Updated October 16, 2026. Quick answer: Box 17 of Schedule K-1 (Form 1120-S) is the Other information box, and codes A, B and U are the ones that feed a shareholder’s investment income decisions. The instructions say to report code A on Form 4952, line 4a, and code B on Form 4952, line 5, while code U supplies information for the net investment income tax figured on Form 8960.
What codes A, B and U report
All three codes sit in box 17, which the form labels “Other information”. The instructions give each code a short entry, and they send the amounts to different forms. Every other box is set out on the Schedule K-1 (Form 1120-S) boxes overview.
| Box 17 code | As printed in the 2025 instructions |
|---|---|
| A | “Investment income.” “Report this amount on Form 4952, line 4a.” |
| B | “Investment expenses.” “Report this amount on Form 4952, line 5.” |
| U | “Net investment income.” “Follow the Instructions for Form 8960 to figure and report your net investment income and AGI or MAGI.” |
Codes A and B on Form 4952
Form 4952 is the form for investment interest expense. The shareholder-side rule for the interest itself is in box 12, where the instructions say: “If the corporation has investment income or other investment expense, it will report your share of these items in box 17 of Schedule K-1 using codes A and B.” “Include investment income and expenses from other sources to figure how much of your total investment interest is deductible.”
The instructions point to the form and a publication for the rules: “For more information on the special provisions that apply to investment interest expense, see Form 4952 and Pub. 550.” The form is covered on the Form 4952 page.
Qualified dividends have their own election, noted in the box 5b instructions: “Qualified dividends are excluded from investment income, but you may elect to include part or all of these amounts in investment income.” “See the instructions for line 4g of Form 4952, Investment Interest Expense Deduction, for important information on making this election.”
Code U and the net investment income tax
Code U is information, not a single dollar line. “The corporation may use code U to report information you may need to determine your net investment income tax under section 1411”, and the instructions add: “Any information not provided elsewhere on Schedule K-3 (or an attachment to Schedule K-3) is provided using code U.”
The step for the shareholder is Form 8960: “Follow the Instructions for Form 8960 to figure and report your net investment income and AGI or MAGI.” “See Regulations sections 1.1411-1 through 1.1411-10 for more details.” Form 8960 and the net investment income tax page cover the form and the tax.
One example in the instructions shows when code U may not be needed: “if the corporation made an election under Regulations section 1.1411-10(g) for a CFC, the stock of which is owned by the corporation, and the relevant income and deduction items derived from that CFC are reported elsewhere on Schedule K-1, you will not need the information provided using code U to complete your Form 8960.”
Selling the stock
A sale of the S corporation interest can also touch the same tax. “Gain or loss from the disposition of your S corporation stock may be net investment income under section 1411 and could be subject to the net investment income tax.” “See Form 8960, Net Investment Income Tax”, and its instructions for the figuring.
Limits and the corporation’s reporting
The instructions put the limits in a fixed order: “These limitations and the order in which you must apply them are as follows: the basis limitations, the at-risk limitations, the passive activity limitations, and the excess business loss limitations.” The amounts printed in Part III are before any of them. “The amounts shown in boxes 1 through 17 reflect your share of income, loss, deductions, credits, and other items from corporate business or rental activities without reference to limitations on losses, credits, or other items that may have to be adjusted”.
Some items carry their own limit first. “Other limitations may apply to specific deductions (for example, the section 179 expense deduction). Generally, specific limitations apply before the at-risk and passive loss limitations.”
Fiscal-year corporations shift the year. “If you file your tax return on a calendar-year basis, but the corporation files a return for a fiscal year, report the amounts on your tax return for the year in which the corporation’s fiscal year ends.”
The shareholder reports what the corporation reported. “Generally, you must report corporate items shown on your Schedule K-1 (and any attached statements) the same way that the corporation treated the items on its return.” If a figure looks wrong: “If you believe the corporation has made an error on your Schedule K-1, notify the corporation and ask for a corrected Schedule K-1.” “Don’t change any items on your copy of Schedule K-1.”
Which revision applies
The edition read for this page is the 2025 Shareholder’s Instructions for Schedule K-1 (Form 1120-S) and the 2025 Schedule K-1 (Form 1120-S) itself, which are the revisions irs.gov served when they were read on 2026-10-16. Check the revision printed on the Schedule K-1 you received and the matching instructions, because a later edition can change the box layout, the code letters and the reporting lines.
Common mistakes
- Leaving out other investment income when using code A and code B. The instructions say to include investment income and expenses from other sources to figure how much of the total investment interest is deductible, so the K-1 amounts are only part of the Form 4952 picture.
- Treating a code U entry as a finished net investment income figure. The instructions describe it as information you may need, and say to follow the Instructions for Form 8960 to figure and report net investment income.
- Ignoring the dividend election in the box 5b tip. The instructions say qualified dividends are excluded from investment income unless you elect to include part or all of them, and point to line 4g of Form 4952.
Related: Form 4952 investment interest expense, Form 8960 net investment income tax, net investment income tax, Schedule B (Form 1040), and Schedule A (Form 1040).
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S corporation shareholder investment income tax decision
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Answer againSources
- 2025 Shareholder’s Instructions for Schedule K-1 (Form 1120-S): https://www.irs.gov/pub/irs-pdf/i1120ssk.pdf
- Schedule K-1 (Form 1120-S) (2025), Shareholder’s Share of Income, Deductions, Credits, etc.: https://www.irs.gov/pub/irs-pdf/f1120ssk.pdf
Read from the IRS documents linked above on October 16, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.