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Schd K & K1 for 1120S S corp questions

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      01-30-2007, 06:37 PM

I am a little confused as to how to fill out schd K-1 along with the
1120S form.

In particular, the first entry in the schd K-1 is the ordinary
business loss or income.

But the rest of the form asks for interest income, deductions, sec
which are ALREADY included in the ordinary business income or loss.

How come this double counting?

That's why I am confused.

Could someone please help?

How do I correctly fill out this form?



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      01-30-2007, 10:53 PM
It's not double counting. The primary purpose of Schedule K-1 is to report
to each shareholder her/his distributive share of the corporation's items
of income.

Generally, ordinary business income/loss is reported as a lump sum, and
other items as specified in the Code or the Regulations are separately
reported, the reason being that the tax treatment of such separately
reported items will vary from shareholder to shareholder (e.g., the
treatment of Sec. 1231 net gain or loss will depend on whether the
shareholder has other Sec. 1231 gains or losses.

Items that must be separately reported are not included in the computation
of ordinary income or loss. For example, Sec. 179 expenses are not
included in depreciation on line 14 of page 1 of Form 1120-S. See the
instructions to line 14, page 1, of Form 1120-S.

It is probably easier from a computational perspective to have a list of
all of the s-corp's separate items of income, gain, deduction, and loss,
and to start by entering the items that must be separately reported. It's
a good bet (although you should always double-check) that anything still
left on your lists after you've entered all of the separately reported
items goes into the computation of ordinary income or loss under lines 1 -
21, page 1, of Form 1120-S.

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