Updated October 16, 2026. Quick answer: Box 12 of Schedule K-1 (Form 1120-S) holds a shareholder’s other deductions, and each lettered code goes to a different place. Codes A through G are charitable contributions, code H is investment interest for Form 4952, and code Z is itemized deductions. The instructions warn: “Deductions reported in box 12 may be limited.”
What box 12 reports
On the form, line 12 of Part III is labelled “Other deductions”. Each item is identified by a code, and the instructions treat each code on its own. This page covers the shareholder’s side of a K-1 you received. Every other box is set out on the Schedule K-1 (Form 1120-S) boxes overview.
“Deductions reported in box 12 may be limited. See Limitations on Losses, Deductions, and Credits, earlier.”
Every box 12 code and where it goes
The table follows the instructions code by code. The charitable codes A through G have their own table below, and the codes marked reserved carry no instruction.
| Code | What it is, as printed | Where it goes |
|---|---|---|
| A to G | “The corporation will give you a statement that shows charitable contributions subject to the 100%, 60%, 50%, 30%, and 20% adjusted gross income (AGI) limitations.” | Schedule A (Form 1040), lines 11 and 12; see the charitable table below |
| H | “Investment interest expense.” | “Report this amount on Form 4952, line 1.” |
| I | Royalty deductions | “Report deductions allocable to royalties on Schedule E (Form 1040), line 19.” |
| J | “The corporation will show on an attached statement the type and the amount of qualified expenditures for which you may make a section 59(e) election.” | “Make the election on Form 4562.” |
| L | Portfolio income deductions | “Generally, you should report these amounts on Schedule A (Form 1040), line 16.” |
| M | “You may be able to deduct these expenses currently or you may need to capitalize them under section 263A.” | “See Pub. 225, Farmer’s Tax Guide, and Regulations section 1.263A-4 for details.” |
| O | “The corporation will provide a statement that describes the qualified timber property for these reforestation expenses.” | “If you materially participated in the reforestation activity, report the deduction in column (i) of Schedule E (Form 1040), line 28.” |
| W | “Soil and water conservation expenditures and endangered species recovery expenditures.” | “See section 175 for limitations on the amount you are allowed to deduct.” |
| X | “The corporation will provide a statement that describes the film, television, live theatrical, or qualified sound recording production generating these expenses.” | “If you materially participated in the production activity, report the deduction in column (i) of Schedule E (Form 1040), line 28.” |
| Y | “Expenditures for the removal of architectural and transportation barriers to the elderly and disabled that the corporation elected to treat as a current expense.” | “The deductions are limited by section 190(c) to $15,000 per year from all sources.” |
| Z | “Itemized deductions that Form 1040 or 1040-SR filers report on Schedule A (Form 1040).” | Schedule A (Form 1040) |
| AA | “The deduction for a CCF investment isn’t taken on Schedule E (Form 1040).” | “Instead, you subtract the deduction from the amount that would normally be entered as taxable income on Form 1040 or 1040-SR, line 15.” |
| AB | “Penalty on early withdrawal of savings.” | “Report this amount on Schedule 1 (Form 1040), line 18.” |
| AC | “Interest expense allocated to debt-financed distributions.” | “The manner in which you report such interest expense depends on your use of the distributed debt proceeds.” |
| K, N, P to V, AD to AJ | “Code K. Reserved for future use.” “Code N. Reserved for future use.” “Codes P through V. Reserved for future use.” “Codes AD through AJ. Reserved for future use.” | No entry |
| ZZ | “Amounts with code ZZ are other deductions not included in box 12 using codes A through AC.” | “The corporation will give you a description and the amount of your share for each of these items.” |
Charitable contributions, codes A to G
The corporation passes charitable gifts through as a statement. “If the corporation made a property contribution, it will report on an attached statement your share of both the fair market value (FMV) and adjusted basis of the property.” “Use these amounts to adjust your stock basis.”
