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there is more than one type of

wages reported to you by the

Code L. Deductions—Portfolio

expenditure, the amount of each type

corporation (in box 12 of

(other). Generally, you should report

will also be listed.

Schedule K-1) on Form 8903, line 17.

these amounts on Schedule A (Form

If you deduct these expenditures in

1040), line 28. See the instructions for

Code S. Other deductions.

full in the current year, they are

Schedule A (Form 1040), lines 23 and

Amounts with this code may include

treated as adjustments or tax

28, for details.

the following.

preference items for purposes of

Itemized deductions that Form

These deductions aren't taken into

alternative minimum tax. However,

1040 filers report on Schedule A

account in figuring your passive

you may elect to amortize these

(Form 1040).

activity loss for the year. Don't enter

expenditures over the number of

Soil and water conservation

them on Form 8582.

years in the applicable period rather

expenditures and endangered

Code M. Preproductive period ex-

than deduct the full amount in the

species recovery expenditures. See

penses. You may be able to deduct

current year. If you make this election,

section 175 for limitations on the

these expenses currently or you may

these items aren't treated as

amount you are allowed to deduct.

need to capitalize them under section

adjustments or tax preference items.

Expenditures for the removal of

263A. See Pub. 225, Farmer's Tax

architectural and transportation

Under the election, you can deduct

Guide, and Regulations section

barriers to the elderly and disabled

circulation expenditures ratably over a

1.263A-4 for details.

that the corporation elected to treat as

3-year period. Research and

Code N. Commercial revitalization

a current expense. The deductions

experimental expenditures and mining

deduction from rental real estate

are limited by section 190(c) to

exploration and development costs

$15,000 per year from all sources.

activities. Follow the Instructions for

can be amortized over a 10-year

Form 8582 to figure how much of the

Interest expense allocated to

period. Intangible drilling and

debt-financed distributions. The

deduction can be reported on

development costs can be amortized

Schedule E (Form 1040), line 28,

manner in which you report such

over a 60-month period. The

interest expense depends on your use

column (f).

amortization periods begin with the

of the distributed debt proceeds. If the

month in which such costs were paid

Code O. Reforestation expense de-

proceeds were used in a trade or

or incurred.

duction. The corporation will provide

business activity, report the interest

Make the election on Form 4562. If

a statement that describes the

on Schedule E (Form 1040), line 28.

you make the election, report the

qualified timber property for these

In column (a) enter the name of the

current year amortization of section

reforestation expenses. The expense

corporation and “interest expense.” If

59(e) expenditures from Part VI of

deduction is limited to $10,000

you materially participated in the trade

Form 4562 on Schedule E (Form

($5,000 if married filing separately) for

or business activity, enter the interest

1040), line 28. If you don't make the

each qualified timber property,

expense in column (h). If you didn't

election, report the section 59(e)(2)

including your share of the

materially participate in the activity,

expenditures on Schedule E (Form

corporation's expense and any

follow the Instructions for Form 8582

1040), line 28, and figure the resulting

reforestation expenses you separately

to figure the interest expense you can

adjustment or tax preference item

paid or incurred during the tax year.

report in column (f). Material

(see Form 6251, Alternative Minimum

If you didn't materially participate in

participation is defined earlier under

Tax—Individuals). Whether you

the activity, use Form 8582 to figure

Passive Activity

Limitations. If the

deduct the expenditures or elect to

the amount to report on Schedule E

proceeds were used in an investment

amortize them, report the amount on a

(Form 1040), line 28, column (f). If you

activity, report the interest on Form

separate line in column (h) of line 28 if

materially participated in the

4952. If the proceeds are used for

you materially participated in the

reforestation activity, report the

personal purposes, the interest is

activity. If you didn't materially

deduction on Schedule E (Form

generally not deductible.

participate, follow the Instructions for

1040), line 28, column (h).

Contributions to a capital

Form 8582 to figure how much of the

construction fund (CCF). The

Code P. Domestic production ac-

deduction can be reported in column

deduction for a CCF investment isn't

tivities information. The corporation

(f).

taken on Schedule E (Form 1040).

will provide you with a statement with

Code K. Deductions—Portfolio

Instead, you subtract the deduction

information that you must use to figure

(2% floor). Amounts entered with

from the amount that would normally

the domestic production activities

code K are deductions that are clearly

be entered as taxable income on

deduction. Use Form 8903, Domestic

and directly allocable to portfolio

Form 1040, line 43. In the margin to

Production Activities Deduction, to

income (other than investment

the left of line 43, enter "CCF" and the

figure this deduction. For details, see

interest expense and section 212

amount of the deduction.

the Instructions for Form 8903.

expenses from a REMIC). Generally,

Penalty on early withdrawal of

Code Q. Qualified production ac-

you should report these amounts on

savings. Report this amount on Form

tivities income (QPAI). Report the

Schedule A (Form 1040), line 23. See

1040, line 30.

QPAI reported to you by the

the instructions for Schedule A (Form

Film, television, and live theatrical

corporation (in box 12 of

1040), lines 23 and 28, for details.

production expenses. The corporation

Schedule K-1) in the applicable

will provide a statement that describes

These deductions aren't taken into

column of Form 8903, line 7.

the film, television, or live theatrical

account in figuring your passive

production generating these

activity loss for the year. Don't enter

Code R. Employer's Form W-2 wa-

expenses. Generally, if the aggregate

them on Form 8582.

ges. Report the portion of Form W-2

-15-

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 15

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