Lone Tree, Colorado
Three forms. One from a partnership, one from an S corporation, one from a trust.
They look the same from across the room.
Here is where every box goes on your 1040, and which ones matter.
Welcome. We’re glad to serve you.
This is the companion to Schedule K-1: your share of somebody else’s return, which explains what a K-1 is. This page is the map: each box on each of the three kinds of K-1, and where it lands on your return. Box numbers are from the current forms; older K-1s in your file may be numbered differently.
Part I identifies the entity (name, EIN, where it files). Part II identifies you — and on the two business K-1s it carries numbers that matter as much as Part III:
Top of the form: the Final K-1 and Amended K-1 boxes, and (partnership) whether you are a general or limited partner and whether the partnership is publicly traded — a PTP has its own passive rules.
↑ Back to top| Box | What it is | Where it goes |
|---|---|---|
| 1 | Ordinary business income (loss) | Schedule E page 2, line 28: column (k) nonpassive income or (i) nonpassive loss if you materially participate; (h) passive income or (g) passive loss via Form 8582 if you don’t. Subject to the basis, at-risk and passive limits. |
| 2 | Net rental real estate income (loss) | Schedule E line 28, passive for nearly everyone; a loss goes through Form 8582 (with the $25,000 active-participation allowance) unless you are a real estate professional. |
| 3 | Other net rental income (loss) | Schedule E line 28, passive. |
| 4a–4c | Guaranteed payments (services, capital, total) | Schedule E line 28 column (k), nonpassive, and into box 14 for SE tax. Taxable regardless of the partnership’s profit. |
| 5 | Interest income | 1040 line 2b (Schedule B if over $1,500 total). |
| 6a / 6b | Ordinary / qualified dividends | 1040 lines 3b / 3a. |
| 7 | Royalties | Schedule E page 1, line 4. |
| 8 | Net short-term capital gain (loss) | Schedule D line 5. |
| 9a / 9b / 9c | Net long-term capital gain; collectibles gain; unrecaptured §1250 gain | Schedule D line 12; the 28% Rate Gain Worksheet; the Unrecaptured §1250 Gain Worksheet (taxed up to 25%). |
| 10 | Net §1231 gain (loss) | Form 4797 line 2 — net gain becomes long-term capital gain, net loss is ordinary. Passive if from a rental or a business you don’t materially participate in. |
| 11 | Other income (loss), coded | By code: A/B other portfolio income, C §1256 contracts (Form 6781), E cancellation of debt, I other — see the statement. |
| 12 | Section 179 deduction | Form 4562 Part I, then to Schedule E column (j) or Form 8582 if passive. Limited by your business income across all sources. |
| 13 | Other deductions, coded | A–G charitable contributions by AGI-limit category (Schedule A); H investment interest (Form 4952); W/ZZ other — see the statement. |
| 14 | Self-employment earnings (loss) | Code A to Schedule SE. General partners and working LLC members have it; limited partners generally only on guaranteed payments. Reduce by §179 and unreimbursed partnership expenses before SE. |
| 15 | Credits, coded | Form 3800 and the specific credit form; passive credits through Form 8582-CR. |
| 16 | Schedule K-3 attached (checkbox) | Foreign items are on the K-3, not here. Form 1116 if you claim a foreign tax credit. |
| 17 | Alternative minimum tax items | Form 6251. |
| 18 | Tax-exempt income and nondeductible expenses | A tax-exempt interest to 1040 line 2a; B other tax-exempt income (not reported); C nondeductible expenses (not reported). All three adjust basis. |
| 19 | Distributions | Not income. Code A cash, B/C property. Reduce basis; excess over basis is capital gain on Form 8949/Schedule D. Property distributions: Form 7217 (verify). |
| 20 | Other information, coded | A investment income and B investment expenses (Form 4952); N business interest (Form 8990); Z Section 199A information (Form 8995/8995-A); AH other — the statement is the content. |
| 21 | Foreign taxes paid or accrued | Form 1116 or Schedule A line 6 (the $300/$600 simplified election if that is all there is). |
| 22 / 23 | More than one activity for at-risk / passive purposes | Checkboxes: the statement splits box 1 by activity for Forms 6198 and 8582. |
The S corporation K-1 is the partnership K-1 with three things missing: no guaranteed payments (the owner is paid on a W-2), no self-employment box (box 1 is not SE income), and no share of the company’s debt in basis (only loans you made count). Everything is allocated by shares, per day.
