Stock . . . . . . . . . . . . . . . . . 2  
International Boycotts . . . . . . . . . . . . . . . . . . . . . 2  
Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2  
Additional Information . . . . . . . . . . . . . . . . . . . . . 2  
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  
Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2  
Basis Limitations . . . . . . . . . . . . . . . . . . . . . 2  
At-Risk Limitations . . . . . . . . . . . . . . . . . . . . 3  
Passive Activity Limitations . . . . . . . . . . . . . . 3  
Excess Business Loss Limitations . . . . . . . . . 6  
Specific Instructions . . . . . . . . . . . . . . . . . . . . . . . . . 6  
Box 1. Ordinary Business Income (Loss) . . . . . . . 6  
Box 2. Net Rental Real Estate Income (Loss) . . . . 6  
Box 3. Other Net Rental Income (Loss) . . . . . . . . . 7  
Box 4. Interest Income . . . . . . . . . . . . . . . . . . . . 7  
Boxes 5a and 5b. Dividends . . . . . . . . . . . . . . . . 7  
Box 6. Royalties . . . . . . . . . . . . . . . . . . . . . . . . . 7  
Box 7. Net Short-Term Capital Gain (Loss) . . . . . . 7  
Box 8a. Net Long-Term Capital Gain (Loss) . . . . . 7  
Box 9. Net Section 1231 Gain (Loss) . . . . . . . . . . 8  
Box 10. Other Income (Loss) . . . . . . . . . . . . . . . . 8  
Box 11. Section 179 Deduction . . . . . . . . . . . . . . 9  
Box 12. Other Deductions . . . . . . . . . . . . . . . . . 10  
Box 13. Credits . . . . . . . . . . . . . . . . . . . . . . . . . 12  
Box 14. International Transactions . . . . . . . . . . . 14  
Box 15. AMT Items . . . . . . . . . . . . . . . . . . . . . . 14  
Box 16. Items Affecting Shareholder Basis . . . . . 14  
Box 17. Other Information . . . . . . . . . . . . . . . . . 15  
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  
!
CAUTION  
reported on Schedule K-1. It is the shareholder's  
responsibility to consider and apply any applicable  
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  
Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . 18  
Box 19. More Than One Activity for Passive  
Activity Purposes . . . . . . . . . . . . . . . . . . . . . 18  
Inconsistent Treatment of Items  
List of Codes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19  
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  
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  
instructions for code M in box 12.  
Section 617 (deduction and recapture of certain mining  
exploration expenditures).  
Section 901 (foreign tax credit).  
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  
2
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  
!
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  
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,  
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:  
!
CAUTION  
Distributions don't reduce loan basis, and  
Loans that a shareholder guarantees or co-signs aren't  
Are individuals, estates, or trusts; and  
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.  
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)  
3
   
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  
4
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  
activity of the corporation, or  
You were a real estate professional (defined earlier) in a  
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.  
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  
retirement benefits.  
Any deductible contributions to an IRA or certain other  
qualified retirement plans under section 219.  
The student loan interest deduction.  
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  
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  
!
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.  
See List of Codes, later.  
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  
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  
6
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  
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 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,  
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,  
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)  
See List of Codes, later.  
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  
!
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  
!
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  
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,  
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  
See List of Codes, later.  
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  
See List of Codes, later.  
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  
statement. See Passive Activity Limitations, earlier, and  
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.  
See Passive Activity Limitations, earlier, and the  
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,  
line 1u (see TIP, earlier).  
Code B. Production from advanced nuclear power fa-  
cilities credit. Report this amount in Part I of Form 7213,  
or Form 3800, Part III, line 1cc (see TIP, earlier).  
Code I. Biofuel producer credit. Report this amount on  
line 3 of Form 6478, Biofuel Producer Credit, or Form  
3800, Part III, line 4c (see TIP, earlier).  
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  
3800, Part III, line 4d (see TIP, earlier).  
