Updated October 16, 2026. Quick answer: Box 11 of Schedule K-1 (Form 1120-S) is a shareholder’s share of the S corporation’s section 179 expense deduction. The 2025 instructions say “Use this amount, along with the total cost of section 179 property placed in service during the year from other sources, to complete Part I of Form 4562”. The part that is not a passive activity deduction goes to column (j) of Schedule E, line 28, after the basis and at-risk limits, and the part allocable to a passive activity is reported using the Instructions for Form 8582.
What box 11 reports
On the form, line 11 of Part III is labelled “Section 179 deduction”. It is a deduction, so it sits in the deductions group of the instructions, and the group opens with a warning. “There are potential limitations on corporate losses you can deduct on your return.” Every other box is set out on the Schedule K-1 (Form 1120-S) boxes overview.
The shareholder does not simply copy the figure. The instruction is to combine it with other section 179 property the shareholder bought: “Use this amount, along with the total cost of section 179 property placed in service during the year from other sources, to complete Part I of Form 4562, Depreciation and Amortization.” Form 4562 is covered on the Form 4562 page.
Where the box 11 amount goes
The instructions give four paths, depending on whether the amount is passive and whether a statement is attached.
| Situation | Where the instructions send it |
|---|---|
| Part I of Form 4562 | “Use this amount, along with the total cost of section 179 property placed in service during the year from other sources, to complete Part I of Form 4562, Depreciation and Amortization.” |
| Allocable to a passive activity | “Report the amount from line 12 of Form 4562 allocable to a passive activity using the Instructions for Form 8582.” |
| Not a passive activity deduction | “If the amount isn’t a passive activity deduction, report it in column (j) of Schedule E (Form 1040), line 28, after applying the basis and at-risk limitations on losses.” |
| Enterprise zone or qualified real property | “The corporation will report on an attached statement your share of the cost of any qualified enterprise zone property or qualified real property it placed in service during its tax year.” |
Section 179 limits come first
Some items carry their own limit first. “Other limitations may apply to specific deductions (for example, the section 179 expense deduction). Specific limitations generally apply before at-risk and passive loss limitations.”
The Part III heading carries the same sentence: “Other limitations may apply to specific deductions (for example, the section 179 expense deduction). Generally, specific limitations apply before the at-risk and passive loss limitations.”
Basis and at-risk limits
Basis is the shareholder’s own job to track. “Any losses and deductions not allowed this year because of the basis limit can be carried forward indefinitely and deducted in a later year subject to the basis limit for that year.” “You are responsible for keeping the information needed to figure the basis of your stock in the corporation.”
The basis steps list losses and deductions together: “Basis is decreased (but not below zero) by all losses and deductions reported on Schedule K-1.” “The basis of your stock (generally, its cost) is adjusted annually”.
Section 179 is named in the at-risk rules. “The at-risk rules generally limit the amount of loss and other deductions that you can claim to the amount you could actually lose in the activity.” “These losses and deductions include a loss on the disposition of assets and the section 179 expense deduction.”
For the at-risk step, “you will have to complete Form 6198, At-Risk Limitations, to figure your allowable loss for the activity.” Form 6198 is covered on the Form 6198 page.
Passive activity treatment
Whether the section 179 amount is passive depends on the activity it came from. “Generally, passive activities include: 1. Trade or business activities in which you didn’t materially participate”. “Passive activities don’t include the following. 1. Trade or business activities in which you materially participated.”
Passive losses are figured on their own form. “If you have a passive activity loss or credit, use Form 8582, Passive Activity Loss Limitations, to figure your allowable passive losses”. The form is covered on the Form 8582 page.
Carryovers from earlier years follow their own rule. “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 income, loss, or credits for this year.”
Reporting on the return
“If you are an individual, and the above limitations don’t apply to the amounts shown on your Schedule K-1, take the amounts shown and report them on the appropriate lines of your tax return.” “If any of the above limitations apply, adjust the amounts on Schedule K-1 before you report them on your return.”
Schedule E is the destination for the non-passive case. “If you have amounts other than those shown on Schedule K-1 to report on Schedule E (Form 1040), enter each item separately on Schedule E (Form 1040), line 28.” See the Schedule E page. If the corporation’s tax year differs from yours: “report the amounts on your tax return for the year in which the corporation’s fiscal year ends.”
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
- Entering the box 11 amount straight onto Schedule E. The instructions send it to Part I of Form 4562 first, together with the cost of other section 179 property placed in service.
- Applying the passive loss rules before the section 179 limit. The instructions state that specific limitations generally apply before the at-risk and passive loss limitations.
- Forgetting the at-risk step. The instructions name the section 179 expense deduction among the deductions that the at-risk rules can limit, and Form 6198 is the form for it.
Related: Form 4562 depreciation and amortization, Form 6198 at-risk limits, Form 8582 passive activity losses, Schedule E (Form 1040), and Depreciation recapture in year one.
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.