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

(loss), deductions, or credits from any

limitations on losses, credits, or other

If you have amounts other

activity to which special rules apply,

items that may have to be adjusted

than those shown on

the corporation will identify the activity

because of:

Schedule K-1 to report on

and all amounts relating to it on

CAUTION

1. The adjusted basis of your

Schedule E (Form 1040), enter each

Schedule K-1 or on an attached

stock and debt in the corporation;

item separately on Schedule E (Form

statement.

1040), line 28.

2. The at-risk limitations;

If you have net income subject to

3. The passive activity limitations;

recharacterization under Temporary

Codes. In box 10 and boxes 12

Regulations section 1.469-2T(f) and

through 17, the corporation will

4. Any other limitations that must

Regulations section 1.469-2(f), report

identify each item by entering a code

be taken into account at the

such amounts according to the

in the column to the left of the dollar

shareholder level in figuring taxable

Instructions for Form 8582.

amount entry space. These codes are

income (for example, the section 179

identified on page 2 of Schedule K-1

If you have net income (loss),

expense limitation).

and in these instructions.

deductions, or credits from either of

the following activities, treat such

For information on these

Attached statements. The

amounts as nonpassive and report

provisions, see

Limitations on Losses,

corporation will enter an asterisk (*)

them as indicated in these

Deductions, and

Credits, earlier.

after the code, if any, in the column to

instructions.

the left of the dollar amount entry

If you are an individual, and the

space for each item for which it has

1. The rental of a dwelling unit any

above limitations don't apply to the

shareholder used for personal

attached a statement providing

amounts shown on your

purposes during the year for more

additional information. For those

Schedule K-1, take the amounts

than the greater of 14 days or 10% of

informational items that can't be

shown and report them on the lines of

the number of days that the residence

reported as a single dollar amount,

your tax return as indicated in the

was rented at fair rental value.

the corporation will enter an asterisk in

summarized reporting information

the left column and enter “STMT” in

2. Trading personal property for

shown on page 2 of the Schedule K-1.

the dollar amount entry space to

the account of owners of interests in

If any of the above limitations apply,

indicate the information is provided on

the activity.

adjust the amounts on Schedule K-1

an attached statement.

before you report them on your return.

Self-charged interest. The

Income (Loss)

When applicable, the passive

corporation will report any

activity limitations on losses are

“self-charged” interest income or

Box 1. Ordinary Business

applied after the limitations on losses

expense that resulted from loans

Income (Loss)

for a shareholder's basis in stock and

between you and the corporation (or

debt and the shareholder's at-risk

The amount reported in box 1 is your

between the corporation and another

amount.

share of the ordinary income (loss)

S corporation or partnership if both

from trade or business activities of the

entities have the same owners with

The line numbers in the

corporation. Generally, where you

the same proportional interest in each

summarized reporting information on

report this amount on Form 1040

entity). If there was more than one

page 2 of Schedule K-1 are

depends on whether the amount is

activity, the corporation will provide a

references to forms in use for

from an activity that is a passive

statement allocating the interest

calendar year 2016. If you file your tax

activity to you. If you are an individual

income or expense with respect to

return on a calendar year basis, but

shareholder filing a 2016 Form 1040,

each activity. The self-charged

the corporation files a return for a

find your situation below and report

interest rules don't apply to your

fiscal year, report the amounts on your

your box 1 income (loss) as instructed

interest in the S corporation if the

tax return for the year in which the

after applying the basis and at-risk

corporation made an election under

corporation's fiscal year ends. For

limitations on losses. If the corporation

Regulations section 1.469-7(g) to

example, if the corporation's tax year

had more than one trade or business

avoid the application of these rules.

ends in February 2017, report the

activity, it will attach a statement

See the Instructions for Form 8582 for

amounts on your 2017 tax return.

identifying the income or loss from

details.

each activity.

If you have losses, deductions, or

Specific Instructions

credits from a prior year that were not

1. Report box 1 income (loss) from

deductible or usable because of

corporate trade or business activities

certain limitations, such as the basis

Part III. Shareholder's

in which you materially participated on

rules or the at-risk limitations, take

Schedule E (Form 1040), line 28,

Share of Current Year

them into account in determining your

column (h) or (j).

Income, Deductions,

income, loss, or credits for this year.

2. Report box 1 income (loss) from

Credits, and Other Items

However, except for passive activity

corporate trade or business activities

losses and credits, don't combine the

The amounts shown in boxes 1

in which you didn't materially

prior year amounts with any amounts

through 17 reflect your share of

participate, as follows.

shown on this Schedule K-1 to get a

income, loss, deductions, credits, and

a. If income is reported in box 1,

net figure to report on your return.

other items, from corporate business

report the income on Schedule E

Instead, report the amounts on your

or rental activities without reference to

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

return on a year-by-year basis.

-6-

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

Shareholder'S Instructions For Schedule K-1 (Form 1120s) - 2016 Page 6

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