Schedule K of Form 1120-S captures capital gains, real estate credits, and foreign transactions.
- Income: Ordinary business income should match the amount on page 1, Line 21 of the 1120-S return
- Deductions: all of the deductions applicable to your S-Corp have been accounted for on page 1, so there shouldn’t be any amounts here or for credits, international, or Alternative Minimum Tax
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Items Affecting Shareholder Basis:
- Nondeductible expenses, such as charitable contributions, a percentage of meals and expenses, or any other expense that’s on the S-Corp’s P&L but can’t be deducted by the S Corp, will be listed on Statement 3, which is then attached to the return
- Owner’s Distributions taken will be listed on Statement 4, which is then attached to the return
- All of this information will carry over to your Schedule K-1