| Box | What it is | Where it goes |
|---|---|---|
| 1 | Ordinary business income (loss) | Schedule E line 28, column by participation as above. A loss needs Form 7203 basis first, then Form 6198, then Form 8582. No self-employment tax. |
| 2 / 3 | Net rental real estate / other rental income (loss) | Schedule E line 28, passive; Form 8582 for a loss. |
| 4 | Interest income | 1040 line 2b. |
| 5a / 5b | Ordinary / qualified dividends | 1040 lines 3b / 3a. |
| 6 | Royalties | Schedule E line 4. |
| 7 | Net short-term capital gain (loss) | Schedule D line 5. |
| 8a / 8b / 8c | Net long-term capital gain; collectibles; unrecaptured §1250 | Schedule D line 12 and the two worksheets. |
| 9 | Net §1231 gain (loss) | Form 4797 line 2. |
| 10 | Other income (loss), coded | By code; see the statement. |
| 11 | Section 179 deduction | Form 4562 Part I, then Schedule E column (j) or Form 8582. |
| 12 | Other deductions, coded | A–G charitable by category; H investment interest; S other. |
| 13 | Credits, coded | Form 3800; 8582-CR if passive. |
| 14 | Schedule K-3 attached (checkbox) | Foreign items on the K-3. |
| 15 | Alternative minimum tax items | Form 6251. |
| 16 | Items affecting shareholder basis | A tax-exempt interest (1040 line 2a, increases basis); B other tax-exempt income (increases basis); C nondeductible expenses (decreases basis); D distributions — not income, reduce basis, excess over basis is capital gain; E repayment of shareholder loans — taxable in part if the loan’s basis was reduced by losses. All go to Form 7203. |
| 17 | Other information, coded | A/B investment income and expenses (Form 4952); K dispositions of §179 property; V Section 199A information (Form 8995/8995-A); AC gross receipts for §448(c); AD other. |
| 18 / 19 | More than one activity for at-risk / passive purposes | Checkboxes; the statement splits the activities. |
Not on the K-1 but part of the same package: your W-2 from the company, which carries your salary (box 1), and, if you own more than 2%, the health insurance the company paid for you, which is in box 1 wages and deductible on your 1040 as self-employed health insurance. See S corporations.
↑ Back to topOnly fourteen boxes, and a different logic: the trust or estate reports what it carried out to you, in the character it had inside the trust. Distributions themselves are not shown. Losses stay in the trust until its final year. You report the items the way the fiduciary did; if you disagree and the trustee won’t fix it, Form 8082.
