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                                                                                                        Department of the Treasury
                                                                                                        Internal Revenue Service
2022

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 
Contents                                                            Page     Schedule K-1 (Form 1120-S) and its instructions, such as 
Future Developments     . . . . . . . . . . . . . . . . . . . . . . . .   1  legislation enacted after they were published, go to 
General Instructions  . . . . . . . . . . . . . . . . . . . . . . . . .   1  IRS.gov/Form1120S.
Purpose of Schedule K-1             . . . . . . . . . . . . . . . . . .   1
                                                                             Reminder
Inconsistent Treatment of Items . . . . . . . . . . . . . .               2
Errors   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  2  Form 7203. Form 7203 and its separate instructions are 
Decedent's Schedule K-1             . . . . . . . . . . . . . . . . . .   2  developed to replace the Worksheet for Figuring a 
                                                                             Shareholder's Stock and Debt Basis. See the Instructions 
Sale of S Corporation Stock           . . . . . . . . . . . . . . . . .   2
                                                                             for Form 7203 for details.
International Boycotts . . . . . . . . . . . . . . . . . . . . .          2
Elections     . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
                                                                             General Instructions
Additional Information . . . . . . . . . . . . . . . . . . . . .          2
Limitations on Losses, Deductions, and                                       Purpose of Schedule K-1
Credits       . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2  The corporation uses Schedule K-1 to report your share of 
Basis Limitations             . . . . . . . . . . . . . . . . . . . . .   2  the corporation's income, deductions, credits, and other 
At-Risk Limitations             . . . . . . . . . . . . . . . . . . . .   3  items. Keep it for your records. Don't file it with your tax 
Passive Activity Limitations                . . . . . . . . . . . . . .   4  return unless backup withholding is reported in box 13 
Excess Business Loss Limitations                      . . . . . . . . .   6  using code O. (See the instructions for Code O. Backup 
                                                                             withholding, later.) The corporation files a copy of 
Specific Instructions . . . . . . . . . . . . . . . . . . . . . . . . .   6
                                                                             Schedule K-1 with the IRS.
Box 1. Ordinary Business Income (Loss)                    . . . . . . .   6
Box 2. Net Rental Real Estate Income (Loss)                     . . . .   7  For your protection, Schedule K-1 may show only the 
Box 3. Other Net Rental Income (Loss)                 . . . . . . . . .   7  last four digits of your identifying number (social security 
Box 4. Interest Income          . . . . . . . . . . . . . . . . . . . .   7  number (SSN), employer identification number (EIN), or 
                                                                             individual taxpayer identification number (ITIN)). However, 
Boxes 5a and 5b. Dividends              . . . . . . . . . . . . . . . .   7  the corporation has reported your complete identifying 
Box 6. Royalties . . . . . . . . . . . . . . . . . . . . . . . . .        7  number to the IRS.
Box 7. Net Short-Term Capital Gain (Loss) . . . . . .                     7
Box 8a. Net Long-Term Capital Gain (Loss)                     . . . . .   7  You may be liable for tax on your share of the 
                                                                             corporation's income, whether or not distributed. Include 
Box 9. Net Section 1231 Gain (Loss)                 . . . . . . . . . .   8  your share on your tax return if a return is required. Use 
Box 10. Other Income (Loss) . . . . . . . . . . . . . . . .               8  these instructions to help you report the items shown on 
Box 11. Section 179 Deduction               . . . . . . . . . . . . .     10 Schedule K-1 on your tax return.
Box 12. Other Deductions . . . . . . . . . . . . . . . . .                10
                                                                             Your share of S corporation income isn't 
Box 13. Credits     . . . . . . . . . . . . . . . . . . . . . . . . .     11 self-employment income and it isn't subject to 
Box 14. International Transactions . . . . . . . . . . .                  13 self-employment tax.
Box 15. AMT Items . . . . . . . . . . . . . . . . . . . . . .             13
                                                                                     The amount of loss and deduction you may claim 
Box 16. Items Affecting Shareholder Basis . . . . .                       14 !       on your tax return may be less than the amount 
Box 17. Other Information           . . . . . . . . . . . . . . . . .     14 CAUTION reported on Schedule K-1. It is the shareholder's 
Box 18. More Than One Activity for At-Risk                                   responsibility to consider and apply any applicable 
Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . .            17 limitations. See Limitations on Losses, Deductions, and 
Box 19. More Than One Activity for Passive                                   Credits, later, for more information.
Activity Purposes           . . . . . . . . . . . . . . . . . . . . .     17
List of Codes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   18 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 

Dec 20, 2022                                                        Cat. No. 11521O

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calendar year on Form 1099-DIV, Dividends and If the corporation cooperated with an international
Distributions. boycott, it must give you a copy of its Form 5713. You
must file your own Form 5713 to report the corporation's
Inconsistent Treatment of Items activities and any other boycott operations that you may
Generally, you must report corporate items shown on your have. You may lose certain tax benefits if the corporation
Schedule K-1 (and any attached statements) the same participated in, or cooperated with, an international
way that the corporation treated the items on its return. boycott. See Form 5713 and its instructions for details.

If the treatment on your original or amended return is Elections
inconsistent with the corporation's treatment, or if the Generally, the corporation decides how to figure taxable
corporation hasn't filed a return, file Form 8082, Notice of income from its operations. However, certain elections are
Inconsistent Treatment or Administrative Adjustment made by you separately on your income tax return and not
Request (AAR), with your original or amended return to by the corporation. These elections are made under the
identify and explain any inconsistency (or to note that a following code sections.
corporate return hasn't been filed). • Section 59(e) (deduction of certain qualified
expenditures ratably over the period of time specified in
If you are required to file Form 8082 but don't do so, that section). For details, see the instructions for code J in
you may be subject to the accuracy-related penalty. This box 12.
penalty is in addition to any tax that results from making Section 263A(d) (preproductive expenses). See the
•
your amount or treatment of the item consistent with that instructions for code M in box 12.
shown on the corporation's return. Any deficiency that Section 617 (deduction and recapture of certain mining
•
results from making the amounts consistent may be exploration expenditures).
assessed immediately. Section 901 (foreign tax credit).
•
Errors Additional Information
If you believe the corporation has made an error on your For more information on the treatment of S corporation
Schedule K-1, notify the corporation and ask for a income, deductions, credits, and other items, see Pub.
corrected Schedule K-1. Don't change any items on your 535, Business Expenses; Pub. 550, Investment Income
copy of Schedule K-1. Be sure that the corporation sends and Expenses; and Pub. 925, Passive Activity and At-Risk
a copy of the corrected Schedule K-1 to the IRS. If you are Rules.
unable to reach an agreement with the corporation
regarding the inconsistency, file Form 8082. 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
If you are the executor of an estate and you have received Limitations on Losses, Deductions,
a decedent's Schedule K 1, then you have the ‐ and Credits
responsibility to notify the S corporation of the name and There are potential limitations on corporate losses that
tax identification number (TIN) of the decedent’s estate if you can deduct on your return. These limitations and the
the S corporation stock is part of a decedent’s estate. This order in which you must apply them are as follows: the
is information that the S corporation must have to properly basis limitations, the at-risk limitations, the passive activity
determine its eligibility to maintain status as a subchapter limitations, and the excess business loss limitations.
S corporation. If a decedent died in a prior year and the S These limitations are discussed below.
corporation continues to send the decedent a Schedule K‐
1 after being notified of the decedent’s death, then you Other limitations may apply to specific deductions (for
should request that the S corporation send a corrected example, the section 179 expense deduction). Specific
Schedule K 1. If you receive an interest in an S ‐ limitations generally apply before at-risk and passive loss
corporation by reason of a former shareholder’s death, limitations.
you must provide the S corporation with your name and
TIN. For treatment of S corporation income upon the Basis Limitations
death of a shareholder, see Pub. 559, Survivors, Generally, the deduction for your share of aggregate
Executors, and Administrators. losses and deductions reported on Schedule K-1 is
limited to the basis of your stock and loans from you to the
Sale of S Corporation Stock corporation. For details and exceptions, see section
Gain or loss from the disposition of your S corporation 1366(d). The basis of your stock is generally figured at the
stock may be net investment income under section 1411 end of the corporation's tax year. Any losses and
and could be subject to the net investment income tax. deductions not allowed this year because of the basis limit
See Form 8960, Net Investment Income Tax—Individuals, can be carried forward indefinitely and deducted in a later
Estates, and Trusts, and its instructions for information year subject to the basis limit for that year.
about how to figure and report the tax. You are responsible for keeping the information
International Boycotts needed to figure the basis of your stock in the corporation.
Schedule K-1 provides information to help you figure your
Every corporation that had operations in, or related to, a stock basis at the end of each corporate tax year. The
boycotting country, company, or a national of a boycotting basis of your stock (generally, its cost) is adjusted
country must file Form 5713, International Boycott Report. annually as follows and, except as noted, in the order

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listed. In addition, basis may be adjusted under other When determining your basis in loans to the
provisions of the Internal Revenue Code. You should ! corporation, remember that:
generally use Form 7203, S Corporation Shareholder CAUTION
Stock and Debt Basis Limitations, to figure your aggregate • Distributions don't reduce loan basis, and
stock and debt basis. • Loans that a shareholder guarantees or co-signs aren't
1. Basis is increased by (a) all income (including part of a shareholder's loan basis. Shareholders only
tax-exempt income) reported on Schedule K-1, and (b) obtain basis from acting as a guarantee or in a similar
the excess of the deduction for depletion (other than oil capacity to the extent the shareholder makes a payment
and gas depletion) over the basis of the property subject pursuant to the guarantee.
to depletion.
You must report on your return (if you are required See the Instructions for Form 7203 for more details.

