Updated October 16, 2026. Quick answer: Box 20 of Schedule K-1 (Form 1065) is the “Other information” box, and codes A and B carry a partner’s share of investment income and investment expenses. The 2025 instructions send code A to Form 4952, Part II, line 4a, and code B to Form 4952, Part II, line 5. They matter when the partner also has investment interest expense, which arrives in box 13 under code H.
What box 20 codes A and B report
On the form, line 20 of Part III is labelled “Other information”. The instructions define the two codes in one sentence each: “Investment income. Report this amount on Form 4952, Part II, line 4a.” “Investment expenses. Report this amount on Form 4952, Part II, line 5.” This page covers the partner’s side of a K-1 that has been received. Every other box is set out on the Schedule K-1 (Form 1065) boxes overview.
Box 20 is a coded box. “In box 11, boxes 13 through 15, and boxes 17 through 20, the partnership will identify each item by entering a code in the column to the left of the dollar amount entry space.” When a code needs more than one number, the partnership attaches a statement: “The partnership will enter an asterisk (*) after the code, if any, in the column to the left of the dollar amount entry space for each item for which it has attached a statement providing additional information.” “For those informational items that can’t be reported as a single dollar amount, the partnership will enter an asterisk (*) in the left column and enter “STMT” in the dollar amount entry space to indicate the information is provided on an attached statement.”
Where each code goes on Form 4952
Both codes feed Form 4952, the form used to work out the investment interest deduction. The table sets the box 20 codes beside the box 13 code that pairs with them.
| Code | As printed in the instructions |
|---|---|
| Box 20, code A | “Investment income. Report this amount on Form 4952, Part II, line 4a.” |
| Box 20, code B | “Investment expenses. Report this amount on Form 4952, Part II, line 5.” |
| Box 13, code H | “Investment interest expense. Include this amount on Form 4952, line 1.” |
Box 13 code H: the interest side
Codes A and B are the income and expense inputs; the interest itself is a separate box 13 item. “If the partnership has investment income or other investment expense, it’ll report your share of these items in box 20 of Schedule K-1 using codes A and B.” The instructions tell the partner to look beyond the K-1: “Include investment income and expenses from other sources to figure how much of your total investment interest is deductible.” “You’ll also need this information to figure your investment interest expense deduction.”
A limit can apply to the interest itself. “If the partnership paid or accrued interest on debts properly allocable to investment property, the amount of interest you’re allowed to deduct may be limited.” “For more information on the special provisions that apply to investment interest expense, see Form 4952 and Pub. 550, Investment Income and Expenses.”
Other items on the K-1 that touch investment income
Some investment-income points sit outside box 20. In box 6b, the instructions add a tip about qualified dividends: “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 Form 4952, line 4g, for important information on making this election.”
For a publicly traded partnership, the instructions explain how an overall gain is split, and why the split matters here: “In addition, the nonpassive income is included in investment income when figuring your investment interest expense deduction on Form 4952, Investment Interest Expense Deduction.”
Interest from borrowing can also land on Form 4952 from a different box. On the instructions for the interest-expense item in box 13, the tie to the use of the money is stated this way: “If the proceeds were used in an investment activity, report the interest on Form 4952.” “If the proceeds are used for personal purposes, the interest is generally not deductible.”
Net investment income tax
Investment items on a K-1 can also bear on the surtax on net investment income. The instructions say of code Y in box 20: “The partnership may use code Y to report information you may need to determine your NIIT under section 1411 that isn’t reported elsewhere on Schedule K-1 or K-3.” “If you’re an individual who is a U.S. citizen or resident, or a domestic trust or estate, follow the Instructions for Form 8960 to figure and report your NII and AGI or MAGI.” The Form 8960 mechanics are covered on the Form 8960 page, and the tax itself on net investment income tax. “Corporate partners aren’t subject to the NIIT.”
Gain on selling the interest has its own tip: “Gain or loss from the disposition of your partnership interest may be net investment income (NII) under section 1411 and could be subject to the net investment income tax (NIIT).”
Limits that apply before the numbers reach the return
The numbers in Part III come before the partner’s own limits. “The amounts shown in boxes 1 through 21 reflect your share of income, loss, deductions, credits, and other items from partnership business or rental activities without reference to limitations on losses or adjustments that may be required of you”. “If you have losses, deductions, or credits from a prior year that weren’t deductible or usable because of certain limitations, such as the basis limitations or the at-risk limitations, take them into account in determining your net income, loss, or credits for this year.”
Timing follows the partnership’s year. “If you file your tax return on a calendar-year basis, but your partnership files a return for a fiscal year, report the amounts on your tax return for the year in which the partnership’s fiscal year ends.”
Which revision applies
The edition read for this page is the 2025 Partner’s Instructions for Schedule K-1 (Form 1065) and the 2025 Schedule K-1 (Form 1065) 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 column letters and the reporting lines.
Common mistakes
- Treating code A as already netted against the interest. The instructions send code A to Form 4952, Part II, line 4a, and the interest from box 13 code H to line 1, so the two are entered separately on the form.
- Using only the K-1 amounts. The instructions say to include investment income and expenses from other sources to figure how much of your total investment interest is deductible.
- Forgetting that qualified dividends sit outside investment income by default. The box 6b tip says they are excluded from investment income unless the partner elects to include part or all of them.
Related: Form 4952 investment interest, Form 8960 net investment income tax, net investment income tax, Schedule K-1 (Form 1065) boxes explained, and 1099-DIV box 1a and 1b dividends.
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- 2025 Partner’s Instructions for Schedule K-1 (Form 1065): https://www.irs.gov/pub/irs-pdf/i1065sk1.pdf
- Schedule K-1 (Form 1065) (2025), Partner’s Share of Income, Deductions, Credits, etc.: https://www.irs.gov/pub/irs-pdf/f1065sk1.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.