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Net short-term capital gain (loss)

1. You must have held an interest

Code E. Other income (loss).

and net long-term capital gain (loss)

in the corporation during the entire

Amounts with code E are other items

from Schedule D (Form 1120S) that

period in which the corporation held

of income, gain, or loss not included in

isn't portfolio income. An example is

the QSB stock (more than 6 months

boxes 1 through 9 or in box 10 using

gain or loss from the disposition of

prior to the sale), and

codes A through D. The corporation

nondepreciable personal property

should give you a description and the

2. Your share of the gain eligible

used in a trade or business activity of

amount of your share for each of

for the section 1045 rollover can't

the corporation. Report total net

these items.

exceed the amount that would have

short-term gain (loss) on Schedule D

been allocated to you based on your

Report loss items that are passive

(Form 1040), line 5. Report the total

interest in the corporation at the time

activity amounts to you following the

net long-term gain (loss) on

the QSB stock was acquired.

Instructions for Form 8582.

Schedule D (Form 1040), line 12.

Code E items may include the

See Form 8949, Schedule D (Form

Current year section 108(i)

following.

1040), and the related instructions for

cancellation of debt income. The

Income from recoveries of tax

details on how to report the gain and

corporation will provide your share of

benefit items. A tax benefit item is an

the amount of the allowable

the deferred amount that you must

amount you deducted in a prior tax

postponed gain.

include in income in the current tax

year that reduced your income tax.

Gain eligible for section 1045

year under section 108(i)(1) or section

Report this amount on Form 1040,

rollover (replacement stock not

108(i)(5)(D)(i) or (ii).

line 21, to the extent it reduced your

purchased by the corporation). The

Gain from the sale or exchange of

tax in the prior year.

corporation should also give you (a)

qualified small business (QSB) stock

Gambling gains and losses.

the name of the corporation that

(as defined in the Instructions for

issued the qualified small business

Schedule D (Form 1040)) eligible for

1. If the corporation wasn't

(QSB) stock, (b) your share of the

the section 1202 exclusion. The

engaged in the trade or business of

corporation's adjusted basis and sales

corporation should also give you (a)

gambling, (a) report gambling

price of the QSB stock, and (c) the

the name of the corporation that

winnings on Form 1040, line 21, and

dates the QSB stock was bought and

issued the QSB stock, (b) your share

(b) deduct gambling losses to the

sold. To qualify for the section 1045

of the corporation's adjusted basis

extent of winnings on Schedule A

rollover:

and sales price of the QSB stock, and

(Form 1040), line 28.

1. You must have held an interest

2. If the corporation was engaged

bought and sold. The following

in the corporation during the entire

in the trade or business of gambling,

additional limitations apply at the

period in which the corporation held

(a) report gambling winnings on

shareholder level.

the QSB stock (more than 6 months

Schedule E (Form 1040), line 28, and

prior to the sale),

1. You must have held an interest

(b) deduct gambling losses (to the

in the corporation when the

extent of winnings) on Schedule E

2. Your share of the gain eligible

corporation acquired the QSB stock

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

for the section 1045 rollover can't

and at all times thereafter until the

Gain (loss) from the disposition of

exceed the amount that would have

corporation disposed of the QSB

an interest in oil, gas, geothermal, or

been allocated to you based on your

stock.

other mineral properties. The

interest in the corporation at the time

corporation will attach a statement

the QSB stock was acquired, and

2. Your share of the eligible

that provides a description of the

section 1202 gain can't exceed the

3. You must purchase other QSB

property, your share of the amount

amount that would have been

stock (as defined in the Instructions

realized from the disposition, your

allocated to you based on your

for Schedule D (Form 1040)) during

share of the corporation's adjusted

interest in the corporation at the time

the 60-day period that began on the

basis in the property (for other than oil

the QSB stock was acquired.

date the QSB stock was sold by the

or gas properties), and your share of

corporation.

See Form 8949, Sales and Other

the total intangible drilling costs,

Dispositions of Capital Assets,

See Form 8949, Schedule D (Form

development costs, and mining

Schedule D (Form 1040), and the

1040), and the related instructions for

exploration costs (section 59(e)

related instructions for details on how

details on how to report the gain and

expenditures) passed through for the

to report the gain and the amount of

the amount of the allowable

property. You must figure your gain or

the allowable exclusion.

postponed gain.

loss from the disposition by increasing

Gain eligible for section 1045

your share of the adjusted basis by

Deductions

rollover (replacement stock

the intangible drilling costs,

purchased by the corporation). The

development costs, or mine

Box 11. Section 179 Deduction

corporation should also give you (a)

exploration costs for the property that

Use this amount, along with the total

the name of the corporation that

you capitalized (that is, costs that you

issued the qualified small business

cost of section 179 property placed in

didn't elect to deduct under section

service during the year from other

(QSB) stock, (b) your share of the

59(e)). Report a loss in Part I of Form

corporation's adjusted basis and sales

sources, to complete Part I of Form

4797. Report a gain in Part III of Form

4562, Depreciation and Amortization.

price of the QSB stock, and (c) the

4797 in accordance with the

dates the QSB stock was bought and

The corporation will report on an

instructions for line 28. See

attached statement your share of the

sold. To qualify for the section 1045

Regulations section 1.1254-4 for

rollover:

cost of any qualified enterprise zone

details.

property or qualified real property it

-13-

Instructions for Schedule K-1 (Form 1120S) (2017)

Instructions For Schedule K-1 (Form 1120s) - Shareholder'S Share Of Income, Deductions, Credits, Etc. - 2017 Page 13

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