1120-US: Amounts on Schedule K-1 (FAQ)

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Question

Why doesn’t Schedule K-1 reflect the amounts limited by the shareholder’s basis in the S Corporation?

Answer

Based on the Shareholder’s instructions for Schedule K-1 (Form 1120-S), the amounts shown on Schedule K-1 reflect the shareholder’s share of income, loss, deductions, credits, and other items without reference to limitations on losses, credits or other items that may have to be adjusted because of any of the following.

  • The adjusted basis of the shareholder’s stock and debt in the corporation.
  • The at-risk limitations.
  • The passive activity limitations.
  • Any other limitations that must be taken into account at the shareholder level in figuring taxable income.

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