! to file one) any amount required to be included in At-Risk Limitations
CAUTION gross income for it to increase your basis.
Generally, if you have (a) a loss or other deduction from
2. Basis is decreased (but not below zero) by (a) any activity carried on as a trade or business or for the
property distributions (including cash) made by the production of income by the corporation, and (b) amounts
corporation reported on Schedule K-1, box 16, code D, in the activity for which you aren't at risk, you will have to
minus (b) the amount of such distributions in excess of the complete Form 6198, At-Risk Limitations, to figure your
basis in your stock. allowable loss for the activity.
3. Basis is decreased (but not below zero) by (a)
The at-risk rules generally limit the amount of loss and
nondeductible expenses, and (b) the depletion deduction
other deductions that you can claim to the amount you
for any oil and gas property held by the corporation, but
could actually lose in the activity. These losses and
only to the extent your share of the property's adjusted
deductions include a loss on the disposition of assets and
basis exceeds that deduction.
the section 179 expense deduction. However, if you
4. Basis is decreased (but not below zero) by all acquired your stock before 1987, the at-risk rules don't
losses and deductions reported on Schedule K-1. apply to losses from an activity of holding real property
You may elect to decrease your basis under (4) prior to placed in service before 1987 by the corporation. The
decreasing your basis under (3). If you make this election, activity of holding mineral property doesn't qualify for this
any amount described under (3) that exceeds the basis of exception.
your stock and debt owed to you by the corporation is
Generally, you aren't at risk for amounts such as the
treated as an amount described under (3) for the following
following.
tax year.
• The basis of your stock in the corporation or the basis of
To make the election, attach a statement to your timely your loans to the corporation if the cash or other property
filed original or amended return that states you agree to used to purchase the stock or make the loans was from a
the carryover rule of Regulations section 1.1367-1(g) and source (a) covered by nonrecourse indebtedness (except
the name of the S corporation to which the rule applies. for certain qualified nonrecourse financing, as defined in
Once made, the election applies to the year for which it is section 465(b)(6)); (b) protected against loss by a
made and all future tax years for that S corporation, guarantee, stop-loss agreement, or other similar
unless the IRS agrees to revoke your election. arrangement; or (c) that is covered by indebtedness from
a person who has an interest in the activity or from a
The basis of each share of stock is increased or person related to a person (except you) having such an
decreased (but not below zero) based on its pro rata interest, other than a creditor.
share of the above adjustments. If the total decreases in Any cash or property contributed to a corporate activity,
•
basis attributable to a share exceed that share's basis, the or your interest in the corporate activity, that is (a) covered
excess reduces (but not below zero) the remaining bases by nonrecourse indebtedness (except for certain qualified
of all other shares of stock in proportion to the remaining nonrecourse financing, as defined in section 465(b)(6));
basis of each of those shares. (b) protected against loss by a guarantee, stop-loss
Basis of loans. The basis of your loans to the agreement, or other similar arrangement; or (c) covered
corporation is generally the balance the corporation owes by indebtedness from a person who has an interest in the
you, adjusted for any reductions and restorations of loan activity or from a person related to a person (except you)
basis (see the instructions for box 16, code E). Any having such an interest, other than a creditor.
amounts described in (3) and (4), earlier, not used to
offset amounts in (1), earlier, or to reduce your stock Any loss from a section 465 activity not allowed for this
basis, are used to reduce your loan basis (to the extent of tax year will be treated as a deduction allocable to the
such basis prior to such reduction). 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.

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Passive Activity Limitations Material participation. You must determine if you
Section 469 provides rules that limit the deduction of materially participated (a) in each trade or business
certain losses and credits. These rules apply to activity held through the corporation, and (b) if you were a
shareholders who: real estate professional (defined earlier), in each rental
• Are individuals, estates, or trusts; and real estate activity held through the corporation.
• Have a passive activity loss or credit for the tax year. Each interest in rental real estate is a separate activity,
unless you elect to treat all interests in rental real estate
Generally, passive activities include: as one activity. For details on making this election, see the
1. Trade or business activities in which you didn't Instructions for Schedule E (Form 1040), Supplemental
materially participate, and Income and Loss.
2. Activities that meet the definition of rental activities All determinations of material participation are based
under Temporary Regulations section 1.469-1T(e)(3) and on your participation during the corporation's tax year.
Regulations section 1.469-1(e)(3). Material participation standards for shareholders who
Passive activities don't include the following. are individuals are listed below. Special rules apply to
1. Trade or business activities in which you materially certain retired or disabled farmers and to the surviving
participated. spouses of farmers. See the Instructions for Form 8582 for
details.
2. Rental real estate activities in which you materially Individuals. If you are an individual, you materially
participated if you were a real estate professional for the participated in an activity only if one or more of the
tax year. You were a real estate professional only if you following apply.
met both of the following conditions.
1. You participated in the activity for more than 500
a. More than half of the personal services you hours during the tax year.
performed in trades or businesses were performed in real
property trades or businesses in which you materially 2. Your participation in the activity for the tax year
participated. constituted substantially all the participation in the activity
of all individuals (including individuals who aren't owners
b. You performed more than 750 hours of services in of interests in the activity).
real property trades or businesses in which you materially
participated. 3. You participated in the activity for more than 100
hours during the tax year, and your participation in the
If you are married filing jointly, either you or your activity for the tax year wasn't less than the participation in
spouse must separately meet both (a) and (b) of the the activity of any other individual (including individuals
above conditions, without taking into account services who weren’t owners of interests in the activity) for the tax
performed by the other spouse. year.
A real property trade or business is any real property 4. The activity was a significant participation activity
development, redevelopment, construction, for the tax year, and you participated in all significant
reconstruction, acquisition, conversion, rental, operation, participation activities (including activities outside the
management, leasing, or brokerage trade or business. corporation) during the year for more than 500 hours. A
Services you performed as an employee aren't treated as significant participation activity is any trade or business
performed in a real property trade or business unless you activity in which you participated for more than 100 hours
owned more than 5% of the stock (or more than 5% of the during the year and in which you didn't materially
capital or profits interest) in the employer. participate under any of the material participation tests
3. The rental of a dwelling unit any shareholder used (other than this test).
for personal purposes during the year for more than the 5. You materially participated in the activity for any 5
greater of 14 days or 10% of the number of days that the tax years (whether or not consecutive) during the 10 tax
residence was rented at fair rental value. 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
account of owners of interests in the activities. materially participated in the activity for any 3 tax years
If you have a passive activity loss or credit, use Form (whether or not consecutive) preceding the tax year. A
8582, Passive Activity Loss Limitations, to figure your personal service activity involves the performance of
allowable passive losses, and Form 8582-CR, Passive personal services in the fields of health, law, engineering,
Activity Credit Limitations, to figure your allowable passive architecture, accounting, actuarial science, performing
credits. See the instructions for these forms for details. arts, consulting, or any other trade or business in which
capital isn't a material income-producing factor.
If the corporation has more than one activity, it will 7. Based on all the facts and circumstances, you
attach a statement to your Schedule K-1 that identifies participated in the activity on a regular, continuous, and
each activity (trade or business activity, rental real estate substantial basis during the tax year.
activity, rental activity other than rental real estate,
portfolio income) and specifies the income (loss), Work counted toward material participation.
deductions, and credits from each activity. Generally, any work that you or your spouse does in
connection with an activity held through an S corporation
Note. Schedule K-1, box 19, will be checked when a (where you own your stock at the time the work is done) is
statement is attached. counted toward material participation. However, work in

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connection with the activity isn't counted toward material participation requirement for the activity for the tax year
participation if either of the following applies. the decedent died.
1. The work isn't the type of work that owners of the You aren't considered to actively participate in a rental
activity would usually do, and one of the principal real estate activity if, at any time during the tax year, your
purposes of the work that you or your spouse does is to interest (including your spouse's interest) in the activity
avoid the passive loss or credit limitations. was less than 10% (by value) of all interests in the activity.
2. You do the work in your capacity as an investor and Active participation is a less stringent requirement than
you aren't directly involved in the day-to-day operations of material participation. You may be treated as actively
the activity. Examples of work done as an investor that participating if you participated, for example, in making
wouldn't count toward material participation include: management decisions or arranging for others to provide
a. Studying and reviewing financial statements or services (such as repairs) in a significant and bona fide
reports on operations of the activity, sense. Management decisions that can count as active
participation include approving new tenants, deciding
b. Preparing or compiling summaries or analyses of
rental terms, approving capital or repair expenditures, and
the finances or operations of the activity for your own use,
other similar decisions.
and
Modified adjusted gross income limitation. The
c. Monitoring the finances or operations of the activity maximum special allowance that single individuals and
in a nonmanagerial capacity. married individuals filing a joint return can qualify for is
Effect of determination. Income (loss), deductions, $25,000. The maximum is $12,500 for married individuals
and credits from an activity are nonpassive if you who file separate returns and who lived apart at all times
determine that: during the year. The maximum special allowance for
• You materially participated in a trade or business which an estate can qualify is $25,000 reduced by the
activity of the corporation, or special allowance for which the surviving spouse qualifies.
• You were a real estate professional (defined earlier) in a If your modified adjusted gross income (defined below)
rental real estate activity of the corporation. is $100,000 or less ($50,000 or less if married filing
If you determine that you didn't materially participate in separately), your loss is deductible up to the maximum
a trade or business activity of the corporation or if you special allowance referred to in the preceding paragraph.
have income (loss), deductions, or credits from a rental If your modified adjusted gross income is more than
activity of the corporation (other than a rental real estate $100,000 (more than $50,000 if married filing separately),
activity in which you materially participated as a real the special allowance is limited to 50% of the difference
estate professional), the amounts from that activity are between $150,000 ($75,000 if married filing separately)
passive. Report passive income (losses), deductions, and and your modified adjusted gross income. When modified
credits as follows. adjusted gross income is $150,000 or more ($75,000 or
more if married filing separately), there is no special
1. If you have an overall gain (the excess of income
allowance.
over deductions and losses, including any prior year
unallowed loss) from a passive activity, report the income, Modified adjusted gross income is your adjusted gross
deductions, and losses from the activity as indicated in income figured without taking into account the following
these instructions. amounts, if applicable.
2. If you have an overall loss (the excess of • Any passive activity loss.
deductions and losses, including any prior year unallowed • Any rental real estate loss allowed under section 469(c)
(7) to real estate professionals (defined earlier).
loss, over income) or credits from a passive activity, report
the income, deductions, losses, and credits from all • Any overall loss from a publicly traded partnership.
passive activities using the Instructions for Form 8582 or • Any taxable social security or equivalent railroad
retirement benefits.
Form 8582-CR, to see if your deductions, losses, and
credits are limited under the passive activity rules. • Any deductible contributions to an IRA or certain other
qualified retirement plans under section 219.
Special allowance for a rental real estate activity. If • The student loan interest deduction.
you actively participated in a rental real estate activity, you • The deductible part of self-employment taxes.
may be able to deduct up to $25,000 of the loss (or credit • The exclusion from income of interest from Series EE or
equivalent to a $25,000 deduction) from the activity from I U.S. Savings Bonds used to pay higher education
nonpassive income. This “special allowance” is an expenses.
exception to the general rule disallowing losses in excess • The exclusion of amounts received under an
of income from passive activities. The special allowance employer's adoption assistance program.
isn't available if you were married, file a separate return for Special rules for certain other activities. If you have
the year, and didn't live apart from your spouse at all times net income (loss), deductions, or credits from any activity
during the year. to which special rules apply, the corporation will identify
Only individuals can actively participate in a rental real the activity and all amounts relating to it on Schedule K-1
estate activity. However, a decedent's estate (including a or on an attached statement.
qualified revocable trust for which a section 645 election If you have net income subject to recharacterization
has been made) is treated as actively participating for its under Temporary Regulations section 1.469-2T(f) and
tax years ending less than 2 years after the decedent's
death, if the decedent would have satisfied the active

