1120-US: Information reported on Schedule K-1, Box 12, Code P, Q, or R (FAQ)

Alerts and notices
Leave feedback

Internal Employees: Submit feedback

Contact information (optional):

Leave this blank:

Please tell us how we can make this information more helpful.


Characters left:

Change to CS Support service hours

Our Support department is closed on [[date]]. However, limited UltraTax CS phone support is available on that date from 9 AM - 5 PM ET due to the approaching deadline.

Links to our most popular tax processing topics are available in the Alerts and notices section on the right side of most pages.

Question

How do I get the information reported on Schedule K-1, Box 12, Code P, Q, or R?

Answer

Per the Form 8903 instructions, the domestic production activity deduction (DPAD) is determined at the shareholder level; therefore, the S Corporation calculates and reports, on the related Schedule K-1, the information needed by the shareholder to complete their separate Form 8903. Form 8903 is not filed by the S Corporation.

If the S Corporation is an eligible entity as defined in Rev. Proc. 2007-34, Section 3.01, the corporation may choose to calculate the qualified production activities income (QPAI) and W-2 wages at the entity level. This information will be reported on the Schedule K-1, Box 12, Codes Q and R. An eligible S Corporation can calculate the QPAI and W-2 wages by using either the simplified deduction method or the small business simplified overall method, where applicable.

In Screen 8903S, enter 1 in the Allocation method field if the S Corporation is calculating the QPAI and W-2 wages under the small business simplified overall method. The QPAI and Employer's Form W-2 wages are calculated on the Small Business Simplified Overall Method Worksheet. Enter 2 in the Allocation method field if the S Corporation is calculating the QPAI and W-2 wages under the simplified deduction method. The QPAI and Employer's Form W-2 wages are calculated on the Simplified Deduction Method Worksheet. You must also enter the amounts in the Cost of goods sold allocable to DPGR and Wages allocable to DPGR fields in Screen 8903S when the simplified deduction method is used. The shareholder's share of the amounts calculated using allocation code 1 or 2 are reported on Schedule K-1, Box 12, Codes Q and R.

UltraTax/1120 transfers these amounts to Screen K1-3 in UltraTax/1040, which transfers to lines 7 and 17 respectively, on the shareholder's Form 8903.

If the S Corporation does not calculate QPAI and W-2 wages at the entity level, whether by ineligibility in Rev. Proc. 2007-34 or choice, then the S Corporation must provide the detailed information for the shareholder to calculate the deduction at the shareholder level. UltraTax CS reports this information on Schedule K-1, Box 12, Code P. The following information, as listed in the Form 1120S instructions for Schedule K, line 12d, Code P, must be provided for the shareholder to calculate the domestic production activities deduction:

If the S Corporation does not calculate QPAI and W-2 wages at the entity level, enter 3 in the Allocation method field in Screen 8903S. You must also enter the following amounts in Screen 8903S when the other allocation method is used.

The shareholder's share of the amounts are reported on Schedule K-1, Box 12, Code P.

Because the shareholder may need to make additional calculations to the information provided by the S Corporation, the amounts reported in Code 12P are not transferred to UltraTax/1040.

Related topic: 1120-US: Domestic production information for S Corporations FAQs

Share This