Page 175 - BusinessStructures & Forms

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Form 8990, Part III, line 42, for excess taxable income on Line 18. More Than One At-Risk Activity
Schedule K. Report the shareholder's pro rata share in box 17 of
Schedule K-1. If the corporation entered into more than one activity subject to
Gross receipts for section 448(c) (code AC). Provide the at-risk rules (at-risk activity), the corporation is required to
information shareholders need to complete the gross receipts provide information separately for each at-risk activity to its
test for section 448(c) purposes. See the Instructions for Form shareholders. This information is reported on an attachment to
8990 for details. Schedule K-1. Check the box to indicate there is more than one
Other information (code AD). Report the following information at-risk activity for which a statement is attached. See At-Risk
Activity Reporting Requirements under At-Risk Limitations,
to each shareholder. earlier, for details.
1. If the corporation participates in a transaction that must
be disclosed on Form 8886 (discussed earlier), both the Line 19. More Than One Passive Activity
corporation and its shareholders may be required to file Form
8886. The corporation must determine if any of its shareholders
are required to disclose the transaction and provide those If the corporation entered into more than one activity
shareholders with information they will need to file Form 8886. (determined for purposes of the passive activity loss and credit
This determination is based on the category(ies) under which a limitations), the corporation is required to provide information
transaction qualified for disclosures. See the Instructions for separately for each activity to its shareholders. This information
Form 8886 for details. is reported on an attachment to Schedule K-1. Check the box to
2. If the corporation is involved in a farming or fishing indicate there is more than one passive activity for which a
business, report the gross income and gains as well as losses statement is attached. See Passive Activity Reporting
Requirements under Passive Activity Limitations, earlier, for
and deductions attributable to such business activities. See details.
section 1301.
3. If the corporation has deductions attributable to a Reconciliation
business activity, provide a statement showing the aggregate
gross income or gain and the aggregate deductions from the Line 18. Income/Loss Reconciliation
business activity that shareholders need to figure any excess (Schedule K Only)
business loss limitation. See section 461(l) and the Instructions
for Form 461 for details. To the extent the corporation has an amount on line 16f of
4. The shareholder's pro rata share of any amount included Schedule K (foreign taxes paid and accrued), subtract that
in interest income on line 4 of Schedule K with respect to clean amount for purposes of figuring the corporation's net income
(loss). The amount reported on line 18 must be the same as the
renewable energy or (for bonds issued before October 4, 2008) amount reported on line 8 of Schedule M-1 or line 26, column
qualified zone academy bonds. Shareholders need this
information to properly adjust their stock basis. See Form 8912. (d), in Part II of Schedule M-3 (Form 1120-S).
5. Any income or gain reported on lines 1 through 10 of Schedule L. Balance Sheets per
Schedule K that qualifies as inversion gain, if the corporation is
an expatriated entity or is a partner in an expatriated entity. For Books
details, see section 7874. Attach a statement to Form 1120-S
that shows the amount of each type of income or gain included The balance sheets should agree with the corporation's books
in the inversion gain. The corporation must report each and records. Schedule L isn't required to be completed if the
shareholder's pro rata share of the inversion gain in box 17 of corporation answered “Yes” to question 11 on Schedule B. If the
Schedule K-1 using code AD. Attach a statement to corporation is required to complete Schedule L, include total
Schedule K-1 that shows the shareholder's pro rata share of the assets reported on Schedule L, line 15, column (d), on page 1,
amount of each type of income or gain included in the inversion item F.
gain. Corporations with total assets of $10 million or more on the
6. Basis in qualifying advanced coal project property. Attach last day of the tax year must file Schedule M-3 (Form 1120-S)
a statement to Schedule K-1 that provides the shareholder's pro instead of Schedule M-1. However, see the instructions for
rata share of the basis amounts the shareholder will need to Schedule M-1, later. See the separate Instructions for
figure the amounts to report on lines 5a, 5b, and 5c of Form Schedule M-3 (Form 1120-S) for provisions that also affect
3468. See the Instructions for Form 3468 for details. Schedule L.
7. Basis in qualifying gasification or advanced energy
project property. Attach a statement to Schedule K-1 that If the S election terminated during the tax year and the
provides the shareholder's pro rata share of the basis amounts corporation reverted to a C corporation, the year-end balance
the shareholder will need to figure the amounts to report on lines sheet should generally agree with the books and records at the
6a and 6b of Form 3468. See the Instructions for Form 3468 for end of the C short year. However, if the corporation elected
details. under section 1362(e)(3) to have items assigned to each short
8. Basis in advanced manufacturing investment facility year under normal tax accounting rules, the year-end balance
property. Attach a statement to Schedule K-1 that provides the sheet should agree with the books and records at the end of the
shareholder's pro rata share of the basis amounts the S short year.
shareholder will need to figure the amounts to report on line 7 of Line 5. Tax-Exempt Securities
Form 3468. See the Instructions for Form 3468 for details.
9. Any other information the shareholders need to prepare Include on this line:
their tax returns, including information needed to prepare state • State and local government obligations, the interest on which
and local tax returns. is excludable from gross income under section 103(a); and
• Stock in a mutual fund or other regulated investment company
that distributed exempt-interest dividends during the tax year of
the corporation.

Instructions for Form 1120-S (2022) -45-