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Regulations section 1.469-2(f), report such amounts apply, adjust the amounts on Schedule K-1 before you
according to the Instructions for Form 8582. report them on your return.
If you have net income (loss), deductions, or credits
When applicable, the passive activity limitations on
from either of the following activities, treat such amounts
losses are applied after the limitations on losses for a
as nonpassive and report them as indicated in these
shareholder's basis in stock and debt and the
instructions.
shareholder's at-risk amount.
1. The rental of a dwelling unit any shareholder used
for personal purposes during the year for more than the If you file your tax return on a calendar year basis, but
greater of 14 days or 10% of the number of days that the the corporation files a return for a fiscal year, report the
residence was rented at fair rental value. amounts on your tax return for the year in which the
2. Trading personal property for the account of owners corporation's fiscal year ends. For example, if the
of interests in the activity. corporation's tax year ends in February 2023, report the
amounts on your 2023 tax return.
Self-charged interest. The corporation will report any
“self-charged” interest income or expense that resulted If you have losses, deductions, or credits from a prior
from loans between you and the corporation (or between year that weren’t deductible or usable because of certain
the corporation and another S corporation or partnership if limitations, such as the basis limitations or the at-risk
both entities have the same owners with the same limitations, take them into account in determining your
proportional interest in each entity). If there was more than income, loss, or credits for this year. However, except for
one activity, the corporation will provide a statement passive activity losses and credits, don't combine the prior
allocating the interest income or expense with respect to year amounts with any amounts shown on this
each activity. The self-charged interest rules don't apply to Schedule K-1 to get a net figure to report on your return.
your interest in the S corporation if the corporation made Instead, report the amounts on your return on a
an election under Regulations section 1.469-7(g) to avoid year-by-year basis.
the application of these rules. See the Instructions for If you have amounts other than those shown on
Form 8582 for details. ! Schedule K-1 to report on Schedule E (Form
CAUTION 1040), enter each item separately on Schedule E
Excess Business Loss Limitations (Form 1040), line 28.
Losses attributable to your trade or business may be
limited, pursuant to section 461(l). See Form 461, Codes. In boxes 10, 12, 13, and boxes 15 through 17,
Limitation on Business Losses, and its instructions for the corporation will identify each item by entering a code
more information. in the column to the left of the dollar amount entry space.
See List of Codes, later.
Specific Instructions Attached statements. The corporation will enter an
asterisk (*) after the code, if any, in the column to the left
Part III. Shareholder's Share of of the dollar amount entry space for each item for which it
Current Year Income, Deductions, has attached a statement providing additional information.
For those informational items that can't be reported as a
Credits, and Other Items single dollar amount, the corporation will enter an asterisk
The amounts shown in boxes 1 through 17 reflect your in the left column and enter “STMT” in the dollar amount
share of income, loss, deductions, credits, and other entry space to indicate the information is provided on an
items, from corporate business or rental activities without attached statement.
reference to limitations on losses, credits, or other items
that may have to be adjusted because of: Income (Loss)

1. The adjusted basis of your stock and debt in the Box 1. Ordinary Business Income (Loss)
corporation,
The amount reported in box 1 is your share of the ordinary
2. The at-risk limitations, income (loss) from trade or business activities of the
3. The passive activity limitations, and corporation. Generally, where you report this amount on
4. The excess business loss limitations. Form 1040 or 1040-SR depends on whether the amount is
from an activity that is a passive activity to you. If you are
For information on these provisions, see Limitations on an individual shareholder filing a 2022 Form 1040 or
Losses, Deductions, and Credits, earlier. 1040-SR, find your situation below and report your box 1
income (loss) as instructed after applying the basis and
Other limitations may apply to specific deductions (for
at-risk limitations on losses. See Limitations on Losses,
example, the section 179 expense deduction). Generally,
Deductions, and Credits, earlier. If the corporation had
specific limitations apply before the at-risk and passive
more than one trade or business activity, it will attach a
loss limitations.
statement identifying the income or loss from each
If you are an individual, and the above limitations don't activity.
apply to the amounts shown on your Schedule K-1, take 1. Report box 1 income (loss) from corporate trade or
the amounts shown and report them on the appropriate business activities in which you materially participated on
lines of your tax return. If any of the above limitations Schedule E (Form 1040), line 28, column (i) or (k).

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2. Report box 1 income (loss) from corporate trade or activity, it will attach a statement identifying the income or
business activities in which you didn't materially loss from each activity. After applying the limitations on
participate, as follows. losses and deductions, report the income or loss as
a. If income is reported in box 1, report the income on follows.
Schedule E (Form 1040), line 28, column (h). 1. If box 3 is a loss, follow the Instructions for Form
b. If a loss is reported in box 1, follow the Instructions 8582 to figure how much of the loss can be reported on
for Form 8582 to figure how much of the loss can be Schedule E (Form 1040), line 28, column (g).
reported on Schedule E (Form 1040), line 28, column (g). 2. If income is reported in box 3, report the income on
Schedule E (Form 1040), line 28, column (h).
Box 2. Net Rental Real Estate Income (Loss)
See Limitations on Losses, Deductions, and Credits,
Generally, the income (loss) reported in box 2 is a passive
earlier.
activity amount for all shareholders. However, the income
(loss) in box 2 isn't from a passive activity if you were a Portfolio Income
real estate professional (defined earlier) and you
Portfolio income or loss (shown in boxes 4 through 8b and
materially participated in the activity. If the corporation had
in box 10, code A) isn't subject to the passive activity
more than one rental real estate activity, it will attach a
limitations. Portfolio income includes income (not derived
statement identifying the income or loss from each
in the ordinary course of a trade or business) from
activity.
interest, ordinary dividends, annuities, or royalties, and
If you are filing a 2022 Form 1040 or 1040-SR, use the gain or loss on the sale of property that produces such
following instructions to determine where to report a box 2 income or is held for investment.
amount after applying the basis and at-risk limitations on
losses. See Limitations on Losses, Deductions, and Box 4. Interest Income
Credits, earlier. 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 Box 5a. Ordinary Dividends
on Schedule E (Form 1040), line 28, column (g). Report ordinary dividends on Form 1040 or 1040-SR,
a. You actively participated in the corporate rental real line 3b. The amount in box 5a may be attributable to
estate activities. See Special allowance for a rental real previously taxed earnings and profits (PTEP) in annual
estate activity, earlier. PTEP accounts that you have with respect to a foreign
corporation. You will need to determine the amount of the
b. Rental real estate activities with active participation ordinary dividends that are attributable to PTEP in your
were your only passive activities. annual PTEP accounts.
c. You have no prior year unallowed losses from these
activities. Box 5b. Qualified Dividends
d. If you are a married person filing separately, you Report any qualified dividends on Form 1040 or 1040-SR,
lived apart from your spouse all year. line 3a. The amount in box 5b may be attributable to PTEP
in annual PTEP accounts that you have with respect to a
e. Your total loss from the rental real estate activities
foreign corporation. You will need to determine the
wasn't more than $25,000 (not more than $12,500 if
amount of the qualified dividends that are attributable to
married filing separately).
PTEP in your annual PTEP accounts.
f. You have no current or prior year unallowed credits
from a passive activity. Qualified dividends are excluded from investment
TIP income, but you may elect to include part or all of
g. Your modified adjusted gross income wasn't more
these amounts in investment income. See the
than $100,000 (not more than $50,000 if married filing
instructions for line 4g of Form 4952, Investment Interest
separately and you lived apart from your spouse all year).
Expense Deduction, for important information on making
2. If you have a loss from a passive activity in box 2 this election.
and you don't meet all the conditions in (1) above, follow
the Instructions for Form 8582 to figure how much of the
Box 6. Royalties
loss you can report on Schedule E (Form 1040), line 28,
column (g). Report royalties on Schedule E (Form 1040), line 4.

3. If you were a real estate professional and you Box 7. Net Short-Term Capital Gain (Loss)
materially participated in the activity, report box 2 income
After applying the limitations on losses and deductions,
(loss) on Schedule E (Form 1040), line 28, column (i) or
report the net short-term capital gain (loss) on Schedule D
(k).
(Form 1040), Capital Gains and Losses, line 5. See
4. If you have income from a passive activity in box 2, Limitations on Losses, Deductions, and Credits, earlier.
report the income on Schedule E (Form 1040), line 28,
column (h). Box 8a. Net Long-Term Capital Gain (Loss)
After applying the limitations on losses and deductions,
Box 3. Other Net Rental Income (Loss) report the net long-term capital gain (loss) on Schedule D
The amount in box 3 is a passive activity amount for all (Form 1040), line 12. See Limitations on Losses,
shareholders. If the corporation had more than one rental Deductions, and Credits, earlier.

