Updated October 16, 2026. Quick answer: Schedule K-1 (Form 1120-S) is the form an S corporation gives each of its shareholders. The 2025 instructions say “The corporation uses Schedule K-1 to report your share of the corporation’s income, deductions, credits, and other items.” “Include your share on your tax return if a return is required.” The Part III amounts are shown “without reference to limitations on losses, credits, or other items”, so a loss may be smaller on your return than on the form.
S corporation return (Form 1120-S) for 2025, read line by line: Form 1120-S lines 1a to 6, Form 1120-S Schedule B questions 1 to 3 and Form 1120-S Schedule B questions 6 to 11.
More IRS forms and schedules, read line by line: Form 8886 instructions.
What Schedule K-1 (Form 1120-S) is
An S corporation reports its pass-through items to each shareholder on this form. “The corporation uses Schedule K-1 to report your share of the corporation’s income, deductions, credits, and other items. Keep it for your records.” “Don’t file it with your tax return unless backup withholding is reported in box 13 using code O.”
The tax follows the share, not the cash. “You may be liable for tax on your share of the corporation’s income, whether or not distributed.” “Schedule K-1 doesn’t show actual dividend distributions the corporation made to you.”
The form is also not self-employment income. “Your share of S corporation income isn’t self-employment income and it isn’t subject to self-employment tax.” Salary and Social Security questions for S corporation owners are on the S corporation Social Security page.
Box map for boxes 1 to 12
Each row links to the page that reads that box (or group of boxes) in detail. The middle column is the label printed on the 2025 form, and the right column is a line from the instructions.
| Box (page) | Label on the form | What the 2025 instructions say |
|---|---|---|
| Box 1 | “Ordinary business income (loss)” | “The amount reported in box 1 is your share of the ordinary income (loss) from trade or business activities of the corporation.” |
| Box 2 | “Net rental real estate income (loss)” | “Generally, the income (loss) reported in box 2 is a passive activity amount for all shareholders.” |
| Box 3 | “Other net rental income (loss)” | “The amount in box 3 is a passive activity amount for all shareholders.” |
| Boxes 4, 5a, 5b and 6 | “Interest income” “Ordinary dividends” “Qualified dividends” “Royalties” | “Report interest income on Form 1040 or 1040-SR, line 2b.” “Report ordinary dividends on Form 1040 or 1040-SR, line 3b.” “Report any qualified dividends on Form 1040 or 1040-SR, line 3a.” “Report royalties on Schedule E (Form 1040), line 4.” |
| Boxes 7, 8a, 8b and 8c | “Net short-term capital gain (loss)” “Net long-term capital gain (loss)” “Collectibles (28%) gain (loss)” “Unrecaptured section 1250 gain” | “report the net short-term capital gain (loss) on Schedule D (Form 1040), Capital Gains and Losses, line 5.” “report the net long-term capital gain (loss) on Schedule D (Form 1040), line 12.” |
| Box 9 | “Net section 1231 gain (loss)” | “a gain, report it in column (g) of Form 4797, Sales of Business Property, line 2” |
| Box 10 | “Other income (loss)” | “Losses reported in box 10 may be limited.” |
| Box 11 | “Section 179 deduction” | “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.” |
| Box 12 | “Other deductions” | “Deductions reported in box 12 may be limited.” |
Boxes 13 and higher
Boxes 13 and higher are in the same IRS instructions linked below. They cover credits, the Schedule K-3 check box, alternative minimum tax items, items affecting shareholder basis, other information and the two activity boxes. The labels on the form are Credits, “Alternative minimum tax (AMT) items”, “Items affecting shareholder basis” and “Other information”.
Two of the last boxes tell you whether an attached statement exists. “Box 18 of Schedule K-1 will be checked when a statement is attached.” “Box 19 of Schedule K-1 will be checked when a statement is attached.”
Box by box, boxes 13 to 19 of the instructions, one page each: Schedule K-1 box 13, Schedule K-1 boxes 14 and 15, Schedule K-1 box 16, Schedule K-1 boxes 18 and 19, Schedule K-1 box 17 codes A, B and U, Schedule K-1 box 17 code V, Schedule K-1 box 17 codes K to O and Schedule K-1 box 17 other codes.
How the codes work
“In boxes 10, 12, 13, and 15 through 17, the corporation will identify each item by entering a code in the column to the left of the dollar amount entry space.” “The corporation 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.”
Items that do not fit a single box go on the return line the instructions name. “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.” Schedule E is explained on the Schedule E page.
The order of the limits
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”.
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.”
“When applicable, the passive activity limitations on losses are applied after the limitations on losses for a shareholder’s basis in stock and debt and the shareholder’s at-risk amount.” Form 6198 covers at-risk (Form 6198) and Form 8582 covers passive losses (Form 8582).
“If any of the above limitations apply, adjust the amounts on Schedule K-1 before you report them on your return.”
Treating the items the way the corporation did
“Generally, you must report corporate items shown on your Schedule K-1 (and any attached statements) the same way that the corporation treated the items on its return.” “If the treatment on your original or amended return is inconsistent with the corporation’s treatment, or if the corporation hasn’t filed a return, file Form 8082”.
If a figure looks wrong, the instructions point to the corporation first. “If you believe the corporation has made an error on your Schedule K-1, notify the corporation and ask for a corrected Schedule K-1.” “Don’t change any items on your copy of Schedule K-1.”
Other K-1 pages on this site
The partnership version of this form has different boxes and codes; it is read on the Schedule K-1 (Form 1065) boxes page. Estates and trusts receive a third version, covered on the estates Schedule K-1 page. For a shareholder deciding whether an S corporation election is worth the filing burden, see the S corporation election calculator.
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
- Deducting the full Part III loss. The instructions state that “The amount of loss and deduction you may claim on your tax return may be less than the amount reported on Schedule K-1.” Basis, at-risk, passive and excess business loss limits come first.
- Treating the K-1 as the record of cash received. The instructions say Schedule K-1 does not show actual dividend distributions, so distributions are tracked separately and a Form 1099-DIV may be involved.
- Changing numbers on your copy. The instructions say to notify the corporation and ask for a corrected Schedule K-1, and to file Form 8082 if you cannot reach agreement.
Related: Schedule K-1 (Form 1065) boxes explained, Schedule K-1 for estates, Schedule E (Form 1040), Form 8582 passive activity losses, and Form 6198 at-risk limits.
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.