Updated October 18, 2026. Quick answer: Part IV is for holders of a residual interest in a REMIC and ends with line 39. Part V is the summary: line 40 is net farm rental income, line 41 combines lines 26, 32, 37, 39 and 40, and lines 42 and 43 are reconciliations for farming and fishing income and for real estate professionals.
What Part IV is for
The form heads the part “Income or Loss From Real Estate Mortgage Investment Conduits (REMICs)” for the residual holder. The instructions say “If you are the holder of a residual interest in a REMIC, use Part IV to report your total share of the REMIC’s taxable income or loss for each quarter included in your tax year.” You “should receive Schedule Q (Form 1066) and instructions from the REMIC for each quarter.” “Do not attach Schedule(s) Q to your return. Keep it for your records.”
One exception: “Note: If you are the holder of a regular interest in a REMIC, do not use Schedule E to report the income you received.” “Instead, report it on Form 1040 or 1040-SR, line 2b.” The whole schedule is mapped on Schedule E (Form 1040).
Lines 38 and 39: the columns and total
Line 38 has these captions: “(c) Excess inclusion from Schedules Q, line 2c”, “(d) Taxable income (net loss) from Schedules Q, line 1b” and “(e) Income from Schedules Q, line 3b”. For column (c) the instructions say “Report the total of the amounts shown on Schedule(s) Q (Form 1066), line 2c.” For column (e) they say “Report the amount(s) shown on Schedule(s) Q (Form 1066), line 3b.”
Line 39 reads “Combine columns (d) and (e) only. Enter the result here and include in the total on line 41 below”. The instructions repeat it: “Do not include the amount shown in column (c) in the total on Schedule E, line 39.” Also, “REMIC income or loss is not income or loss from a passive activity.” For a holder of more than one REMIC, “attach a continuation sheet using the same format as in Part IV” and enter the combined totals of columns (d) and (e) on line 39.
Part V: lines 40 and 41
Part V is headed Summary. Line 40 is “Net farm rental income or (loss) from Form 4835. Also, complete line 42 below”. Line 41 gathers the parts: “Total income or (loss). Combine lines 26, 32, 37, 39, and 40. Enter the result here and on Schedule” 1 (Form 1040), line 5. The pieces come from Schedule E lines 23a to 26, Schedule E Part II and Schedule E Part III.
Computed illustration, not an IRS example: if line 26 is $6,500 and line 32 is $4,000 and line 37 is $3,800 and lines 39 and 40 are zero then line 41 is $6,500 plus $4,000 plus $3,800 which is $14,300.
Line 42: farming and fishing income
The form captions it “Reconciliation of farming and fishing income. Enter your gross farming and fishing income reported on Form 4835, line 7;” followed by the Schedule K-1 boxes it lists, and “See instructions”. The instructions say “Special estimated tax rules may apply if you have gross farming or fishing income.” You “will not be charged a penalty for underpayment of estimated tax if:” your gross farming or fishing income meets the first test and you “file your 2025 tax return and pay the tax due by March 2, 2026.” The first test is “gross farming or fishing income for 2024 or 2025 is at least two-thirds of your gross income; and”
Line 43: real estate professionals
The form captions it “Reconciliation for real estate professionals. If you were a real estate professional (see instructions), enter the net income or (loss) you reported anywhere on Form 1040, Form 1040-SR, or Form 1040-NR” from rental real estate activities in which you materially participated. The instructions say “If you were a real estate professional for 2025, complete Schedule E, line 43.”
The instructions define the status: you “were a real estate professional for the year only if you met both of the following conditions.” The first is “More than half of the personal services you performed in trades or businesses during the year were performed in real property trades or businesses in which you materially participated.” The second is that you “performed more than 750 hours of services during the year in real property trades or businesses in which you materially participated.”
The instructions add a married filing jointly rule: “either you or your spouse must meet both of the above conditions without taking into account services performed by the other spouse.”
Where it goes next
Line 41 is the schedule’s grand total, and the form says to enter it on Schedule 1 (Form 1040), line 5. That step is explained on the Schedule 1 lines 3 to 6 page, and the income carries on to Form 1040. A loss on line 26, 32, 37 or 39 can be limited: “If you report a loss on line 26, 32, 37, or 39 of your Schedule E (Form 1040), you may be subject to a business loss limitation.” The instructions say the “Any disallowed loss resulting from this limitation will be treated as a net operating loss that must be carried forward and deducted in” a later year.
Edition and line numbers
This page reads the 2025 Schedule E (Form 1040) and its 2025 instructions, the current files irs.gov served on 2026-10-18 (byte-identical to the archived copies). They are the files for the tax year 2025 return, filed in 2026. The schedule says “Attach to Form 1040, 1040-SR, 1040-NR, or 1041.” Check the tax year printed on the schedule you are filling in and use the line numbers on that year’s schedule, because a different year’s schedule can number or word its lines differently.
Common mistakes
- Putting column (c) in the line 39 total. The instructions say “Do not include the amount shown in column (c) in the total on Schedule E, line 39.”
- Reporting a regular interest in a REMIC on Schedule E. The instructions say “do not use Schedule E to report the income you received.”
- Skipping line 43 as a real estate professional. The instructions say “If you were a real estate professional for 2025, complete Schedule E, line 43.”
Related: Schedule E (Form 1040), Schedule 1 lines 3 to 6, Form 1040, and Form 8582.
Sources
- Instructions for Schedule E (Form 1040), Supplemental Income and Loss (2025): https://www.irs.gov/pub/irs-pdf/i1040se.pdf
- Schedule E (Form 1040), Supplemental Income and Loss (2025): https://www.irs.gov/pub/irs-pdf/f1040se.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.