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Box 8b. Collectibles (28%) Gain (Loss) ordinary dividend, royalty, and capital gain (loss) income,
After applying the limitations on losses and deductions, and attach a statement to tell you what kind of portfolio
report collectibles gain or loss on line 4 of the 28% Rate income is reported.
Gain Worksheet—Line 18 in the Instructions for If the corporation held a residual interest in a real estate
Schedule D (Form 1040). See Limitations on Losses, mortgage investment conduit (REMIC), it will report on the
Deductions, and Credits, earlier. statement your share of REMIC taxable income (net loss)
that you report on Schedule E (Form 1040), line 38,
Box 8c. Unrecaptured Section 1250 Gain column (d). The statement will also report your share of
There are three types of unrecaptured section 1250 gain. any “excess inclusion” that you report on Schedule E
Report your share of this unrecaptured gain on the (Form 1040), line 38, column (c), and your share of
Unrecaptured Section 1250 Gain Worksheet—Line 19 in section 212 expenses that you report on Schedule E
the Instructions for Schedule D (Form 1040) as follows. (Form 1040), line 38, column (e).
• Report unrecaptured section 1250 gain from the sale or Code B. Involuntary conversions. This is your net loss
exchange of the corporation's business assets on line 5. from involuntary conversions due to casualty or theft. The
• Report unrecaptured section 1250 gain from the sale or corporation will give you a statement that shows the
exchange of an interest in a partnership on line 10. amounts to be reported on Form 4684, Casualties and
• Report unrecaptured section 1250 gain from an estate, Thefts, line 34, columns (b)(i), (b)(ii), and (c).
trust, regulated investment company (RIC), or real estate
investment trust (REIT) on line 11. If there was a gain (loss) from a casualty or theft to
property not used in a trade or business or for
If the corporation reports only unrecaptured section income-producing purposes, the corporation will provide
1250 gain from the sale or exchange of its business you with the information you need to complete Form 4684.
assets, it will enter a dollar amount in box 8c. If it reports
Code C. Section 1256 contracts and straddles. The
the other two types of unrecaptured gain, it will provide an
corporation will report any net gain or loss from section
attached statement that shows the amount for each type
1256 contracts. Report this amount on Form 6781, Gains
of unrecaptured section 1250 gain.
and Losses From Section 1256 Contracts and Straddles.
Box 9. Net Section 1231 Gain (Loss) Code D. Mining exploration costs recapture. The
The amount in box 9 is generally passive if it is from a: corporation will give you a statement that shows the
• Rental activity, or information needed to recapture certain mining
• Trade or business activity in which you didn't materially exploration costs (section 617). See Pub. 535 for details.
participate. Code E. Section 951A(a) income inclusions. If the
However, an amount from a rental real estate activity corporation (and its shareholders, as applicable) has
isn't from a passive activity if you were a real estate elected under Notice 2020-69 to be treated as an entity
professional (defined earlier) and you materially for purposes of section 951A, this is your share of the
participated in the activity. corporation's global intangible low-taxed income amount.
Report this amount on Schedule 1 (Form 1040),
If the amount is either (a) a loss that isn't from a passive Additional Income and Adjustments to Income, line 8o, or
activity, or (b) a gain, report it on Form 4797, Sales of the comparable line of your income tax return, as an
Business Property, line 2, column (g), after applying the addition to any amount of global intangible low-taxed
basis and at-risk limitations on losses. See Limitations on income (GILTI) under section 951A otherwise computed
Losses, Deductions, and Credits, earlier. Don't complete on Form 8992, U.S. Shareholder Calculation of Global
columns (b) through (f) on line 2 of Form 4797. Instead, Intangible Low-Taxed Income (GILTI).
enter “From Schedule K-1 (Form 1120-S)” across these
columns. This information will be provided in box 10 using
code E only if the corporation (and its
If the amount is a loss from a passive activity, see CAUTION! shareholders, if applicable) has elected to be
Passive Loss Limitations in the Instructions for Form treated as an entity for purposes of section 951A under
4797. After applying the limitations on losses and Notice 2020-69. If no election has been made under the
deductions, report the loss following the Instructions for Notice, see the instructions for Part V of Schedule K-3
Form 8582 to figure how much of the loss is allowed on (Form 1120-S), Shareholder's Share of Income,
Form 4797. If the corporation had net section 1231 gain Deductions, Credits, etc.—International.
(loss) from more than one activity, it will attach a
statement that will identify the section 1231 gain (loss) Code F. Inclusions of subpart F income. The
from each activity. corporation will provide your share of its section 951(a)(1)
(A) inclusions. Report this amount on your Form 1040,
Box 10. Other Income (Loss) 1040-SR, or relevant income tax return.
See List of Codes, later.
Code G. Section 951(a)(1)(B) inclusions. The
Losses reported in box 10 may be limited. See corporation will provide your share of its section 951(a)(1)
! Limitations on Losses, Deductions, and Credits, (B) inclusions. Report this amount on your Form 1040,
CAUTION earlier. 1040-SR, or relevant income tax return.
Code A. Other portfolio income (loss). The
corporation will report portfolio income other than interest,

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If the corporation has chosen to apply the name of the corporation that issued the QSB stock, (b)
! provisions of Proposed Regulations section your share of the corporation's adjusted basis and sales
CAUTION 1.958-1(d) for the tax year, no information will be price of the QSB stock, and (c) the dates the QSB stock
provided in box 10 using codes F or G. Instead, the was bought and sold. The following additional limitations
corporation will provide information needed to figure your apply at the shareholder level.
section 951(a) inclusions in Part V of Schedule K-3 (Form 1. You must have held an interest in the corporation
1120-S). when the corporation acquired the QSB stock and at all
times thereafter until the corporation disposed of the QSB
Code H. Other income (loss). Amounts with code H are stock.
other items of income, gain, or loss not included in boxes
1 through 9 or in box 10 using codes A through G. The 2. Your share of the eligible section 1202 gain can't
corporation should give you a description and the amount exceed the amount that would have been allocated to you
of your share for each of these items. based on your interest in the corporation at the time the
QSB stock was acquired.
Report loss items that are passive activity amounts to
you following the Instructions for Form 8582. See Form 8949, Sales and Other Dispositions of
Code H items may include the following. Capital Assets, Schedule D (Form 1040), and the related
• Income from recoveries of tax benefit items. A tax instructions for details on how to report the gain and the
benefit item is an amount you deducted in a prior tax year amount of the allowable exclusion.
that reduced your income tax. Report this amount on • Gain eligible for section 1045 rollover (replacement
Schedule 1 (Form 1040), line 8z, to the extent it reduced stock purchased by the corporation). The corporation
your tax in the prior year. should also give you (a) the name of the corporation that
• Gambling gains and losses. issued the qualified small business (QSB) stock, (b) your
share of the corporation's adjusted basis and sales price
1. If the corporation wasn't engaged in the trade or of the QSB stock, and (c) the dates the QSB stock was
business of gambling, (a) report gambling winnings on bought and sold. To qualify for the section 1045 rollover:
Schedule 1 (Form 1040), line 8b, and (b) deduct gambling
losses to the extent of winnings on Schedule A (Form 1. You must have held an interest in the corporation
1040), Itemized Deductions, line 16. during the entire period in which the corporation held the
QSB stock (more than 6 months prior to the sale), and
2. If the corporation was engaged in the trade or
business of gambling, (a) report gambling winnings on 2. Your share of the gain eligible for the section 1045
Schedule E (Form 1040), line 28, column (k), and (b) rollover can't exceed the amount that would have been
deduct gambling losses (to the extent of winnings) on allocated to you based on your interest in the corporation
Schedule E (Form 1040), line 28, column (i). at the time the QSB stock was acquired.
• Gain (loss) from the disposition of an interest in oil, gas, See Form 8949, Schedule D (Form 1040), and the
geothermal, or other mineral properties. The corporation related instructions for details on how to report the gain
will attach a statement that provides a description of the and the amount of the allowable postponed gain.
property, your share of the amount realized from the • Gain eligible for section 1045 rollover (replacement
disposition, your share of the corporation's adjusted basis stock not purchased by the corporation). The corporation
in the property (for other than oil or gas properties), and should also give you (a) the name of the corporation that
your share of the total intangible drilling costs, issued the qualified small business (QSB) stock, (b) your
development costs, and mining exploration costs (section share of the corporation's adjusted basis and sales price
59(e) expenditures) passed through for the property. You of the QSB stock, and (c) the dates the QSB stock was
must figure your gain or loss from the disposition by bought and sold. To qualify for the section 1045 rollover:
increasing your share of the adjusted basis by the
1. You must have held an interest in the corporation
intangible drilling costs, development costs, or mine
during the entire period in which the corporation held the
exploration costs for the property that you capitalized (that
QSB stock (more than 6 months prior to the sale),
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 2. Your share of the gain eligible for the section 1045
in Part III of Form 4797 in accordance with the instructions rollover can't exceed the amount that would have been
for line 28. See Regulations section 1.1254-4 for details. allocated to you based on your interest in the corporation
• Net short-term capital gain (loss) and net long-term at the time the QSB stock was acquired, and
capital gain (loss) from Schedule D (Form 1120-S), 3. You must purchase other QSB stock (as defined in
Capital Gains and Losses and Built-in Gains that isn't the Instructions for Schedule D (Form 1040)) during the
portfolio income. An example is gain or loss from the 60-day period that began on the date the QSB stock was
disposition of nondepreciable personal property used in a sold by the corporation.
trade or business activity of the corporation. Report total
See Form 8949, Schedule D (Form 1040), and the
net short-term gain (loss) on Schedule D (Form 1040),
related instructions for details on how to report the gain
line 5. Report the total net long-term gain (loss) on
and the amount of the allowable postponed gain.
Schedule D (Form 1040), line 12.
• Gain from the sale or exchange of qualified small
business (QSB) stock (as defined in the Instructions for
Schedule D (Form 1040)) eligible for the section 1202
exclusion. The corporation should also give you (a) the

