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Form 1120-S Schedule B Questions 6 to 11 (2025)

Updated October 18, 2026. Quick answer: Questions 6 to 11 on Schedule B ask about a material advisor disclosure, publicly offered debt with original issue discount, net unrealized built-in gain, the section 163(j) election, the conditions for Form 8990 and whether the corporation can skip Schedules L and M-1. Each answer comes from the corporation’s records, and several point to another form.

Question 6: material advisor disclosure

The form asks “Has this corporation filed, or is it required to file, Form 8918, Material Advisor Disclosure Statement, to provide information on any reportable transaction?” The instructions say “Answer “Yes” if the corporation filed or is required to file Form 8918, Material Advisor Disclosure Statement.” They add “For details, see the Instructions for Form 8918.”

Question 7: publicly offered debt with original issue discount

Question 7 is a check box: “Check this box if the corporation issued publicly offered debt instruments with original issue discount”. The form adds that the corporation “may have to file Form 8281, Information Return for Publicly Offered Original Issue Discount Instruments.” The instructions have no separate paragraph for question 7.

Question 8: net unrealized built-in gain

The form asks for a dollar amount if two conditions hold: “If the corporation (a) was a C corporation before it elected to be an S corporation or the corporation acquired an asset with a basis determined by reference to the basis of the asset” in the hands of a C corporation, and “has net unrealized builtin gain in excess of the net recognized builtin gain from prior years, enter the net unrealized builtin gain reduced by net recognized builtin gain from prior years.”

The instructions define the term: “The corporation’s net unrealized built-in gain is the amount, if any, by which the aggregate FMV of the assets of the corporation at the beginning of its first S corporation year” exceeds the aggregate adjusted basis of such assets at that time. On the tax itself they say “The corporation is liable for section 1374 tax if (a) and (b) above apply and it has a net recognized built-in gain”. If there is more than one pool of assets, the instructions say to “attach a statement showing for each pool of assets” the reduced amount.

Question 9: section 163(j) election

The form asks “Did the corporation have an election under section 163(j) for any real property trade or business or any farming business in effect during the tax year?” The instructions say “Check “Yes” if the taxpayer has an election in effect to exclude a real property trade or business or a farming business from section 163(j).” They warn that “This is an irrevocable election.” Form 8990 is covered at Form 8990.

Question 10: conditions for filing Form 8990

The form lists three conditions and says “If “Yes,” complete and attach Form 8990, Limitation on Business Interest Expense Under Section 163(j).” One of them reads “The corporation’s aggregate average annual gross receipts (determined under section 448(c)) for the 3 tax years preceding the current tax year are more than $31 million and the corporation has business interest expense.”

The instructions say “A taxpayer that isn’t a small business taxpayer (defined below) must generally file Form 8990.” On the receipts test they say “A taxpayer meets the gross receipts test if the taxpayer has average annual gross receipts of $31 million or less for the 3 prior tax years.” Averaging is explained this way: “determined by adding the gross receipts for the 3 prior tax years and dividing the total by 3.”

Question 11: total receipts and total assets

The form asks “Does the corporation satisfy both of the following conditions?” Condition a reads “The corporation’s total receipts (see instructions) for the tax year were less than $250,000.” Condition b reads “The corporation’s total assets at the end of the tax year were less than $250,000.” The consequence is printed under them: “If “Yes,” the corporation is not required to complete Schedules L and M-1.”

The instructions define the receipts side: “Total receipts is the sum of the following amounts.” The list includes “Gross receipts or sales (page 1, line 1a).” and “All other income (page 1, lines 4 and 5).” It also includes “Income reported on Schedule K, lines 3a, 4, 5a, and 6.” and “Income or net gain reported on Form 8825, lines 2, 21, and 22a.”

Where the number comes from

Question 8 comes from the corporation’s records of asset values and basis at the start of its first S corporation year. Questions 10 and 11 come from the gross receipts history, the Schedule K income lines and the balance sheet totals. The ownership questions before these are on the Schedule B questions 4 and 5 page.

Where it goes next

A “Yes” on question 10 sends the filer to Form 8990, and a “Yes” on question 11 lets the corporation leave off Schedule L and Schedule M-1. The remaining questions are on the Schedule B questions 13 to 16 page, and the Schedule K lines that feed question 11 start on the Schedule K lines 1 to 4 page. This page is part of the Form 1120-S line-by-line walk-through.

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 questions differently.

Common mistakes

  • Leaving the pool-by-pool statement off question 8. The instructions say to “attach a statement showing for each pool of assets”
  • Treating the section 163(j) election as changeable. The instructions say “This is an irrevocable election.”
  • Counting only page 1 for question 11. The instructions say “Total receipts is the sum of the following amounts.” and the list includes Schedule K and Form 8825 items.

Related: Form 1120-S, Form 8990, Form 8283, Form 1120, and Form 4562.

Sources

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.

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