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

section 212 expenses that you report

1. If the corporation wasn't

If you have any foreign source

on Schedule E (Form 1040), line 38,

engaged in the trade or business of

unrecaptured section 1250

column (e). If you itemize your

gambling, (a) report gambling

gain, see the instructions for

deductions on Schedule A (Form

winnings on Form 1040, line 21, and

CAUTION

box 14, later.

1040), you may also deduct these

(b) deduct gambling losses to the

section 212 expenses as a

extent of winnings on Schedule A

Box 9. Net Section 1231 Gain

miscellaneous deduction subject to

(Form 1040), line 28.

(Loss)

the 2% limit on Schedule A (Form

2. If the corporation was engaged

The amount in box 9 is generally

1040), line 23.

in the trade or business of gambling,

passive if it is from a:

(a) report gambling winnings on

Code B. Involuntary conversions.

Rental activity, or

Schedule E (Form 1040), line 28, and

This is your net loss from involuntary

Trade or business activity in which

(b) deduct gambling losses (to the

conversions due to casualty or theft.

you didn't materially participate.

extent of winnings) on Schedule E

The corporation will give you a

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

However, an amount from a rental

statement that shows the amounts to

Gain (loss) from the disposition of

real estate activity isn't from a passive

be reported on Form 4684, Casualties

an interest in oil, gas, geothermal, or

activity if you were a real estate

and Thefts, line 34, columns (b)(i), (b)

other mineral properties. The

professional (defined earlier) and you

(ii), and (c).

corporation will attach a statement

materially participated in the activity.

If there was a gain (loss) from a

that provides a description of the

casualty or theft to property not used

If the amount is either (a) a loss that

property, your share of the amount

in a trade or business or for

isn't from a passive activity or (b) a

realized from the disposition, your

income-producing purposes, the

gain, report it on Form 4797, line 2,

share of the corporation's adjusted

corporation will provide you with the

column (g). Don't complete columns

basis in the property (for other than oil

information you need to complete

(b) through (f) on line 2 of Form 4797,

or gas properties), and your share of

Form 4684.

Sales of Business Property. Instead,

the total intangible drilling costs,

enter “From Schedule K-1 (Form

Code C. Section 1256 contracts

development costs, and mining

1120S)” across these columns.

and straddles. The corporation will

exploration costs (section 59(e)

report any net gain or loss from

expenditures) passed through for the

If the amount is a loss from a

section 1256 contracts. Report this

property. You must figure your gain or

passive activity, see Passive Loss

amount on Form 6781, Gains and

loss from the disposition by increasing

Limitations in the Instructions for Form

Losses From Section 1256 Contracts

your share of the adjusted basis by

4797. Report the loss following the

and Straddles.

the intangible drilling costs,

Instructions for Form 8582 to figure

development costs, or mine

Code D. Mining exploration costs

how much of the loss is allowed on

exploration costs for the property that

recapture. The corporation will give

Form 4797. If the corporation had net

you capitalized (that is, costs that you

you a statement that shows the

section 1231 gain (loss) from more

didn't elect to deduct under section

than one activity, it will attach a

information needed to recapture

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

statement that will identify the section

certain mining exploration costs

4797. Report a gain in Part III of Form

1231 gain (loss) from each activity.

(section 617). See Pub. 535 for

4797 in accordance with the

details.

If you have any foreign source

instructions for line 28. See

net section 1231 gain (loss),

Code E. Other income (loss).

Regulations section 1.1254-4 for

see the instructions for

Amounts with code E are other items

details.

CAUTION

box 14, later.

of income, gain, or loss not included in

Net short-term capital gain (loss)

boxes 1 through 9 or in box 10 using

and net long-term capital gain (loss)

Box 10. Other Income (Loss)

codes A through D. The corporation

from Schedule D (Form 1120S) that

should give you a description and the

isn't portfolio income. An example is

Code A. Other portfolio income

amount of your share for each of

gain or loss from the disposition of

(loss). The corporation will report

these items.

nondepreciable personal property

portfolio income other than interest,

used in a trade or business activity of

Report loss items that are passive

ordinary dividend, royalty, and capital

the corporation. Report total net

activity amounts to you following the

gain (loss) income, and attach a

short-term gain (loss) on Schedule D

Instructions for Form 8582.

statement to tell you what kind of

(Form 1040), line 5. Report the total

portfolio income is reported.

Code E items may include the

net long-term gain (loss) on

following.

If the corporation held a residual

Schedule D (Form 1040), line 12.

Income from recoveries of tax

interest in a real estate mortgage

Current year section 108(i)

benefit items. A tax benefit item is an

investment conduit (REMIC), it will

cancellation of debt income. The

amount you deducted in a prior tax

report on the statement your share of

corporation will provide your share of

year that reduced your income tax.

REMIC taxable income (net loss) that

the deferred amount that you must

Report this amount on Form 1040,

you report on Schedule E (Form

include in income in the current tax

line 21, to the extent it reduced your

1040), line 38, column (d). The

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

tax in the prior year.

statement will also report your share

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

Gambling gains and losses.

of any “excess inclusion” that you

Gain from the sale or exchange of

report on Schedule E (Form 1040),

qualified small business (QSB) stock

line 38, column (c), and your share of

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

Shareholder'S Instructions For Schedule K-1 (Form 1120s) - 2016 Page 8

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