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Deductions Code B. Cash contributions (30%). Report this
amount, subject to the 30% AGI limitation, on Schedule A
There are potential limitations on corporate losses (Form 1040), line 11.
! you can deduct on your return. These limitations Code C. Noncash contributions (50%). Report this
CAUTION and the order in which you must apply them are as
follows: the basis limitations, the at-risk limitations, the amount, subject to the 50% AGI limitation, on Schedule A
passive activity limitations, and the excess business loss (Form 1040), line 12.
limitations. See Limitations on Losses, Deductions, and Food inventory contributions. The corporation will
Credits, earlier. report on an attached statement your share of qualified
food inventory contributions. The food inventory
Box 11. Section 179 Deduction contribution isn't included in the amount reported in
box 12 using code C. The corporation will also report your
Use this amount, along with the total cost of section 179 share of the corporation's net income from the business
property placed in service during the year from other activities that made the food inventory contribution(s).
sources, to complete Part I of Form 4562, Depreciation Your deduction for food inventory contributions made
and Amortization. The corporation will report on an during 2022 can't exceed 15% of your aggregate net
attached statement your share of the cost of any qualified income for the tax year from the business activities from
enterprise zone property or qualified real property it which the food inventory contribution was made (including
placed in service during its tax year. Report the amount your share of net income from partnership or
from line 12 of Form 4562 allocable to a passive activity S corporation businesses that made food inventory
using the Instructions for Form 8582. If the amount isn't a contributions). Amounts that exceed the 15% limitation
passive activity deduction, report it on Schedule E (Form may be carried over for up to 5 years. Report this amount,
1040), line 28, column (j), after applying the basis and subject to the 50% AGI limitation, on Schedule A (Form
at-risk limitations on losses. See Limitations on Losses, 1040), line 12.
Deductions, and Credits, earlier.
Code D. Noncash contributions (30%). Report this
Box 12. Other Deductions amount, subject to the 30% AGI limitation, on Schedule A
See List of Codes, later. (Form 1040), line 12.
Deductions reported in box 12 may be limited. Code E. Capital gain property to a 50% limit organi-
zation (30%). Report this amount, subject to the 30%
! See Limitations on Losses, Deductions, and AGI limitation, on Schedule A (Form 1040), line 12. See
CAUTION Credits, earlier.
Worksheet 2. Applying the Deduction Limits in Pub. 526.
Contributions. Codes A through G. The corporation Code F. Capital gain property (20%). Report this
will give you a statement that shows charitable amount, subject to the 20% AGI limitation, on Schedule A
contributions subject to the 100%, 60%, 50%, 30%, and (Form 1040), line 12.
20% adjusted gross income (AGI) limitations.
Code G. Contributions (100%). The corporation will
If the corporation made a property contribution, it will
report on an attached statement your share of qualified
report on an attached statement your share of both the fair
conservation contributions of property used in agriculture
market value (FMV) and adjusted basis of the property.
or livestock production. This contribution isn't included in
Use these amounts to adjust your stock basis. If the
the amount reported in box 12 using code C. If you are a
corporation made a qualified conservation contribution, it
farmer or rancher, you qualify for a 100% AGI limitation for
will report the FMV of the underlying property before and
this contribution. Otherwise, your deduction for this
after the donation, the type of legal interest contributed,
contribution is subject to a 50% AGI limitation. Report this
and a description of the conservation purpose furthered
amount, subject to your applicable limitation, on
by the donation. If the corporation made a contribution of
Schedule A (Form 1040), line 12. See Pub. 526 for more
real property located in a registered historic district, it will
information on qualified conservation contributions.
report any information you will need to take a deduction.
For more details, see Pub. 526, Charitable Code H. Investment interest expense. Report this
Contributions, and the Instructions for Schedule A (Form amount on Form 4952, line 1.
1040). If your contributions are subject to more than one If the corporation has investment income or other
of the AGI limitations, see Pub. 526. investment expense, it will report your share of these
Charitable contribution deductions aren't taken into items in box 17 using codes A and B. Include investment
account in figuring your passive activity loss for the year. income and expenses from other sources to figure how
Don't enter them on Form 8582. much of your total investment interest is deductible.
For more information on the special provisions that
Form 8283. If you received a copy of Form 8283,
apply to investment interest expense, see Form 4952 and
Noncash Charitable Contributions, from the corporation,
Pub. 550.
attach the copy to your tax return. Use the amount shown
on your Schedule K-1, not the amount shown on the Form Code I. Deductions—Royalty income. Report
8283, to figure your deduction. deductions allocable to royalties on Schedule E (Form
1040), line 19. For this type of expense, enter “From
Code A. Cash contributions (60%). Report this
Schedule K-1 (Form 1120-S).”
amount, subject to the 60% AGI limitation, on Schedule A
(Form 1040), line 11.

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These deductions aren't taken into account in figuring expense and any reforestation expenses you separately
your passive activity loss for the year. Don't enter them on paid or incurred during the tax year.
Form 8582. If you didn't materially participate in the activity, use
Code J. Section 59(e)(2) expenditures. The Form 8582 to figure the amount to report on Schedule E
corporation will show on an attached statement the type (Form 1040), line 28, column (g). If you materially
and the amount of qualified expenditures for which you participated in the reforestation activity, report the
may make a section 59(e) election. The statement will deduction on Schedule E (Form 1040), line 28, column (i).
also identify the property for which the expenditures were Codes P through R. Reserved for future use.
paid or incurred. If there is more than one type of
expenditure, the amount of each type will also be listed. Code S. Other deductions. Amounts with this code may
include the following.
If you deduct these expenditures in full in the current
• Itemized deductions that Form 1040 or 1040-SR filers
year, they are treated as adjustments or tax preference
report on Schedule A (Form 1040).
items for purposes of alternative minimum tax. However,
• Soil and water conservation expenditures and
you may elect to amortize these expenditures over the
endangered species recovery expenditures. See section
number of years in the applicable period rather than
175 for limitations on the amount you are allowed to
deduct the full amount in the current year. If you make this
deduct.
election, these items aren't treated as adjustments or tax
• Expenditures for the removal of architectural and
preference items.
transportation barriers to the elderly and disabled that the
Under the election, you can deduct circulation corporation elected to treat as a current expense. The
expenditures ratably over a 3-year period. Research and deductions are limited by section 190(c) to $15,000 per
experimental expenditures and mining exploration and year from all sources.
development costs can be amortized over a 10-year • Interest expense allocated to debt-financed
period. Intangible drilling and development costs can be distributions. The manner in which you report such
amortized over a 60-month period. The amortization interest expense depends on your use of the distributed
periods begin with the month in which such costs were debt proceeds. If the proceeds were used in a trade or
paid or incurred. business activity, report the interest on Schedule E (Form
Make the election on Form 4562. If you make the 1040), line 28. In column (a), enter the name of the
election, report the current year amortization of section corporation and “interest expense.” If you materially
59(e) expenditures from Part VI of Form 4562 on participated in the trade or business activity, enter the
Schedule E (Form 1040), line 28. If you don't make the interest expense in column (i). If you didn't materially
election, report the section 59(e)(2) expenditures on participate in the activity, follow the Instructions for Form
Schedule E (Form 1040), line 28, and figure the resulting 8582 to figure the interest expense you can report in
adjustment or tax preference item (see Form 6251, column (g). Material participation is defined earlier under
Alternative Minimum Tax—Individuals). Whether you Passive Activity Limitations. If the proceeds were used in
deduct the expenditures or elect to amortize them, report an investment activity, report the interest on Form 4952. If
the amount on a separate line in column (i) of line 28 if you the proceeds are used for personal purposes, the interest
materially participated in the activity. If you didn't is generally not deductible.
materially participate, follow the Instructions for Form • Contributions to a capital construction fund (CCF). The
8582 to figure how much of the deduction can be reported deduction for a CCF investment isn't taken on Schedule E
in column (g). (Form 1040). Instead, you subtract the deduction from the
amount that would normally be entered as taxable income
Code K. Reserved for future use.
on Form 1040 or 1040-SR, line 15. In the margin to the left
Code L. Deductions—Portfolio (other). Generally, you of line 15, enter “CCF” and the amount of the deduction.
should report these amounts on Schedule A (Form 1040), • Penalty on early withdrawal of savings. Report this
line 16. See the instructions for Schedule A (Form 1040), amount on Schedule 1 (Form 1040), line 18.
line 16, for details. • Film, television, and live theatrical production
These deductions aren't taken into account in figuring expenses. The corporation will provide a statement that
your passive activity loss for the year. Don't enter them on describes the film, television, or live theatrical production
Form 8582. generating these expenses. If you didn't materially
participate in the activity, use Form 8582 to determine the
Code M. Preproductive period expenses. You may be amount that can be reported on Schedule E (Form 1040),
able to deduct these expenses currently or you may need line 28, column (g). If you materially participated in the
to capitalize them under section 263A. See Pub. 225, production activity, report the deduction on Schedule E
Farmer's Tax Guide, and Regulations section 1.263A-4 for (Form 1040), line 28, column (i).
details.
The corporation will give you a description and the
Code N. Reserved for future use. amount of your share for each of these items.
Code O. Reforestation expense deduction. The
Box 13. Credits
corporation will provide a statement that describes the
qualified timber property for these reforestation expenses. See List of Codes, later.
The expense deduction is limited to $10,000 ($5,000 if If you have credits that are passive activity credits to
married filing separately) for each qualified timber you, you must complete Form 8582-CR in addition to the
property, including your share of the corporation's credit forms identified below. See Passive Activity

