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2020 Shareholder's Instructions for Schedule K-1 (Form 1120-S)

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2020 Shareholder's Instructions for Schedule K-1 (Form 1120-S) Userid: CPM Schema: Leadpct: 100% Pt. size: 10 Draft Ok to Print instrx AH XSL/XML Fileid: … -S SCH K-1/2020/A/XML/Cycle07/source (Init. & Date) _______ Page 1 of 24 14:58 - 3-Feb-2021 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. Department of the Treasury 2020 Internal Revenue Service Shareholder's Instructions for Schedule K-1 (Form 1120-S) Shareholder's Share of Income, Deductions, Credits, etc. (For Shareholder's Use Only) Section references are to the Internal Contents Page corporation stock is part of a Revenue Code unless otherwise noted. Box 19. More Than One decedent's estate. See Decedent's Contents Page Activity for Passive Schedule K-1, later. Activity Purposes ........ 23 Future Developments ............1 List of Codes ................ 24 Section 951A reporting. Notice What’s New ..................1 2020-69 provides an election to be General Instructions .............1 Future Developments treated as an entity for purposes of Purpose of Schedule K-1 ......1 section 951A. See Statements Inconsistent Treatment of For the latest information about developments related to Required of Shareholders of Certain S Items .................2 Corporations Electing To Be Treated Errors ...................2 Schedule K-1 (Form 1120-S) and its instructions, such as legislation as an Entity Under Notice 2020-69, Decedent's Schedule K-1 ......2 later. Sale of S Corporation Stock .....2 enacted after they were published, go International Boycotts .........2 to IRS.gov/Form1120S. Elections .................2 General Instructions Additional Information ........2 What’s New Purpose of Schedule K-1 Limitations on Losses, List of codes. Most loss, deduction, Deductions, and Credits .....3 The corporation uses Schedule K-1 to and credit items reported on the Basis Limitations .........3 report your share of the corporation's Schedule K-1 may require adjustment At-Risk Limitations ........9 income, deductions, credits, and other based on basis limitations, at-risk Passive Activity items. Keep it for your records. Don't limitations, and passive activity Limitations ...........9 file it with your tax return unless limitations before being reported on a Specific Instructions ............ 11 backup withholding is reported in shareholder's tax return. It is no longer Box 1. Ordinary Business box 13 using code O. (See the Income (Loss) .......... 12 possible to provide useful reporting instructions for Code O. Backup Box 2. Net Rental Real information to taxpayers on one page. withholding, later.) The corporation Estate Income (Loss) ...... 12 The list of codes and descriptions files a copy of Schedule K-1 with the Box 3. Other Net Rental have been moved from the second Income (Loss) .......... 12 IRS. page of Schedule K-1 (Form 1120-S) Box 4. Interest Income ....... 12 to these instructions. See the List of Boxes 5a and 5b. Dividends ... 13 For your protection, Schedule K-1 Codes, later. Box 6. Royalties ........... 13 may show only the last four digits of Box 7. Net Short-Term Excess business loss. The excess your identifying number (social Capital Gain (Loss) ....... 13 business loss limitation rules were security number (SSN), employer Boxes 8a through 8c. Long- repealed for the 2020 tax year by the identification number (EIN), or Term Capital Gain (Loss) ... 13 Coronavirus Aid, Relief, and individual taxpayer identification Box 9. Net Section 1231 Economic Security Act (CARES Act), number (ITIN)). However, the Gain (Loss) ............ 13 corporation has reported your Box 10. Other Income (Loss) ... 13 which also retroactively repealed the rules for the 2018 and 2019 tax years. complete identifying number to the Box 11. Section 179 IRS. Deduction ............. 15 New items added to Part II of Box 12. Other Deductions ..... 15 Schedule K-1. Item G is added for You may be liable for tax on your Box 13. Credits ............ 17 the shareholder's number of shares share of the corporation's income, Box 14. Foreign Transactions ........... 18 for the beginning and end of the tax whether or not distributed. Include Box 15. AMT Items ......... 19 year. Item H is added for loans from your share on your tax return if a Box 16. Items Affecting the shareholder for the beginning and return is required. Use these Shareholder Basis ........ 19 end of the tax year. instructions to help you report the Box 17. Other Information ..... 20 Decedent's Schedule K-1. An items shown on Schedule K-1 on your Box 18. More Than One executor is responsible to notify the S tax return. Activity for At-Risk Purposes .............. 