| Code | Label as printed | Where it goes |
|---|---|---|
| A | “Cash contributions (60%).” | “Report this amount, subject to the 60% AGI limitation, on Schedule A (Form 1040), line 11.” |
| B | “Cash contributions (30%).” | “Report this amount, subject to the 30% AGI limitation, on Schedule A (Form 1040), line 11.” |
| C | “Noncash contributions (50%).” | “Report this amount, subject to the 50% AGI limitation, on Schedule A (Form 1040), line 12.” |
| D | “Noncash contributions (30%).” | “Report this amount, subject to the 30% AGI limitation, on Schedule A (Form 1040), line 12.” |
| E | Capital gain property to a 50% limit organization, subject to the 30% limit | “Report this amount, subject to the 30% AGI limitation, on Schedule A (Form 1040), line 12. See Worksheet 2 in Pub. 526.” |
| F | “Capital gain property (20%).” | “Report this amount, subject to the 20% AGI limitation, on Schedule A (Form 1040), line 12.” |
| G | “Contributions (100%).” | “Report this amount, subject to your applicable limitation, on Schedule A (Form 1040), line 12.” |
Charitable gifts stay out of the passive loss calculation: “Charitable contribution deductions aren’t taken into account in figuring your passive activity loss for the year. Don’t enter them on Form 8582.” They are reported on Schedule A.
If a gift is subject to more than one limit: “If your contributions are subject to more than one of the AGI limitations, see Pub. 526.”
Code H: investment interest expense
“Report this amount on Form 4952, line 1.” “If the corporation has investment income or other investment expense, it will report your share of these items in box 17 of Schedule K-1 using codes A and B.” “Include investment income and expenses from other sources to figure how much of your total investment interest is deductible.” Form 4952 is covered on the Form 4952 page.
Code J: section 59(e)(2) expenditures
Code J lets the shareholder choose between deducting in full and spreading the cost out. “If you deduct these expenditures in full in the current year, they are treated as adjustments or tax preference items for purposes of alternative minimum tax.” “However, you may elect to amortize these expenditures over the number of years in the applicable period rather than deduct the full amount in the current year.”
“Make the election on Form 4562.” See the Form 4562 page.
Codes M, O, W, X and Y: farm, timber and special deductions
Code O has a dollar cap: “The expense deduction is limited to $10,000 ($5,000 if married filing separately) for each qualified timber property”. “If you didn’t materially participate in the activity, use Form 8582 to figure the amount to report in column (g) of Schedule E (Form 1040), line 28.”
Code X refers the reader to the statute for limits: “See section 181(a)(2) for dollar limitations that may apply.”
Codes Z, AA, AB and AC
Code AC depends on how the borrowed money was used: “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.”
The limits that apply before a box 12 deduction reaches the return
The instructions list four limits and put them in a fixed order: “These limitations and the order in which you must apply them are as follows: the basis limitations, the at-risk limitations, the passive activity limitations, and the excess business loss limitations.” The amounts printed in Part III are before any of them. “The amounts shown in boxes 1 through 17 reflect your share of income, loss, deductions, credits, and other items from corporate business or rental activities without reference to limitations on losses, credits, or other items”.
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.”
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 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.
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 all box 12 amounts on Schedule E. The instructions send codes A through G, Z and L to Schedule A, code H to Form 4952 and code AB to Schedule 1, so the code letter decides the form.
- Putting charitable gifts through Form 8582. The instructions say charitable contribution deductions are not taken into account in figuring the passive activity loss and are not entered on Form 8582.
- Ignoring the AGI limit on a charitable code. The instructions tie each of codes A through G to a stated AGI percentage, and send a shareholder with more than one limit to Pub. 526.
Related: Form 4952 investment interest, Schedule A (Form 1040), Schedule E (Form 1040), Form 8582 passive activity losses, and Form 4562 depreciation and amortization.
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.