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Limitations, earlier, and the Instructions for Form 8582-CR credits may be limited by the passive activity limitations. If
for details. the credits are from more than one activity, the
corporation will identify the credits from each activity on
In general, shareholders whose only sources for a
an attached statement. See Passive Activity Limitations,
TIP credit listed on Form 3800, General Business
earlier, and the Instructions for Form 8582-CR for details.
Credit, Part III, are partnerships, S corporations,
estates, trusts, and cooperatives, aren't required to Code G. Other rental credits. The corporation will
complete the applicable credit form or attach it to their identify the type of credit and any other information you
return. Instead, they can report the credit amounts need to figure these rental credits. These credits may be
reported to them by these pass-through entities directly on limited by the passive activity limitations. If the credits are
Form 3800, Part III, and enter the EIN of the entity in from more than one activity, the corporation will identify
column (b) of Part III. However, when applicable, all the credits from each activity on an attached statement.
shareholders must complete and attach the following See Passive Activity Limitations, earlier, and the
credit forms to their return. Instructions for Form 8582-CR for details.
• Form 3468, Investment Credit (Form 3800, Part III, Code H. Undistributed capital gains credit. Code H
line 1a). represents taxes paid on undistributed capital gains by a
• Form 8864, Biodiesel, Renewable Diesel, or regulated investment company or real estate investment
Sustainable Aviation Fuels Credit (Form 3800, Part III, trust. Report these taxes on Schedule 3 (Form 1040),
line 1l). 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 I. Biofuel producer credit. Report this amount on
Codes A and B. Reserved for future use. line 3 of Form 6478, Biofuel Producer Credit, or Form
Codes C and D. Low-income housing credit. If section 3800, Part III, line 4c (see TIP, earlier).
42(j)(5) applies, the corporation will report your share of Code J. Work opportunity credit. Report this amount
the low-income housing credit using code C. If section on line 3 of Form 5884, Work Opportunity Credit, or Form
42(j)(5) doesn't apply, your share of the credit will be 3800, Part III, line 4b (see TIP, earlier).
reported using code D. Any allowable low-income housing
Code K. Disabled access credit. Report this amount on
credit reported using code C or code D is reported on
line 7 of Form 8826, Disabled Access Credit, or Form
Form 8586, Low-Income Housing Credit, line 4, or Form
3800, Part III, line 1e (see TIP, earlier).
3800, Part III, line 4d (see TIP, earlier).
Keep a separate record of the low-income housing Code L. Empowerment zone employment credit.
credit from each separate source so that you can correctly Report this amount on line 3 of Form 8844, Empowerment
figure any recapture of low-income housing credit that Zone Employment Credit, or Form 3800, Part III, line 3
may result from the disposition of all or part of your stock (see TIP, earlier).
in the corporation. For more information on recapture, see Code M. Credit for increasing research activities.
the Instructions for Form 8611, Recapture of Low-Income Report this amount on line 37 of Form 6765, Credit for
Housing Credit. Increasing Research Activities, or in Part III of Form 3800
Code E. Qualified rehabilitation expenditures (rental (see TIP, earlier) as follows.
real estate). The corporation will report your share of the • The S corporation will provide information necessary to
qualified rehabilitation expenditures and other information determine if it is an eligible small business under section
you need to complete Form 3468 related to rental real 38(c)(5)(A). If you and the S corporation are eligible small
estate activities using code E. Your share of qualified businesses, report the credit on line 4i. For more
rehabilitation expenditures from property not related to information, see the Instructions for Form 3800.
rental real estate activities will be reported in box 17 using • All others, report the credit on line 1c.
code C. See the Instructions for Form 3468 for details. If Code N. Credit for employer social security and Med-
the corporation is reporting expenditures from more than icare taxes. Report this amount on line 5 of Form 8846,
one activity, an attached statement will separately identify Credit for Employer Social Security and Medicare Taxes
the expenditures from each activity. Paid on Certain Employee Tips, or Form 3800, Part III,
Combine the expenditures (for Form 3468 reporting) line 4f (see TIP, earlier).
from box 13, code E, and from box 17, code C. The Code O. Backup withholding. This is your share of the
expenditures related to rental real estate activities credit for backup withholding on dividends, interest
(box 13, code E) are reported on Schedule K-1 separately income, and other types of income. Include this amount in
from other qualified rehabilitation expenditures (box 17, the total you enter on Form 1040 or 1040-SR, line 25c,
code C) because they are subject to different passive and attach a copy of your Schedule K-1 to your tax return.
activity limitation rules. See the Instructions for Form Instead of attaching a copy of your Schedule K-1 to your
8582-CR for details. tax return, you can include a statement with your return
Code F. Other rental real estate credits. The that provides the corporation's name, address, EIN, and
corporation will identify the type of credit and any other backup withholding amount.
information you need to figure these credits from rental Code P. Other credits. On a statement attached to
real estate activities (other than the low-income housing Schedule K-1, the corporation will identify the type of
credit and qualified rehabilitation expenditures). These credit and any other information you need to figure credits

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other than those reported with codes A through O. Most • Credit for employer differential wage payments (Form
credits identified by code P will be reported on Form 3800, 8932).
Part III (see TIP, earlier). • Carbon oxide sequestration credit (Form 8933).
Credits that may be reported with code P include the • Qualified plug-in electric drive motor vehicle credit
following. (including qualified two-wheeled plug-in electric vehicles
• Unused investment credit from the qualifying advanced and new clean vehicles) (Form 8936).
coal project credit, qualifying gasification project credit, • Qualified two-wheeled plug-in electric vehicle credit
qualifying advanced energy project credit, or advanced (Form 8936).
manufacturing investment credit allocated from • Qualified commercial clean vehicle credit (Form
cooperatives (Form 3468, line 9). 8936-A) for vehicles acquired after 2022 .
• Unused investment credit from the rehabilitation credit • Credit for small employer health insurance premiums
or energy credit allocated from cooperatives (Form 3468, (Form 8941).
line 13). • Employer credit for paid family and medical leave (Form
• Employee retention credit for employers affected by 8994).
qualified disasters (Form 5884-A).
• Advanced manufacturing production credit (Form 7207) Box 14. International Transactions
for production after 2022. If the S corporation checked the box, see the attached
• Orphan drug credit (Form 8820). Schedule K-3 with respect to items of international tax
• Enhanced oil recovery credit (Form 8830). relevance. If the S corporation did not check the box, the
• Renewable electricity production credit (Form 8835). S corporation attached a statement to the Schedule K-1
The corporation will provide a statement showing the (or issued a statement prior to furnishing the
allocation of the credit for production during the 4-year Schedule K-1) notifying the shareholder that the
period beginning on the date the facility was placed in shareholder will not receive Schedule K-3 from the S
service and for production after that period. If this credit corporation unless the shareholder requests the schedule.
includes the clean hydrogen production credit, the
For additional information, see the Shareholder's
corporation will provide additional information on an
Instructions for Schedule K-3 (Form 1120-S).
attached statement.
• Indian employment credit (Form 8845). Box 15. Alternative Minimum Tax (AMT) Items
• Biodiesel, renewable diesel, or sustainable aviation
fuels credit. If this credit includes the small agri-biodiesel See List of Codes, later.
producer credit or the sustainable aviation fuels credit, the Use the information reported in box 15 (as well as your
corporation will provide additional information on an adjustments and tax preference items from other sources)
attached statement. If no statement is attached, report this to prepare your Form 6251, Alternative Minimum
amount on Form 8864, line 10. If a statement is attached, Tax—Individuals, or Schedule I (Form 1041), Alternative
see the instructions for Form 8864, line 10. Minimum Tax—Estates and Trusts.
• New markets credit (Form 8874).
• Credit for small employer pension plan startup costs Code A. Post-1986 depreciation adjustment. This
and auto-enrollment (Form 8881). amount is your share of the corporation's post-1986
• Credit for employer-provided childcare facilities and depreciation adjustment. If you are an individual
services (Form 8882). shareholder, report this amount on Form 6251, line 2l.
• Low sulfur diesel fuel production credit (Form 8896). Code B. Adjusted gain or loss. This amount is your
• Qualified railroad track maintenance credit (Form share of the corporation's adjusted gain or loss. If you are
8900). an individual shareholder, report this amount on Form
• Credit for oil and gas production from marginal wells 6251, line 2k.
(Form 8904).
• Distilled spirits credit (Form 8906). Code C. Depletion (other than oil & gas). This amount
• Energy efficient home credit (Form 8908). is your share of the corporation's depletion adjustment. If
• Alternative motor vehicle credit (Form 8910). you are an individual shareholder, report this amount on
• Alternative fuel vehicle refueling property credit (Form Form 6251, line 2d.
8911). Codes D and E. Oil, gas, & geothermal proper-
• Qualified zone academy bond credit. Report this ties—Gross income and deductions. The amounts
amount on Form 8912. reported on these lines include only the gross income
• Clean renewable energy bond credit. Report this (code D) from, and deductions (code E) allocable to, oil,
amount on Form 8912. gas, and geothermal properties included in box 1 of
• New clean renewable energy bond credit. Report this Schedule K-1. The corporation should have attached a
amount on Form 8912. statement that shows any income from, or deductions
• Qualified energy conservation bond credit. Report this allocable to, such properties that are included in boxes 2
amount on Form 8912. through 12, 16, and 17 of Schedule K-1. Use the amounts
• Build America bond credit. Report this amount on Form reported here and any other reported amounts to help you
8912. figure the net amount to enter on Form 6251, line 2t.
• Qualified school construction bond credit. Report this
amount on Form 8912. Code F. Other AMT items. Report the information on
• Mine rescue team training credit (Form 8923). the statement attached by the corporation on the
applicable lines of Form 6251 or Schedule I (Form 1041).