23 corporation of the name and tax Your share of S corporation income identification number of the isn't self-employment income and it decedent's estate when the S isn't subject to self-employment tax. Feb 03, 2021 Cat. No. 11521O Page 2 of 24 Fileid: … -S SCH K-1/2020/A/XML/Cycle07/source 14:58 - 3-Feb-2021 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. The amount of loss and Decedent's Schedule K-1 operations. However, certain ! deduction you may claim on If you are the executor of an estate elections are made by you separately CAUTION your tax return may be less and you have received a decedent's on your income tax return and not by than the amount reported on Schedule K-1, then you have the the corporation. These elections are Schedule K-1. It is the shareholder's responsibility to notify the S made under the following code responsibility to consider and apply corporation of the name and tax sections. any applicable limitations. See identification number (TIN) of the • Section 59(e) (deduction of certain Limitations on Losses, Deductions, decedent’s estate if the S corporation qualified expenditures ratably over the and Credits, later, for more stock is part of a decedent’s estate. period of time specified in that information. This is information that the S section). For details, see the corporation must have to properly instructions for code J in box 12. Schedule K-1 doesn't show actual determine its eligibility to maintain • Section 263A(d) (preproductive dividend distributions the corporation status as a subchapter S corporation. expenses). See the instructions for made to you. The corporation must If a decedent died in a prior year and code M in box 12. report such amounts totaling $10 or the S corporation continues to send • Section 617 (deduction and more for the calendar year on Form the decedent a Schedule K-1 after recapture of certain mining 1099-DIV, Dividends and being notified of the decedent’s death, exploration expenditures). Distributions. then you should request that the S • Section 901 (foreign tax credit). corporation send a corrected Inconsistent Treatment of Schedule K-1. If you receive an Statements Required of Items interest in an S corporation by reason Shareholders of Certain S Generally, you must report corporate of a former shareholder’s death, you Corporations Electing To items shown on your Schedule K-1 must provide the S corporation with Be Treated as an Entity (and any attached statements) the your name and TIN. For treatment of same way that the corporation treated S corporation income upon the death Under Notice 2020-69 the items on its return. of a shareholder, see Pub. 559, If the corporation and all of its Survivors, Executors, and shareholders elect for the corporation If the treatment on your original or Administrators. to be treated as an entity for purposes amended return is inconsistent with of section 951A under Notice 2020-69 the corporation's treatment, or if the Sale of S Corporation for tax years of the corporation ending corporation hasn't filed a return, file Stock before September 1, 2020, and after Form 8082, Notice of Inconsistent June 21, 2019, you are required to Treatment or Administrative Gain or loss from the disposition of attach a statement to your timely filed Adjustment Request (AAR), with your your S corporation stock may be net (including extensions) original or original or amended return to identify investment income under section amended return for that year filed by and explain any inconsistency (or to 1411 and could be subject to the net March 15, 2021. The statement must: note that a corporate return hasn't investment income tax. See Form (i) identify the election for the been filed). 8960, Net Investment Income corporation to be treated as an entity Tax—Individuals, Estates, and Trusts, If you are required to file Form 8082 for purposes of section 951A pursuant and its instructions for information to the Notice; and (ii) include the but don't do so, you may be subject to about how to figure and report the tax. the accuracy-related penalty. This amount of the corporation's transition penalty is in addition to any tax that International Boycotts AE&P (as described in section 3.02(3) results from making your amount or of the Notice). The corporation should Every corporation that had operations notify you of this election so you can treatment of the item consistent with in, or related to, a boycotting country, that shown on the corporation's comply with this statement company, or a national of a boycotting requirement. return. Any deficiency that results country must file Form 5713, from making the amounts consistent International Boycott Report. may be assessed immediately. Additional Information If the corporation cooperated with For more information on the treatment Errors an international boycott, it must give of S corporation income, deductions, If you believe the corporation has you a copy of its Form 5713. You must credits, and other items, see Pub. made an error on your Schedule K-1, file your own Form 5713 to report the 535, Business Expenses; Pub.
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