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

qualified food inventory contributions.

how much of your total investment

Tax—Individuals). Whether you

The food inventory contribution isn't

interest is deductible.

deduct the expenditures or elect to

included in the amount reported in

amortize them, report the amount on a

For more information on the special

box 12 using code C. The corporation

separate line in column (h) of line 28 if

provisions that apply to investment

will also report your share of the

you materially participated in the

interest expense, see Form 4952 and

corporation's net income from the

activity. If you didn't materially

Pub. 550.

business activities that made the food

participate, follow the Instructions for

Code I. Deductions—royalty in-

inventory contribution(s). Your

Form 8582 to figure how much of the

come. Report deductions allocable to

deduction for food inventory

deduction can be reported in column

royalties on Schedule E (Form 1040),

contributions can't exceed 15% of

(f).

line 19. For this type of expense, enter

your aggregate net income for the tax

Code K. Deductions—portfolio (2%

“From Schedule K-1 (Form 1120S).”

year from the business activities from

floor). Amounts entered with code K

which the food inventory contribution

These deductions aren't taken into

are deductions that are clearly and

was made (including your share of net

account in figuring your passive

directly allocable to portfolio income

activity loss for the year. Don't enter

income from partnership or S

(other than investment interest

them on Form 8582.

corporation businesses that made

expense and section 212 expenses

food inventory contributions).

Code J. Section 59(e)(2) expendi-

from a REMIC). Generally, you should

Amounts that exceed the 15%

tures. The corporation will show on

report these amounts on Schedule A

limitation may be carried over for up to

an attached statement the type and

(Form 1040), line 23. See the

5 years. Report the deduction, subject

the amount of qualified expenditures

instructions for Schedule A (Form

to the 50% AGI limitation, on

for which you may make a section

1040), lines 23 and 28, for details.

Schedule A (Form 1040), line 17.

59(e) election. The statement will also

These deductions aren't taken into

Code D. Noncash contributions

identify the property for which the

account in figuring your passive

(30%). Report this amount, subject to

expenditures were paid or incurred. If

activity loss for the year. Don't enter

the 30% AGI limitation, on Schedule A

there is more than one type of

them on Form 8582.

(Form 1040), line 17.

expenditure, the amount of each type

Code L. Deductions—portfolio

will also be listed.

Code E. Capital gain property to a

(other). Generally, you should report

If you deduct these expenditures in

50% organization (30%). Report

these amounts on Schedule A (Form

full in the current year, they are

this amount, subject to the 30% AGI

1040), line 28. See the instructions for

treated as adjustments or tax

limitation, on Schedule A (Form

Schedule A (Form 1040), lines 23 and

preference items for purposes of

1040), line 17. See Special 30% Limit

28, for details.

alternative minimum tax. However,

for Capital Gain Property in Pub. 526.

These deductions aren't taken into

you may elect to amortize these

Code F. Capital gain property

account in figuring your passive

expenditures over the number of

(20%). Report this amount, subject to

activity loss for the year. Don't enter

years in the applicable period rather

the 20% AGI limitation, on Schedule A

them on Form 8582.

than deduct the full amount in the

(Form 1040), line 17.

current year. If you make this election,

Code M. Preproductive period ex-

these items aren't treated as

Code G. Contributions (100%).

penses. You may be able to deduct

adjustments or tax preference items.

The corporation will report your share

these expenses currently or you may

of qualified conservation contributions

need to capitalize them under section

Under the election, you can deduct

of property used in agriculture or

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

circulation expenditures ratably over a

livestock production. This contribution

Guide, and Regulations section

3-year period. Research and

isn't included in the amount reported

1.263A-4 for details.

experimental expenditures and mining

in box 12 using code C. If you are a

exploration and development costs

Code N. Commercial revitalization

farmer or rancher, you qualify for a

can be amortized over a 10-year

deduction from rental real estate

100% AGI limitation for this

period. Intangible drilling and

activities. Follow the Instructions for

contribution. Otherwise, your

development costs can be amortized

Form 8582 to figure how much of the

deduction for this contribution is

over a 60-month period. The

deduction can be reported on

subject to a 50% AGI limitation.

amortization periods begin with the

Schedule E (Form 1040), line 28,

Report this deduction on Schedule A

month in which such costs were paid

column (f).

(Form 1040), line 17. See Pub. 526 for

or incurred.

Code O. Reforestation expense de-

more information on qualified

Make the election on Form 4562. If

duction. The corporation will provide

conservation contributions.

you make the election, report the

a statement that describes the

Code H. Investment interest ex-

current year amortization of section

qualified timber property for these

pense. Report this amount on Form

59(e) expenditures from Part VI of

reforestation expenses. The expense

4952, line 1.

Form 4562 on Schedule E (Form

deduction is limited to $10,000

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

If the corporation has investment

($5,000 if married filing separately) for

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

income or other investment expense,

each qualified timber property,

expenditures on Schedule E (Form

it will report your share of these items

including your share of the

1040), line 28, and figure the resulting

in box 17 using codes A and B.

corporation's expense and any

adjustment or tax preference item

Include investment income and

reforestation expenses you separately

(see Form 6251, Alternative Minimum

expenses from other sources to figure

paid or incurred during the tax year.

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Instructions for Schedule K-1 (Form 1120S) (2016)

Shareholder'S Instructions For Schedule K-1 (Form 1120s) - 2016 Page 10

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