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Box 16. Items Affecting Shareholder Basis Combine the expenditures (for Form 3468 reporting)
See List of Codes, later. from box 13, code E, and from box 17, code C. The
expenditures related to rental real estate activities
Code A. Tax-exempt interest income. Report on your (box 13, code E) are reported on Schedule K-1 separately
return, as an item of information, your share of the from other qualified rehabilitation expenditures (box 17,
tax-exempt interest received or accrued by the code C) because they are subject to different passive
corporation during the year. Individual shareholders activity limitation rules. See the Instructions for Form
include this amount on Form 1040 or 1040-SR, line 2a. 8582-CR for details.
Generally, you must increase the basis of your stock by
this amount. Code D. Basis of energy property. If the corporation
provides an attached statement for code D, use the
Code B. Other tax-exempt income. Generally, you information on the statement to complete the applicable
must increase the basis of your stock by the amount energy credit on line 12 of Form 3468. See the
shown, but don't include it in income on your tax return. Instructions for Form 3468 for details.
Code C. Nondeductible expenses. The nondeductible Codes E and F. Recapture of low-income housing
expenses paid or incurred by the corporation aren't credit. The corporation will identify by code E your share
deductible on your tax return. Generally, you must of any recapture of a low-income housing credit from its
decrease the basis of your stock by this amount. investment in partnerships to which the provisions of
Code D. Distributions. Reduce the basis of your stock section 42(j)(5) apply. All other recapture of low-income
(as explained earlier) by distributions, not reported on housing credits will be identified by code F.
Form 1099-DIV, of property or money. This amount will Keep a separate record of each type of recapture so
include any amounts included in income with respect to that you will be able to correctly figure any credit recapture
new clean renewable energy, qualified energy that may result from the disposition of all or part of your
conservation, qualified school construction, build corporate stock. For details, see Form 8611.
America, or (for bonds issued after October 3, 2008)
Code G. Recapture of investment credit. The
qualified zone academy bonds. If these distributions
corporation will provide any information you need to figure
exceed the basis of your stock, the excess is treated as
your recapture tax on Form 4255, Recapture of
capital gain from the sale or exchange of property and is
Investment Credit. See the Form 3468 on which you took
reported on Form 8949 and Schedule D (Form 1040).
the original credit for other information you need to
Code E. Repayment of loans from shareholders. If complete Form 4255.
these payments are made on a loan with a reduced basis, You may also need Form 4255 if your proportionate
the repayments must be allocated in part to a return of stock interest in the corporation is reduced by more than
your basis in the loan and in part to the receipt of income. one-third after you were allocated part of an investment
See Regulations section 1.1367-2 for information on credit.
reduction in basis of a loan and restoration in basis of a
loan with a reduced basis. See Rev. Rul. 64-162, 1964-1 Code H. Recapture of other credits. On a statement
(Part 1) C.B. 304, and Rev. Rul. 68-537, 1968-2 C.B. 372, attached to Schedule K-1, the corporation will report any
for details. information you need to figure the recapture of other
credits including the new markets credit, Indian
Code F. Foreign taxes paid or accrued. Report this employment credit, credit for employer-provided childcare
amount on Form 7203, line 46(a). Do not use this amount facilities and services, alternative motor vehicle credit,
to complete your Form 1116. See Schedule K-3 to alternative fuel vehicle refueling property credit, and
complete your Form 1116. qualified plug-in electric drive motor vehicle credit.
Box 17. Other Information Code I. Look-back interest—Completed long-term
See List of Codes, later. contracts. The corporation will report any information
you need to figure the interest due or to be refunded under
Code A. Investment income. Report this amount on the look-back method of section 460(b)(2) on certain
Form 4952, line 4a. long-term contracts. Use Form 8697, Interest
Code B. Investment expenses. Report this amount on Computation Under the Look-Back Method for Completed
Form 4952, line 5. Long-Term Contracts, to report any such interest.
Code C. Qualified rehabilitation expenditures (other Code J. Look-back interest—Income forecast meth-
than rental real estate). The corporation will report your od. The corporation will report any information you need
share of qualified rehabilitation expenditures and other to figure the interest due or to be refunded under the
information you need to complete Form 3468 for property look-back method of section 167(g)(2) for certain property
not related to rental real estate activities in box 17 using placed in service after September 13, 1995, and
code C. Your share of qualified rehabilitation expenditures depreciated under the income forecast method. Use Form
related to rental real estate activities is reported in box 13 8866, Interest Computation Under the Look-Back Method
using code E. See the Instructions for Form 3468 for for Property Depreciated Under the Income Forecast
details. If the corporation is reporting expenditures from Method, to report any such interest.
more than one activity, the attached statement will Code K. Dispositions of property with section 179
separately identify the expenditures from each activity. deductions. The corporation will report your share of
gain or loss on the sale, exchange, or other disposition of

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property for which a section 179 expense deduction was Code N. Section 453A(c) information. The corporation
passed through to shareholders with code K. If the will report any information you need to figure the interest
corporation passed through a section 179 expense due under section 453A(c) with respect to certain
deduction for the property, you must report the gain or installment sales. This information shall include the
loss, if any, and any recapture of the section 179 expense following from each Form 6252 where line 5 is greater
deduction for the property on your income tax return (see than $150,000.
the Instructions for Form 4797 for details). The corporation
1. Description of property.
will provide all the following information.
2. Date acquired.
1. Description of the property.
3. Date property sold.
2. Date the property was acquired and placed in
service. 4. Selling price, including mortgages and other debts
(not including interest, whether stated or unstated), less
3. Date of the sale or other disposition of the property.
mortgages, debts, and other liabilities the buyer assumed
4. Your share of the gross sales price or amount or took the property subject to.
realized.
5. Gross profit.
5. Your share of the cost or other basis plus the
6. Gross profit percentage.
expense of sale.
7. Contract price less (4) above, plus payments
6. Your share of the depreciation allowed or allowable.
received during the year, not including interest, whether
7. Your share of the section 179 expense deduction (if stated or unstated.
any) passed through for the property and the corporation's
8. Payments received in prior years, not including
tax year(s) in which the amount was passed through.
interest whether stated or unstated.
To figure the depreciation allowed or allowable for
9. Installment sale income.
Form 4797, line 22, add to the amount from item (6) above
the amount of your share of the section 179 expense 10. Character of the income—capital or ordinary.
deduction, reduced by any unused carryover of the 11. Shareholder’s share of the deferred obligation. See
deduction for this property. This amount may be different computation below.
than the amount of section 179 expense you deducted for
the property if your interest in the corporation has Deferred obligation computation. For each Form
changed. 6252 where line 5 is greater than $150,000, figure the
Schedule K-1 deferred obligation as follows.
8. If the disposition is due to a casualty or theft, any • Line 4 from the list above, less the sum of lines 7 and 8.
information you need to complete Form 4684. This equals the Schedule K deferred obligation.
9. If the sale was an installment sale, any information • Multiply the Schedule K deferred obligation by the
you need to complete Form 6252, Installment Sale shareholder's current year allocation percentage. This
Income. The corporation will separately report your share equals the shareholder's share of the deferred obligation.
of all payments received for the property in the following Report the interest on Schedule 2 (Form 1040), line 15.
tax years. See the Instructions for Form 6252 for details. See section 453A(c) for details on how to figure the
interest.
Code L. Recapture of section 179 deduction. The
corporation will report your share of any recapture of Code O. Section 1260(b) information. The corporation
section 179 expense deduction if business use of any will report any information you need to figure the interest
property for which the section 179 expense deduction was due under section 1260(b). If the corporation had gain
passed through to shareholders dropped to 50% or less from certain constructive ownership transactions, your tax
before the end of the recapture period. If this occurs, the liability must be increased by the interest charge on any
corporation must provide the following information. deferral of gain recognition under section 1260(b). Report
1. Your share of the depreciation allowed or allowable the interest on Schedule 2 (Form 1040), line 17z. Enter
(not including the section 179 expense deduction). “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
2. Your share of the section 179 expense deduction (if to figure the interest.
any) passed through for the property and the corporation's
tax year(s) in which the amount was passed through. Code P. Interest allocable to production expendi-
Reduce this amount by the portion, if any, of your unused tures. The corporation will report any information you
(carryover) section 179 expense deduction for this need relating to interest you are required to capitalize
property. under section 263A for production expenditures. See
Regulations sections 1.263A-8 through 1.263A-15 for
Code M. Section 453(l)(3) information. The details.
corporation will report any information you need to figure
Code Q. CCF nonqualified withdrawals. The
the interest due under section 453(l)(3) with respect to the
corporation will report your share of nonqualified
disposition of certain timeshares and residential lots on
withdrawals from a capital construction fund (CCF). These
the installment method. Report the interest on Schedule 2
withdrawals are taxed separately from your other gross
(Form 1040), line 14. See section 453(l)(3) for details on
income at the highest marginal ordinary income or capital
how to figure the interest.
gains tax rate. Attach a statement to your federal income
tax return to show your computation of both the tax and

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interest for a nonqualified withdrawal. Include the tax and 2. Use Form 8995-A, Qualified Business Income
interest on Schedule 2 (Form 1040), line 21. In the space Deduction, if you don’t meet all three of these
to the left of line 21, enter the amount of tax and interest requirements.
and “CCF.” See Pub. 595 for details.
QBI pass-through entity reporting information. Use
Code R. Depletion information—Oil and gas. This is the information provided to you by your S corporation to
your share of gross income from the property, share of complete the appropriate form identified above.
production for the tax year, and other information needed QBI or qualified PTP items subject to
to figure your depletion deduction for oil and gas wells. shareholder-specific determinations. The amounts
The corporation should also allocate to you a reported to you reflect your pro rata share of items from
proportionate share of the adjusted basis of each the S corporation’s trade(s) or business(es), or
corporate oil or gas property. See Pub. 535 for details on aggregation(s), and may include items that aren’t
how to figure your depletion deduction. includible in your calculation of the QBI deduction. When
Reduce the basis of your stock by the amount of this determining QBI or qualified PTP income, you must
deduction up to the extent of your adjusted basis in the include only those items that are qualified items of
property. income, gain, deduction, and loss included or allowed in
determining taxable income for the tax year. To determine
Codes S and T. Reserved for future use.
your QBI or your qualified PTP income amounts and for
Code U. Net investment income. The corporation may information on where to report them, see the instructions
use code U to report information you may need to for Form 8995 or Form 8995-A.
determine your net investment income tax under section W-2 wages. The amounts reported reflect your pro rata
1411, including information regarding income from share of the S corporation’s W-2 wages allocable to the
controlled foreign corporations (CFCs) and passive QBI of each qualified trade or business, or aggregation.
foreign investment companies (PFICs), the stock of which See the instructions for Form 8995 or Form 8995-A.
is owned by the corporation. Any information not provided Unadjusted basis immediately after acquisition
elsewhere on Schedule K-3 (or an attachment to (UBIA) of qualified property. The amounts reported
Schedule K-3) is provided using code U. For CFCs and reflect your pro rata share of the S corporation’s UBIA of
PFICs that you treat as qualified electing funds (QEFs), qualified property of each qualified trade or business, or
the information that is relevant to you will depend on aggregation. See the instructions for Form 8995 or Form
whether you, the corporation, or a subsidiary 8995-A.
pass-through entity has made an election under Section 199A dividends. The amount reported
Regulations section 1.1411-10(g) with respect to the CFC reflects your pro rata share of the S corporation’s net
or QEF. For example, if the corporation made an election section 199A dividends. See the instructions for Form
under Regulations section 1.1411-10(g) for a CFC, the 8995 or Form 8995-A.
stock of which is owned by the corporation, and the Patrons of specified agricultural and horticultural
relevant income and deduction items derived from that cooperatives. If the S corporation was a patron of an
CFC are reported elsewhere on Schedule K-1, you will not agricultural or horticultural cooperative (specified
need the information provided using code U to complete cooperative), you must use Form 8995-A to figure your
your Form 8960. QBI deduction. In addition, you must complete
Follow the Instructions for Form 8960 to figure and Schedule D (Form 8995-A), Special Rules for Patrons of
report your net investment income and adjusted gross Agricultural or Horticultural Cooperatives, to determine
income or modified adjusted gross income. See your patron reduction.
Regulations sections 1.1411-1 through 1.1411-10 for QBI items allocable to qualified payments from
more details. specified cooperatives subject to
Code V. Section 199A information. Generally, you may shareholder-specific determinations. The amounts
be allowed a deduction of up to 20% of your net qualified reported to you reflect your pro rata share of items from
business income (QBI) plus 20% of your qualified REIT the S corporation’s trade(s) or business(es), or
dividends, also known as section 199A dividends, and aggregation(s), and include items that may not be
qualified publicly traded partnership (PTP) income from includible in your calculation of the QBI deduction and
your S corporation. The S corporation will provide the patron reduction. When determining QBI items allocable
information you need to figure your deduction. You will to qualified payments, you must include only qualified
use one of these two forms to figure your QBI deduction. items that are included or allowed in determining taxable
income for the tax year. To determine your QBI items
1. Use Form 8995, Qualified Business Income
allocable to qualified payments, see the Instructions for
Deduction Simplified Computation, if:
Form 8995-A.
a. You have QBI, section 199A dividends, or PTP W-2 wages allocable to qualified payments from
income (defined below); specified cooperatives. The amounts reported reflect
b. Your 2022 taxable income before the QBI deduction your pro rata share of the S corporation’s W-2 wages
is equal to or less than $170,050 ($340,100 if married allocable to qualified payments of each qualified trade or
filing jointly); and business, or aggregation. See the Instructions for Form
c. You aren’t a patron in a specified agricultural or 8995-A.
horticultural cooperative. Section 199A(g) deduction from specified
cooperatives. The amount reported reflects your pro

