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

When determining your basis

Worksheet for Figuring a Shareholder's

in loans to the corporation,

Keep for Your Records

Stock Basis

remember that:

CAUTION

1. Your stock basis at the beginning of the year . . . . . . . . . . . . . . . . .

Distributions don't reduce loan

basis, and

Increases:

Loans that a shareholder

2. Money and your adjusted basis in property contributed to the

guarantees or co-signs aren't part of a

corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

shareholder's loan basis.

3. Your share of the corporation's income (including tax-exempt

See section 1367 and its

income) reduced by any amount included in income with respect to

regulations for more details.

clean renewable energy or (for bonds issued before October 4,

2008) qualified zone academy bonds . . . . . . . . . . . . . . . . . . . . . .

Worksheet instructions. For lines 6

and 7, don't enter more than the

4. Other increases to basis, including your share of the excess of the

deductions for depletion (other than oil and gas depletion) over the

aggregate sum of the preceding lines.

basis of the property subject to depletion . . . . . . . . . . . . . . . . . . .

Any excess of the amounts that would

otherwise be entered on lines 6 and 7

Decreases:

without regard to this limit over the

5. Distributions of money and the fair market value of property

amounts actually entered on those

(excluding dividend distributions reportable on Form 1099-DIV and

lines is a reduction to your basis, if

distributions in excess of basis (the sum of lines 1 through

any, in loans you made to the

5. (

)

4)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

corporation (to the extent of such

6. Enter (a) your share of the corporation's nondeductible expenses

basis). Any portion of the excess not

and the depletion deduction for any oil and gas property held by the

used to reduce your basis in stock

corporation (but only to the extent your share of the property's

and loans isn't deductible in the

adjusted basis exceeds the depletion deduction); or (b) if the

current year and is carried over to

election under Regulations section 1.1367-1(g) applies, your share

next year and subject to that year's

of the corporation's deductions and losses (include your entire

basis limit. See the preceding

share of the section 179 expense deduction even if your allowable

instructions for more details.

section 179 expense deduction is smaller) adjusted, if the

corporation made a charitable contribution of property as described

At-Risk Limitations

6. (

)

in (4) under

Basis Rules

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Generally, if you have (a) a loss or

7. If the election under Regulations section 1.1367-1(g) applies, enter

other deduction from any activity

the amount from 6(a) above. Otherwise, enter the amount from

carried on as a trade or business or

7. (

)

6(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

for the production of income by the

8. Enter the smaller of (a) the excess, as of the beginning of the tax

corporation, and (b) amounts in the

year, of the amount you are owed for loans you made to the

activity for which you aren't at risk, you

corporation over your basis in those loans; or (b) the sum of lines 1

will have to complete Form 6198,

8. (

)

through 7. This amount increases your loan basis . . . . . . . . . . . . .

At-Risk Limitations, to figure your

allowable loss.

9. Your stock basis in the corporation at the end of the year. Combine

lines 1 through 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The at-risk rules generally limit the

amount of loss and other deductions

that you can claim to the amount you

property used to purchase the stock

defined in section 465(b)(6)); (b)

could actually lose in the activity.

or make the loans was from a source

protected against loss by a guarantee,

These losses and deductions include

(a) covered by nonrecourse

stop-loss agreement, or other similar

a loss on the disposition of assets and

indebtedness (except for certain

arrangement; or (c) that is covered by

the section 179 expense deduction.

qualified nonrecourse financing, as

indebtedness from a person who has

However, if you acquired your stock

defined in section 465(b)(6)); (b)

an interest in the activity or from a

before 1987, the at-risk rules don't

protected against loss by a guarantee,

person related to a person (except

apply to losses from an activity of

stop-loss agreement, or other similar

you) having such an interest, other

holding real property placed in service

arrangement; or (c) that is covered by

than a creditor.

before 1987 by the corporation. The

indebtedness from a person who has

Any loss from a section 465 activity

activity of holding mineral property

an interest in the activity or from a

not allowed for this tax year will be

doesn't qualify for this exception. The

person related to a person (except

treated as a deduction allocable to the

corporation should identify on a

you) having such an interest, other

statement attached to Schedule K-1

activity in the next tax year.

than a creditor.

any losses that aren't subject to the

Any cash or property contributed to

You should get a separate

at-risk limitations.

a corporate activity, or your interest in

statement of income, expenses, and

Generally, you aren't at risk for

the corporate activity, that is (a)

other items, for each activity from the

amounts such as the following.

covered by nonrecourse

corporation.

The basis of your stock in the

indebtedness (except for certain

corporation or the basis of your loans

qualified nonrecourse financing, as

to the corporation if the cash or other

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

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Shareholder'S Instructions For Schedule K-1 (Form 1120s) - 2016 Page 3

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