Form 1120-S Schedule K-1: Shareholder Share of Income, Deductions, and Credits

Form 1120-S Schedule K-1 is a tax form used to report a shareholder's portion of the company's profits, losses, and tax benefits. The form is prepared by the company and provided to each shareholder, who then uses the information to report the share of the company's income on a personal tax return.

What is Form 1120-S Schedule K-1 used for?

• Reporting a shareholder's portion of the company's profits, losses, and tax benefits.
• Providing shareholders with the necessary information to report the share of the company's income on a personal tax return.
• Calculating the shareholder's tax liability and reporting any tax benefits or deductions.

Key Components of Form 1120-S Schedule K-1

• Shareholder Information: Identifying information about the shareholder, including name, address, and tax identification number.
• Share of Profits: Reporting the shareholder's portion of the company's profits, including ordinary business income, capital gains, and dividends.
• Share of Losses: Reporting the shareholder's portion of the company's losses, including business expenses, depreciation, and amortization.
• Share of Tax Benefits: Reporting the shareholder's portion of the company's tax benefits, including tax credits and deductions.
• Basis Information: Reporting the shareholder's basis in company stock, used to calculate gain or loss on the sale of shares.

Why is Form 1120-S Schedule K-1 important?

• It provides shareholders with the necessary information to report the share of the company's income on a personal tax return.
• It helps ensure that shareholders accurately report income and pay the correct amount of tax.
• It is used by the IRS to verify the accuracy of shareholder tax returns and to identify any errors or discrepancies.

Who needs to file Form 1120-S Schedule K-1?

• Companies that have shareholders required to report a share of the company's income on a personal tax return.
• Shareholders who receive a Schedule K-1 from a company and must report the share of the company's income on a personal tax return.