Page 160 - BusinessStructures & Forms

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
to Schedule K-1 the amount from each separate activity. See for information on adjusted gross income (AGI) limitations on
Passive Activity Reporting Requirements, earlier. deductions for charitable contributions.
Deductions The codes needed for Schedule K-1 reporting are provided
for each category.
Line 11. Section 179 Deduction Cash contributions (60%) (code A). Enter cash contributions
subject to the 60% AGI limitation.
A corporation can elect to expense part or all of the cost of Cash contributions (30%) (code B). Enter cash contributions
certain property the corporation purchased during the tax year subject to the 30% AGI limitation.
for use in its trade or business or certain rental activities. See
Pub. 946 for a definition of what kind of property qualifies for the Noncash contributions (50%) (code C). Enter noncash
section 179 expense deduction and the Instructions for Form contributions subject to the 50% AGI limitation. Don't include
4562 for limitations on the amount of the section 179 expense food inventory contributions reported separately on an attached
deduction. statement.
Food inventory contributions. Provide the following
Complete Part I of Form 4562 to figure the corporation's information on a statement attached to Schedule K-1.
section 179 expense deduction. The corporation doesn't take • The shareholder's pro rata share of the amount of the
the deduction itself, but instead passes it through to the charitable contributions under section 170(e)(3) for qualified
shareholders. Attach Form 4562 to Form 1120-S and show the food inventory that was donated to charitable organizations for
total section 179 expense deduction on Schedule K, line 11. the care of the ill, needy, and infants. The food must meet all the
quality and labeling standards imposed by federal, state, and
Although the corporation can't take the section 179 local laws and regulations. The charitable contribution for
deduction, it must generally still reduce the basis of the asset by donated food inventory is the lesser of (a) the basis of the
the amount of the section 179 deduction it elected, regardless of donated food plus half of the appreciation (gain if the donated
whether any shareholder can use the deduction. However, the food were sold at fair market value (FMV) on the date of the gift),
corporation doesn't reduce the basis for any section 179 or (b) twice the basis of the donated food. The aggregate
deduction allocable to a trust or estate because they aren't amount of such contributions shall not exceed 15% of the
eligible to take the section 179 deduction. See Regulations taxpayer's aggregate net income from all trades or businesses
section 1.179-1(f). from which such contributions were made. A corporation that
doesn’t account for inventories and isn’t required to capitalize
See the instructions for line 17d of Schedule K for sales or indirect costs under section 263A may elect to treat the basis of
other dispositions of property for which a section 179 deduction the donated food as equal to 25% of the FMV of the food. See
has passed through to shareholders and for the recapture rules if section 170(e)(3)(C) for more details.
the business use of the property dropped to 50% or less. • The shareholder's pro rata share of the net income for the tax
Schedule K-1. Report each shareholder's pro rata share of the year from the corporation's trades or businesses that made the
section 179 expense deduction in box 11 of Schedule K-1. contributions of food inventory.
If the corporation has more than one rental, trade, or business Qualified conservation contributions. The AGI limit for
activity, identify on an attachment to Schedule K-1 the amount of qualified conservation contributions under section 170(h) is
section 179 deduction from each separate activity. See Passive generally 50%. However, if the corporation is a qualified farmer
Activity Reporting Requirements, earlier. or rancher (farm income is more than 50% of gross income), the
Don't complete box 11 of Schedule K-1 for any shareholder AGI limit for qualified conservation contributions of property used
in agriculture or livestock production (or available for such
that is an estate or trust; estates and trusts aren't eligible for the production) is 100%. The carryover period is 15 tax years. See
section 179 expense deduction. section 170(b) and Notice 2007-50, 2007-25 I.R.B. 1430, for
details. Report qualified conservation contributions with a 50%
Line 12a. Charitable Contributions AGI limitation on Schedule K-1 in box 12 using code C. Report
qualified conservation contributions with a 100% AGI limitation
Cash contributions must be supported by a dated bank record or on a statement attached to Schedule K-1 using code G.
receipt. Noncash contributions (30%) (code D). Enter noncash
contributions subject to the 30% AGI limitation.
Generally, no deduction is allowed for any contribution of
$250 or more unless the corporation obtains a written Capital gain property to a 50% limit organization (30%)
acknowledgment from the charitable organization that shows the (code E). Enter capital gain property contributions subject to
amount of cash contributed, describes any property contributed, the 30% AGI limitation.
and gives an estimate of the value of any goods or services Capital gain property (20%) (code F). Enter capital gain
provided in return for the contribution or states that no goods or property contributions subject to the 20% AGI limitation.
services were provided. The acknowledgment must be obtained
by the due date (including extensions) of the corporation's Contributions of property. See Contributions of Property in
return, or, if earlier, the date the return is filed. Don't attach the Pub. 526 and Pub. 561, Determining the Value of Donated
acknowledgment to the tax return, but keep it with the Property, for information on noncash contributions and
corporation's records. These rules apply in addition to the filing contributions of capital gain property. If the deduction claimed for
requirements for Form 8283, Noncash Charitable Contributions, noncash contributions exceeds $500, complete Form 8283 and
described under Contributions of property, later. attach it to Form 1120-S.
Shareholders can deduct their pro rata share of the FMV of
Enter charitable contributions made during the tax year. property contributions, but will only need to adjust their stock
Attach a statement to Form 1120-S that separately identifies the basis by their pro rata share of the property's adjusted basis.
corporation's contributions for each of the following categories. Give each shareholder a statement identifying their pro rata
See Limits on Deductions in Pub. 526, Charitable Contributions, share of both the FMV and adjusted basis of the property.

-30- Instructions for Form 1120-S (2022)