Code J. Work opportunity credit. Report this amount  
on line 3 of Form 5884, Work Opportunity Credit, or Form  
3800, Part III, line 4b (see TIP, earlier).  
Code K. Disabled access credit. Report this amount on  
line 7 of Form 8826, Disabled Access Credit, or Form  
3800, Part III, line 1e (see TIP, earlier).  
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  
(see TIP, earlier).  
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,  
line 1c (see TIP, earlier) as follows.  
Code Z. Orphan drug credit. Report this amount on  
Form 8820, Orphan Drug Credit, or Form 3800, Part III,  
line 1h (see TIP, earlier).  
Code AA. Enhanced oil recovery credit. Report this  
amount on Form 8830, Enhanced Oil Recovery Credit, or  
Form 3800, Part III, line 1t (see TIP, earlier).  
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  
Credit, or Form 3800, Part III, line 1f (see TIP, earlier).  
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,  
line 4f (see TIP, earlier).  
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,  
line 1i (see TIP, earlier).  
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,  
Part I, or Form 3800, Part III, line 1j (see TIP, earlier).  
Code AF. Credit for small employer auto-enrollment.  
Report this amount on Form 8881, Part II, or Form 3800,  
Part III, line 1dd (see TIP, earlier).  
Code AG. Credit for military spouse participation.  
Report this amount on Form 8881, Part III, or Form 3800,  
Part III, line 1ee (see TIP, earlier).  
Code AH. Credit for employer-provided childcare fa-  
cilities and services. Report this amount on Form 8882  
or Form 3800, Part III, line 1k (see TIP, earlier).  
Code AI. Low sulfur diesel fuel production credit.  
Report this amount on Form 8896, Low Sulfur Diesel Fuel  
Production Credit, or Form 3800, Part III, line 1m (see TIP,  
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  
(see TIP, earlier).  
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  
3800, Part III, line 1bb (see TIP, earlier).  
Code AL. Distilled spirits credit. Report this amount on  
Form 8906, Distilled Spirits Credit, or Form 3800, Part III,  
line 1n (see TIP, earlier).  
Code AM. Energy efficient home credit. Report this  
amount on Form 8908, Energy Efficient Home Credit, or  
Form 3800, Part III, line 1p (see TIP, earlier).  
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  
Production Credit, or Form 3800, Part III, line 1b (see TIP,  
earlier).  
Codes W and X. Reserved for future use.  
Code Y. Clean hydrogen production credit. Report  
this amount on Form 7210, Clean Hydrogen Production  
Credit, or Form 3800, Part III, line 1g (see TIP, earlier).  
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  
3800, Part III (see TIP, earlier).  
Code AN. Alternative motor vehicle credit. Report this  
amount on Form 8910, Alternative Motor Vehicle Credit, or  
Form 3800, Part III, line 1r (see TIP, earlier).  
Code AO. Alternative fuel vehicle refueling property  
credit. Report this amount on Form 8911, Alternative  
Fuel Vehicle Refueling Property Credit, Part II, or Form  
3800, Part III, line 1s (see TIP, earlier).  
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  
See List of Codes, later.  
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  
III, line 1w (see TIP, earlier).  
Code AW. Carbon oxide sequestration credit. Report  
this amount on Form 8933, Carbon Oxide Sequestration  
Credit, or Form 3800, Part III, line 1x (see TIP, earlier).  
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  
3800, Part III, line 1y (see TIP, earlier).  
Code AZ. Qualified commercial clean vehicle credit.  
Report this amount on Form 8936, Part V, or Form 3800,  
Part III, line 1aa (see TIP, earlier).  
Code BA. Credit for small employer health insurance  
premiums. Report this amount on Form 8941, Credit for  
Small Employer Health Insurance Premiums, or Form  
3800, Part III, line 4h (see TIP, earlier).  
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  
(see TIP, earlier).  
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  
See List of Codes, later.  
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  
See List of Codes, later.  
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  
information, see At-Risk Limitations, earlier.  
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