Shareholder'S Instructions For Schedule K-1 (Form 1120s)

how much of the loss can be reported

Report your share of this

gain (loss) income. It will attach a

on Schedule E, line 28, column (f).

unrecaptured gain on the

statement to tell you what kind of

2. If income is reported in box 3,

Unrecaptured Section 1250 Gain

portfolio income is reported.

report the income on Schedule E

Worksheet in the instructions for

If the corporation held a residual

(Form 1040), line 28, column (g).

Schedule D (Form 1040), as follows.

interest in a real estate mortgage

•

Report unrecaptured section 1250

investment conduit (REMIC), it will

gain from the sale or exchange of the

Portfolio Income

report on a statement your share of

corporation’s business assets on line

REMIC taxable income (net loss) that

Portfolio income or loss (shown in

you report on Schedule E (Form

boxes 4 through 8b and in box 10,

•

Report unrecaptured section 1250

1040), line 38, column (d). The

code A) is not subject to the passive

gain from the sale or exchange of an

statement will also report your share

activity limitations. Portfolio income

interest in a partnership on line 10.

of any “excess inclusion” that you

includes income not derived in the

•

Report unrecaptured section 1250

report on Schedule E, line 38, column

ordinary course of a trade or business

gain from an estate, trust, regulated

(c), and your share of section 212

from interest, ordinary dividends,

investment company (RIC), or real

expenses that you report on

annuities, or royalties, and gain or

estate investment trust (REIT) on line

Schedule E, line 38, column (e). If

loss on the sale of property that

11.

you itemize your deductions on

produces such income or is held for

Schedule A (Form 1040), you may

If the corporation reports only

investment.

also deduct these section 212

unrecaptured section 1250 gain from

Box 4. Interest Income

expenses as a miscellaneous

the sale or exchange of its business

deduction subject to the 2% limit on

Report interest income on line 8a of

assets, it will enter a dollar amount in

Schedule A, line 22.

Form 1040.

box 8c. If it reports the other two

types of unrecaptured gain, it will

Code B. Involuntary conversions.

Box 5a. Ordinary Dividends

provide an attached statement that

This is your share of net loss from

Report ordinary dividends on line 9a

shows the amount for each type of

involuntary conversions due to

of Form 1040.

unrecaptured section 1250 gain.

casualty or theft. The corporation will

give you a schedule that shows the

Box 5b. Qualified Dividends

Box 9. Net Section 1231 Gain

amounts to be entered on Form 4684,

Report any qualified dividends on line

(Loss)

Casualties and Thefts, line 37,

9b of Form 1040.

columns (b)(i), (b)(ii) and (c).

The amount in box 9 is generally

Note. Qualified dividends are

passive if it is from a:

If there was a gain (loss) from a

•

excluded from investment income,

Rental activity, or

casualty or theft to property not used

•

but you may elect to include part or

Trade or business activity in which

in a trade or business or for

all of these amounts in investment

you did not materially participate.

income-producing purposes, the

income. See the instructions for line

corporation will provide you with the

However, an amount from a rental

4g of Form 4952, Investment Interest

information you need to complete

real estate activity is not from a

Expense Deduction, for important

Form 4684.

passive activity if you were a real

information on making this election.

estate professional (defined on page

Code C. Section 1256 contracts &

Box 6. Royalties

3) and you materially participated in

straddles. The corporation will report

the activity.

any net gain or loss from section

Report royalties on Schedule E, Part

1256 contracts. Report this amount

I, line 4.

If the amount is either (a) a loss

on Form 6781, Gains and Losses

that is not from a passive activity or

Box 7. Net Short-Term

From Section 1256 Contracts and

(b) a gain, report it on Form 4797, line

Straddles.

Capital Gain (Loss)

2, column (g). Do not complete

Code D. Mining exploration costs

columns (b) through (f) on line 2 of

Report the net short-term capital gain

recapture. The corporation will give

Form 4797. Instead, enter “From

(loss) on Schedule D (Form 1040),

you a schedule that shows the

Schedule K-1 (Form 1120S)” across

line 5, column (f).

information needed to recapture

these columns.

Box 8a. Net Long-Term

certain mining exploration costs

If the amount is a loss from a

(section 617). See Pub. 535 for

Capital Gain (Loss)

passive activity, see Passive Loss

details.

Report the net long-term capital gain

Limitations in the Instructions for

Code E. Other income (loss).

(loss) on Schedule D (Form 1040),

Form 4797. Report the loss following

Amounts with code E are other items

line 12, column (f).

the Instructions for Form 8582 to

of income, gain, or loss not included

figure how much of the loss is

Box 8b. Collectibles (28%)

in boxes 1 through 9 or in box 10

allowed on Form 4797. If the

Gain (Loss)

using codes A through D. The

corporation had net section 1231 gain

corporation should give you a

(loss) from more than one activity, it

This is your share of collectibles gain

description and the amount of your

will attach a statement that will

or loss. Include this amount on line 4

share for each of these items.

identify the amount of section 1231

of the 28% Rate Gain Worksheet in

gain (loss) from each activity.

Report loss items that are passive

the instructions for Schedule D (Form

activity amounts to you following the

1040), line 18.

Box 10. Other Income (Loss)

Instructions for Form 8582.

Box 8c. Unrecaptured

Code A. Other portfolio income

Code E items may include the

Section 1250 Gain

(loss). The corporation will report

following.

•

There are three types of

portfolio income other than interest,

Income from recoveries of tax

unrecaptured section 1250 gain.

ordinary dividend, royalty, and capital

benefit items. A tax benefit item is an

-7-

Instructions for Schedule K-1 (Form 1120S)

Shareholder'S Instructions For Schedule K-1 (Form 1120s) - 2005 Page 7

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