Dealing With The S Corporation
K-1 On The 1040 What You Really Need To Know!
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Dealing With The S Corporation
K-1 On The 1040 What You Really Need To Know!
Presenters:
Kathy Hettick, EA, ABA, ATP and
Gene Bell, EA, ATA, CFP®
• Date: September 18, 2014
• Time: 2:00-3:00PM Eastern
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Learning Objectives
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Understand the flow through reporting
requirements of an S-Corporation
Determine how items from the K-1 are
reported on the 1040.
Identify unique K-1 reporting issues and
how to resolve them.
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Intro to S-Corps, K-1
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Purpose of the Schedule K-1
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Inconsistent Treatment of Items
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Limitations on Losses
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Elections
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Sniff Test?!?
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Attention to details!
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Is this the right K-1 for the right person?
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More than 2% shareholder?
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Is it a final year? Amended?
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Let’s talk basis first
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Basis schedule §1366
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Inside/Outside
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Shareholder loans
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Most other items affecting basis are on the K-1
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Now let’s talk "at risk"
and "activity"
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At Risk limitations §465
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Passive or non passive §469
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Active or material participation
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Net Investment Income Tax
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Part III –
Where it all begins…
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Box 1: Ordinary business income (loss)
• Non-separately stated income or loss
Box 2: Net rental real estate income
• Passive Activity
• determined at the shareholder level
Box 3: Other net rental income (loss)
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Part III –
Portfolio Income
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Box 4: Interest Income
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Box 5a – 5b: Dividends
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Box 6: Royalties
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Box 7: Net short-term capital gain(loss)
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Part III –
Portfolio Income
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Box 8a: Net long-term capital gain(loss)
Box 8b: Collectibles (28%) gain(loss)
Box 10: Other Income (loss)
• Code A: Other portfolio income (loss)
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Part III –
Other Gains (Losses)
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Box 8c: Unrecaptured section 1250 gain
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Box 9: Net section 1231 gain (loss)
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Part III –
Attention to the Details
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Box 10:
• Code
• Code
• Code
• Code
B: Involuntary conversions
C: §1256 contracts & straddles
D: Mining exploration costs
E: Other income (loss)
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Part III –
Attention to the Details
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Box 11: Section 179 deduction
• Attach statement
• Income limitations
Box 12: Other deductions (examples)
• Charitable contributions
• Investment interest expense
• Domestic Productions Activity Credit – Form 8903
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Part III –
Those Other Boxes
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Box 13: Credits (examples)
• Low income housing
• Rental real estate credits
• Small employer health insurance premium credit
• Work opportunity credit
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Part III –
Those Other Boxes
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Box 14: Foreign Transactions
• Pub 514
• Form 1116 instructions
Box 15: AMT Items
• Adjustments to Form 6251
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Part III –
BASIS!!!
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Box 16: Items affecting shareholder basis
• Code A: Tax exempt interest
• Code B: Other tax exempt income
• Code C: Nondeductible expenses
• Code D: Distributions
• cash or property?
• Code E: Repayment of shareholder loans
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Part III –
And For Everything Else...
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Box 17: Other information
• Code K: Sale of 179 property
• Code U: Net Investment Income
• Code V: 2% Shareholder health insurance
premiums
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When That Client Calls...
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Check for the basics!
Develop a process
Ask the right questions
Document the answers
Determine an appropriate outcome
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Review Questions for Self Study CPE:
Now’s the time to answer the review questions 1-3.
Click here:
http://www.proprofs.com/quiz-school/story.php?title=NzkyMjI3V3HA
*Once all questions are complete please submit and close quiz
window.
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Questions?
Kathy Hettick, EA, ABA, ATP
Hettick Accounting
2551 Cole St., Ste. U
Enumclaw, WA 98022
www.hettickaccounting.com
Work: (360) 825-0591
Email: kathy@hettickaccounting.com
Gene Bell, EA, ATP, CFP®
Gene Bell & Associates
1700 Iowa Street
Bellingham, WA 98225-3849
www.genebellassociates.com
Work: (360) 671-1845
Email: office@genebellassociates.com
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You must complete this survey and the quiz or final exam (for the
recorded version) to qualify to receive CPE credit.
National Society of Accountants
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Phone: (800) 966-6679
members@nsacct.org
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