Updated October 16, 2026. Quick answer: Code V in box 17 of Schedule K-1 (Form 1120-S) carries the section 199A information a shareholder needs for the qualified business income deduction. The 2025 instructions say “Generally, you may be allowed a deduction of up to 20% of your net qualified business income (QBI)”, and they pick Form 8995 or Form 8995-A by a three part test on taxable income and cooperative patron status.
More IRS forms for employers and business owners, read line by line: Form 8995-A Schedule A and Form 8995-A Schedule D.
Related reading on this site: Form 8995-A QBI deduction.
What code V reports
The code covers a deduction, and the corporation supplies the inputs. “Generally, you may be allowed a deduction of up to 20% of your net qualified business income (QBI) plus 20% of your qualified REIT dividends, also known as section 199A dividends, and qualified publicly traded partnership (PTP) income from your S corporation.” “The S corporation will provide the information you need to figure your deduction.” Every other box is set out on the Schedule K-1 (Form 1120-S) boxes overview.
“Use the information provided to you by your S corporation to complete the appropriate form identified above.” The deduction itself is figured on Form 8995 or Form 8995-A, whichever the test above selects, and the QBI deduction thresholds page covers how the thresholds work.
Form 8995 or Form 8995-A
The instructions choose the form with one test.
| Form | As printed in the instructions |
|---|---|
| Form 8995 | “Use Form 8995, Qualified Business Income Deduction Simplified Computation, if:” “You have QBI, section 199A dividends, or PTP income (defined below);” “Your 2025 taxable income before the QBI deduction is equal to or less than $197,300 ($394,600 if married filing jointly);” “You aren’t a patron in a specified agricultural or horticultural cooperative.” |
| Form 8995-A | “Use Form 8995-A, Qualified Business Income Deduction, if you don’t meet all three of these requirements.” |
The test needs all three parts to be met for the simpler form. A shareholder who is a cooperative patron or whose taxable income is above the printed amount moves to Form 8995-A.
What the corporation reports under code V
The instructions list the items the S corporation provides. The amounts are the shareholder’s share and are used on the form chosen above.
| Item | As printed in the instructions |
|---|---|
| QBI or qualified PTP items | “The amounts reported to you reflect your pro rata share of items from the S corporation’s trade(s) or business(es), or aggregation(s)” |
| W-2 wages | “The amounts reported reflect your pro rata share of the S corporation’s W-2 wages allocable to the QBI of each qualified trade or business, or aggregation.” |
| UBIA of qualified property | “The amounts reported reflect your pro rata share of the S corporation’s UBIA of qualified property of each qualified trade or business, or aggregation.” |
| Section 199A dividends | “The amount reported reflects your pro rata share of the S corporation’s net section 199A dividends.” |
“When determining QBI or qualified PTP income, you must include only those items that are qualified items of income, gain, deduction, and loss included or allowed in determining taxable income for the tax year.” “To determine your QBI or your qualified PTP income amounts and for information on where to report them, see the instructions for Form 8995 or 8995-A.”
Cooperative patrons
A cooperative patron has an extra form. “If the S corporation was a patron of an agricultural or horticultural cooperative (specified cooperative), you must use Form 8995-A to figure your QBI deduction.” “In addition, you must complete Schedule D (Form 8995-A), Special Rules for Patrons of Agricultural or Horticultural Cooperatives, to determine your patron reduction.”
The corporation reports three further items for these patrons.
| Cooperative item | As printed in the instructions |
|---|---|
| QBI items allocable to qualified payments | “To determine your QBI items allocable to qualified payments, see the Instructions for Form 8995-A.” |
| W-2 wages allocable to qualified payments | “The amounts reported reflect your pro rata share of the S corporation’s W-2 wages allocable to qualified payments of each qualified trade or business, or aggregation.” |
| Section 199A(g) deduction | “The amount reported reflects your pro rata share of the S corporation’s net section 199A(g) deduction.” |
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”.
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
- Using Form 8995 without checking all three parts of the test. The instructions say to use Form 8995-A if you do not meet all three requirements, and one of them is that you are not a patron in a specified agricultural or horticultural cooperative.
- Using a prior year dollar limit. The instructions print the taxable income limit for 2025 only, so the amount on a different year’s form has to come from that year’s instructions.
- Entering code V items without a shareholder-level check. The instructions say the amounts include items that may not be includible in the QBI calculation, and that only qualified items included or allowed in determining taxable income count.
Related: Form 8995 qualified business income deduction, QBI deduction thresholds, S corporation reasonable salary, and S corporation election calculator.
Sources
- 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.