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rata share of the S corporation’s net section 199A(g) basis. Because this amount is already included in income
deduction. See the Instructions for Form 8995-A. elsewhere on Schedule K-1, you must reduce your stock
basis by this amount. See Form 7203, line 13.
Codes W through Z. Reserved for future use.
5. The amount included in gross income with respect
Code AA. Excess taxable income. If the S corporation to clean renewable energy bonds. Income with respect to
is required to file Form 8990, Limitation on Business clean renewable energy bonds can't be used to increase
Interest Expense Under Section 163(j), it may determine it your stock basis. Because this amount is already included
has excess taxable income. Report this amount of excess in income elsewhere on Schedule K-1, you must reduce
taxable income on Form 8990, Schedule B, line 45(c), if your stock basis by this amount. See Form 7203, line 13.
you are required to file Form 8990. See the Instructions for
Form 8990 for details. 6. Qualified investment in qualifying advanced coal
project property. Use the amounts the corporation
Code AB. Excess business interest income. If the S provides you to figure the amounts to report on Form
corporation is required to file Form 8990, it may determine 3468, lines 5a, 5b, and 5c.
it has excess business interest income. Report this
7. Qualified investment in qualifying gasification or
amount of excess business interest income on Form
advanced energy property. Use the amounts the
8990, Schedule B, line 45(d), if you are required to file
corporation provides you to figure the amounts to report
Form 8990. See the Instructions for Form 8990 for details.
on Form 3468, lines 6a and 6b.
Code AC. Gross receipts for section 448(c). Use the 8. Qualified investment in advanced manufacturing
gross receipts amount to figure the business interest investment facility property. Use the amounts the
expense you can deduct, if applicable. See section 163(j) corporation provides you to figure the amount to report on
and the Instructions for Form 8990 for details. Form 3468, line 7.
Code AD. Other information. The corporation will use 9. Inversion gain. The corporation will provide a
code AD to report the following to shareholders. statement showing the amounts of each type of income or
1. Any information you need to complete a disclosure gain that is included in inversion gain. The corporation has
statement for reportable transactions in which the included inversion gain in income elsewhere on
corporation participates. If the corporation participates in a Schedule K-1. Inversion gain is also reported under code
transaction that must be disclosed on Form 8886, AD because your taxable income and alternative
Reportable Transaction Disclosure Statement, both you minimum taxable income can't be less than the inversion
and the corporation may be required to file Form 8886 for gain. Also, your inversion gain (a) isn't taken into account
the transaction. The determination of whether you are in figuring the net operating loss (NOL) for the tax year or
required to disclose a transaction of the corporation is the NOL that can be carried over to each tax year, (b) may
based on the category(ies) under which the transaction limit your credits, and (c) is treated as income from
qualifies for disclosure and is determined by you and the sources within the United States for the foreign tax credit.
corporation. You may have to pay a penalty if you are See section 7874 for details.
required to file Form 8886 and don't do so. See the 10. Any other information you may need to file your
Instructions for Form 8886 for details. return not shown elsewhere on Schedule K-1 or
2. Gross farming and fishing income. If you are an Schedule K-3.
individual shareholder, report this income, as an item of The corporation should give you a description and the
information, on Schedule E (Form 1040), Part V, line 42. amount of your share for each of these items.
Don't report this income elsewhere on Form 1040 or
1040-SR. Box 18. More Than One Activity for At-Risk
For a shareholder that is an estate or trust, report this Purposes
income to the beneficiaries, as an item of information, on When the corporation has more than one activity for
Schedule K-1 (Form 1041), Beneficiary’s Share of at-risk purposes, it will check this box and attach a
Income, Deductions, Credits, etc. Don't report it statement. Use the information in the attached statement
elsewhere on Form 1041. to correctly determine your at-risk limitations. For more
3. Excess business loss limitation. If the corporation information, see At-Risk Limitations, earlier.
has deductions attributable to a business activity, it will
provide a statement showing the aggregate gross income Box 19. More Than One Activity for Passive
or gain and the aggregate deductions from the business Activity Purposes
activity that you need to figure any excess business loss When the corporation has more than one activity for
limitation. See section 461(l) and the Instructions for Form passive activity purposes, it will check this box and attach
461 for details. a statement. Use the information in the attached
4. The amount included in gross income with respect statement to correctly determine your passive activity
to qualified zone academy bonds issued before October limitations. For more information, see Passive Activity
4, 2008. Income with respect to these qualified zone Limitations, earlier.
academy bonds can't be used to increase your stock

Instructions for Schedule K-1 (Form 1120-S) (2022) -17-

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List of Codes

This list identifies the codes used on  Box 13. Credits                      E  Repayment of loans from 
Schedule K-1 for all shareholders.                                              shareholders
                                        A Reserved for future use
For detailed reporting and filing                                            F  Foreign taxes paid or accrued
information, see the specific line      B Reserved for future use
instructions, earlier, and the          C Low-income housing credit 
instructions for your income tax          (section 42(j)(5)) from post-2007  Box 17. Other information
                                          buildings
return.                                                                      A  Investment income
                                        D Low-income housing credit          B  Investment expenses 
Box 10. Other income (loss)               (other) from post-2007 buildings   C  Qualified rehabilitation 
                                        E Qualified rehabilitation              expenditures (other than rental 
Code                                      expenditures (rental real estate)     real estate) 
A       Other portfolio income (loss)   F Other rental real estate credits   D  Basis of energy property 
B       Involuntary conversions         G Other rental credits               E  Recapture of low-income housing 
C       Section 1256 contracts &        H Undistributed capital gains credit    credit (section 42(j)(5)) 
        straddles                       I Biofuel producer credit            F  Recapture of low-income housing 
D       Mining exploration costs        J Work opportunity credit               credit (other) 
        recapture                       K Disabled access credit             G  Recapture of investment credit 
E       Section 951A(a) income          L Empowerment zone employment        H  Recapture of other credits 
        inclusions                        credit                             I  Look-back interest—completed 
F       Inclusions of subpart F income  M Credit for increasing research        long-term contracts
G       Section 951(a)(1)(B) inclusions   activities                         J  Look-back interest—income 
H       Other income (loss)             N Credit for employer social            forecast method
                                          security and Medicare taxes        K  Dispositions of property with 
Box 12. Other deductions                O Backup withholding                    section 179 deductions
                                        P Other credits                      L  Recapture of section 179 
A       Cash contributions (60%)                                                deduction
B       Cash contributions (30%)        Box 15. Alternative minimum tax      M  Section 453(l)(3) information
C       Noncash contributions (50%)     (AMT) items                          N  Section 453A(c) information
D       Noncash contributions (30%)                                          O  Section 1260(b) information
E       Capital gain property to a 50%  A Post-1986 depreciation 
        limit organization (30%)          adjustment                         P  Interest allocable to production 
                                                                                expenditures
F       Capital gain property (20%)     B Adjusted gain or loss
                                                                             Q  CCF nonqualified withdrawals
G       Contributions (100%)            C Depletion (other than oil & gas)
                                                                             R  Depletion information—oil and 
H       Investment interest expense     D Oil, gas, & geothermal—gross 
                                                                                gas
I       Deductions—royalty income         income
                                                                             S  Reserved for future use
J       Section 59(e)(2) expenditures   E Oil, gas, & 
                                          geothermal—deductions              T  Reserved for future use
K       Reserved for future use                                              U  Net investment income
                                        F Other AMT items
L       Deductions—portfolio (other)                                         V  Section 199A information
M       Preproductive period expenses                                        W  Reserved for future use
N       Reserved for future use         Box 16. Items affecting share-
                                        holder basis                         X  Reserved for future use
O       Reforestation expense deduction                                      Y  Reserved for future use
P       Reserved for future use         A Tax-exempt interest income         Z  Reserved for future use
Q       Reserved for future use         B Other tax-exempt income            AA Excess taxable income
R       Reserved for future use         C Nondeductible expenses             AB Excess business interest income
S       Other deductions                D Distributions                      AC Gross receipts for section 448(c)
                                                                             AD Other information

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