Updated October 18, 2026. Quick answer: Lines 13 to 20 are the remaining deductions on the S corporation’s page 1: interest, depreciation, depletion, advertising, pension plans, employee benefits, the energy efficient buildings deduction and other deductions. Line 21 totals lines 7 through 20, and line 22 subtracts that total from line 6 to give ordinary business income, which goes to Schedule K.
Line 13: interest
The caption is “Interest (see instructions”. The instructions say “Include only interest incurred in the trade or business activities of the corporation that isn’t claimed elsewhere on the return.” Several kinds of interest stay off the line, including “On debt used to purchase rental property or debt used in a rental activity.” and “On debt used to buy property held for investment.”
The business interest limit
The instructions say “Business interest expense is generally limited to the sum of business interest income, 30% of adjusted taxable income, and floor plan financing interest.” They continue “The limitation applies at the S corporation level, and any excess business interest expense is carried over at the corporate level.” On the small business test: “A small business taxpayer is a taxpayer that isn’t a tax shelter (as defined in section 448(d)(3)) and has average annual gross receipts of $31 million or less for the 3 prior tax years under the gross receipts test of section 448(c).” And “If the corporation fails to meet the gross receipts test, Form 8990 is generally required.” That form is explained at Form 8990.
Line 14: depreciation
The caption is “Depreciation from Form 4562 not claimed on Form 1125-A or elsewhere on return”. The instructions say “Enter the depreciation claimed on assets used in a trade or business activity less any depreciation reported elsewhere”. On the attachment they say “Complete and attach Form 4562 only if the corporation placed property in service during the tax year or claims depreciation on any car or other listed property.” See Form 4562 and Form 4562 lines 14 to 20.
Section 179 stays off this line: “Don’t include any section 179 expense deduction on this line.” The instructions explain “it is passed through to the shareholders in box 11 of Schedule K-1.” The shareholder side is at Schedule K-1 box 11.
Line 15: depletion
The caption is “Depletion (do not deduct oil and gas depletion)”. The instructions say “If the corporation claims a deduction for timber depletion, complete and attach Form T (Timber), Forest Activities Schedule.” The caution reads “Don’t deduct depletion for oil and gas properties.” It adds “Each shareholder figures depletion on oil and gas properties.”
Line 16: advertising
The form’s caption is “Advertising”. The instructions have no separate paragraph for line 16 (checked by searching both text extractions for the heading), so the caption and the section caution are what the form gives you: “Report only trade or business activity deductions on lines 7 through 20.”
Line 17: pension, profit-sharing, etc., plans
The caption is “Pension, profit-sharing, etc., plans”. The instructions say “Enter the deductible contributions not claimed elsewhere on the return made by the corporation for its employees under a qualified pension, profit-sharing, annuity, or simplified employee pension (SEP) or SIMPLE IRA plan or any other deferred compensation plan.” For employee IRAs: “If the corporation contributes to an individual retirement arrangement (IRA) for employees, include the contribution in salaries and wages on page 1, line 8, or Form 1125-A, line 3, and not on line 17.” A one-participant plan files Form 5500-EZ. Owner-level plan limits are a separate topic at 401(k) contribution limits.
Line 18: employee benefit programs
The caption is “Employee benefit programs”. The instructions say “Enter amounts for fringe benefits paid or incurred on behalf of employees owning 2% or less of the corporation’s stock.” They also say “Report amounts for fringe benefits paid on behalf of employees owning more than 2% of the corporate stock on line 7 or 8 (or Form 1125-E), whichever applies.” That owner-side rule is repeated on the lines 7 to 12 page.
Line 19: energy efficient commercial buildings deduction
The caption is “Energy efficient commercial buildings deduction (attach Form 7205)”. The instructions say “Complete and attach Form 7205 if claiming the energy efficient commercial building deduction.”
Line 20: other deductions
The caption is “Other deductions (attach statement)”. The instructions say “Enter the total allowable trade or business deductions that aren’t deductible elsewhere on Form 1120-S, page 1.” They add “Attach a statement listing by type and amount each deduction included on this line.” The examples include “Insurance premiums.” and “Legal and professional fees.” Of the items that stay off line 20, the instructions list “Expenses allocable to tax-exempt income.” The instructions also cover travel, meals and entertainment limits and other special rules; read that text in the instructions themselves.
Line 21: total deductions
The caption is “Total deductions. Add lines 7 through 20”. The instructions have no separate paragraph for line 21 (checked in both extractions), so the caption is the rule.
Line 22: ordinary business income (loss)
The caption is “Ordinary business income (loss). Subtract line 21 from line 6”. The instructions say “Enter this income or loss on Schedule K, line 1.” They add “Line 22 income is not used in figuring the excess net passive income or built-in gains taxes.” The shareholder-side reporting of the same income is at Schedule K-1 box 1, and the Schedule K line is on the Schedule K lines 1 to 4 page.
Where the number comes from
Interest comes from loan statements and the interest allocation records. Depreciation comes from the asset records and Form 4562 where required. Depletion comes from the timber records. Plan contributions come from the plan records for employees. Line 20 comes from the books and the attached statement. Line 22 comes from lines 6 and 21, which are on the lines 1a to 6 page and the lines 7 to 12 page.
Where it goes next
Line 22 carries to Schedule K, line 1. The tax and payments section that follows begins with line 23a and is on the lines 23 to 28 page. The corporation’s return is explained at Form 1120-S.
Edition and line numbers
This page reads the 2025 Form 1120-S and its 2025 instructions, the current files irs.gov served on 2026-10-18. They are the files for the tax year 2025 return, filed in 2026. The form’s title line reads “U.S. Income Tax Return for an S Corporation” and the period line reads “For calendar year 2025 or tax year beginning”. Check the tax year printed on the form you are filling in and use the line numbers on that year’s form, because a different year’s form can number or word its lines differently.
Common mistakes
- Including section 179 in depreciation. The instructions say “Don’t include any section 179 expense deduction on this line.”
- Deducting oil and gas depletion at the corporation level. The instructions say “Don’t deduct depletion for oil and gas properties.”
- Putting an owner’s fringe benefits on line 18. The instructions say “Report amounts for fringe benefits paid on behalf of employees owning more than 2% of the corporate stock on line 7 or 8 (or Form 1125-E), whichever applies.”
Related: Form 1120-S, Form 8990, Form 4562, Form 4562 lines 14 to 20, and Form 5500-EZ.
Sources
- Instructions for Form 1120-S, U.S. Income Tax Return for an S Corporation (2025): https://www.irs.gov/pub/irs-pdf/i1120s.pdf
- Form 1120-S, U.S. Income Tax Return for an S Corporation (2025): https://www.irs.gov/pub/irs-pdf/f1120s.pdf
Read from the IRS documents linked above on October 18, 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.