Page 157 - BusinessStructures & Forms

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Schedule K-1. Enter each shareholder's pro rata share of (defined in section 1297) in either the tax year of the distribution
ordinary dividends in box 5a of Schedule K-1. or the preceding tax year.
See Notice 2004-71, 2004-45 I.R.B. 793, and Notice 2006-3,
Line 5b. Qualified Dividends 2006-3 I.R.B. 306, for more details.
Schedule K-1. Enter each shareholder's pro rata share of
Enter qualified dividends on line 5b. Except as provided below, qualified dividends in box 5b of Schedule K-1.
qualified dividends are dividends received from domestic
corporations and qualified foreign corporations. Do not include If any amounts from line 5b are from foreign sources,
qualified dividends to the extent that they are attributable to ! see the instructions for Schedule K-2 (Form 1120-S) and
PTEP in annual PTEP accounts of the S corporation. See Notice CAUTION Schedule K-3 (Form 1120-S).
2019-01. The amount by which qualified dividends are
attributable to PTEP in annual PTEP accounts of a person other Line 6. Royalties
than the S corporation (for example, a shareholder) is not
relevant for purposes of determining the qualified dividends to Enter the royalties received by the corporation.
be entered on line 5b.
Schedule K-1. Enter each shareholder's pro rata share of
Note. An annual PTEP account of the S corporation is different royalties in box 6 of Schedule K-1.
than the shareholders’ undistributed taxable income previously
taxed account, as discussed in the instructions to Schedule M-2, Line 7. Net Short-Term Capital Gain (Loss)
column (b).
Exceptions. The following dividends aren't qualified dividends. Enter the gain (loss) that is portfolio income (loss) from
• Dividends the corporation received on any share of stock held Schedule D (Form 1120-S), line 7.
for less than 61 days during the 121-day period that began 60 Schedule K-1. Enter each shareholder's pro rata share of net
days before the ex-dividend date. When determining the number short-term capital gain (loss) in box 7 of Schedule K-1.
of days the corporation held the stock, don't count certain days
during which the corporation's risk of loss was diminished. The
ex-dividend date is the first date following the declaration of a Line 8a. Net Long-Term Capital Gain (Loss)
dividend on which the purchaser of a stock isn't entitled to
receive the next dividend payment. When counting the number Enter the gain or loss that is portfolio income (loss) from
of days the corporation held the stock, include the day the Schedule D (Form 1120-S), line 15.
corporation disposed of the stock but not the day the corporation Schedule K-1. Enter each shareholder's pro rata share of net
acquired it. long-term capital gain (loss) in box 8a of Schedule K-1.
• Dividends attributable to periods totaling more than 366 days
that the corporation received on any share of preferred stock If any gain or loss from line 7 or 15 of Schedule D is from
held for less than 91 days during the 181-day period that began ! the disposition of nondepreciable personal property
90 days before the ex-dividend date. When determining the CAUTION used in a trade or business, it may not be treated as
number of days the corporation held the stock, don't count portfolio income. Instead, report it on line 10 of Schedule K and
certain days during which the corporation's risk of loss was report each shareholder's pro rata share in box 10 of
diminished. Preferred dividends attributable to periods totaling Schedule K-1 using code H.
less than 367 days are subject to the 61-day holding period rule
above.
• Dividends that relate to payments that the corporation is Line 8b. Collectibles (28%) Gain (Loss)
obligated to make with respect to short sales or positions in
substantially similar or related property. Figure the amount attributable to collectibles from the amount
• Dividends paid by a regulated investment company that aren't reported on Schedule D (Form 1120-S), line 15. A collectibles
treated as qualified dividend income under section 854. gain (loss) is any long-term gain or deductible long-term loss
• Dividends paid by a real estate investment trust that aren't from the sale or exchange of a collectible that is a capital asset.
treated as qualified dividend income under section 857(c).
See Pub. 550, Investment Income and Expenses, for more Collectibles include works of art, rugs, antiques, metal (such
details. as gold, silver, or platinum bullion), gems, stamps, coins,
alcoholic beverages, and certain other tangible property.
Qualified foreign corporation. A foreign corporation is a
qualified foreign corporation if it is: Also include gain (but not loss) from the sale or exchange of
1. Incorporated in a possession of the United States, or an interest in a partnership or trust held for more than 1 year and
attributable to unrealized appreciation of collectibles. For details,
2. Eligible for benefits of a comprehensive income tax treaty see Regulations section 1.1(h)-1. Also attach the statement
with the United States that the Secretary determines is required under Regulations section 1.1(h)-1(e).
satisfactory for this purpose and that includes an exchange of
information program. See Notice 2011-64, 2011-37 I.R.B. 231, Schedule K-1. Report each shareholder's pro rata share of the
for details. collectibles (28%) gain (loss) in box 8b of Schedule K-1.
If the foreign corporation doesn't meet either (1) or (2), then it
may be treated as a qualified foreign corporation for any Line 8c. Unrecaptured Section 1250 Gain
dividend paid by the corporation if the stock associated with the
dividend paid is readily tradable on an established securities The three types of unrecaptured section 1250 gain must be
market in the United States. reported separately on an attached statement to Form 1120-S.
However, qualified dividends don't include dividends paid by From the sale or exchange of the corporation's business
an entity that was a passive foreign investment company assets. Figure this amount in Part III of Form 4797 for each
section 1250 property (except property for which gain is reported
using the installment method on Form 6252) for which you had

Instructions for Form 1120-S (2022) -27-