| Box | What it is | Where it goes |
|---|---|---|
| 1 | Interest income | 1040 line 2b. |
| 2a / 2b | Ordinary / qualified dividends | 1040 lines 3b / 3a. |
| 3 | Net short-term capital gain | Schedule D line 5. Usually only in the final year. |
| 4a / 4b / 4c | Net long-term capital gain; 28% rate gain; unrecaptured §1250 gain | Schedule D line 12 and the worksheets. Usually only in the final year or when the document requires gains to be distributed. |
| 5 | Other portfolio and nonbusiness income | Schedule E line 33 column (f). Includes income in respect of a decedent — the IRA or final paycheck the estate collected — and annuity and royalty income. |
| 6 | Ordinary business income | Schedule E line 33, column (d) passive or (f) nonpassive, judged by the fiduciary’s participation. |
| 7 / 8 | Net rental real estate / other rental income | Schedule E line 33, (d) or (f). |
| 9 | Directly apportioned deductions (depreciation, depletion, amortization) | Schedule E line 33 column (c) or (e), or Form 8582 — against the box 6–8 income they belong to. |
| 10 | Estate tax deduction | Schedule A line 16, an itemized deduction not subject to any floor: the federal estate tax paid on income (an IRA, say) that you are now paying income tax on. |
| 11 | Final year deductions, coded | A excess deductions — §67(e) administration expenses — Schedule 1, above the line; B excess non-miscellaneous itemized deductions — Schedule A, by type; C / D short- and long-term capital loss carryovers — Schedule D lines 5 and 12, and they carry forward for you indefinitely; E NOL carryover — Schedule 1; F AMT NOL — Form 6251. |
| 12 | Alternative minimum tax adjustments | Form 6251. |
| 13 | Credits and credit recapture | A estimated tax the fiduciary elected to pass to you (1040 line 26, Form 1041-T); B backup withholding (1040 line 25 — the one case where the K-1 is attached); others to their forms. |
| 14 | Other information | A tax-exempt interest (1040 line 2a); B foreign taxes; E net investment income (Form 4952); H §1411 net investment income adjustment (Form 8960); I Section 199A information; Z other. |
Not on the K-1: the basis of property distributed to you. Inherited property takes date-of-death value (see the step-up page); property from an irrevocable trust carries the grantor’s basis; property the trust bought carries its cost. The trustee should give you a statement of basis, holding period and depreciation with any non-cash distribution. See Trusts and taxes for the trust side.
↑ Back to topPaul puts $60,000 into a partnership for 75%; Lori puts $20,000 for 25%. Both work in the business. Year 1 the partnership loses $90,000: Paul’s K-1 box 1 shows ($67,500), Lori’s ($22,500). Paul can deduct only $60,000 (his basis) and suspends $7,500; Lori deducts $20,000 and suspends $2,500. Both end the year at zero basis.
Year 2 the partnership earns $90,000, takes on a $100,000 recourse bank loan, and distributes $7,500 to Paul and $2,500 to Lori. Paul’s basis: $0 + $67,500 income + $75,000 share of the loan − $7,500 distribution − $7,500 suspended loss now released = $127,500. Lori: $0 + $22,500 + $25,000 − $2,500 − $2,500 = $42,500. The distributions were tax-free and the Year 1 losses are finally deducted. In an S corporation the same facts give Paul $52,500 and Lori $17,500 — the bank loan adds nothing to a shareholder’s basis.
Jevon is a silent partner. He starts the year with $11,000 of basis and $10,000 at risk (part of his basis came from nonrecourse debt), has no other passive income, and his K-1 shows a $12,000 loss. Gate one: $11,000 passes, $1,000 is disallowed for lack of basis. Gate two: $10,000 passes, $1,000 is suspended on Form 6198. Gate three: he doesn’t materially participate and has no passive income, so all $10,000 is suspended on Form 8582. Deduction this year: $0. Nothing is lost; all three pieces wait for basis, at-risk amount, or passive income — or the sale of his interest, which releases the passive piece.
Box 1 is your share of the business income for income tax. Box 14 code A is the part of it (plus guaranteed payments) that is also subject to self-employment tax. The two overlap by design; box 14 is not additional income.
Distributions reduce basis before losses do. So a distribution can leave you without enough basis to deduct the loss, and the loss is suspended while the distribution was tax-free. That ordering catches people every year, and it is why Form 7203 asks for both.
Then the $30,000 was principal, or the trust had no income to carry out to you. A distribution of principal is not taxable and does not appear on the K-1. If the trust had income and kept it, the trust paid the tax.
On the statement attached to the K-1, usually several pages back. It lists qualified business income, W-2 wages and unadjusted basis of property for each business. Without it the 20% deduction can’t be computed.
Only if you have foreign tax credits or foreign-source income to report. For most domestic partnerships every line is zero. Keep it with the return; it rarely changes anything.
For the Tax Shop desk · forms, code sections, and the things that get missed
A K-1 is a map of someone else’s return drawn for you. Bring the whole thing and we will follow each box to its line, keep your basis current so the loss and distribution questions have answers, and extend your return if the K-1 is late.
Call 303-734-1040 or stop by the office in Lone Tree. We’ve been reading the footnotes for Douglas County and the Denver area since 1969.
Figures reflect the 2026 tax year as currently published and are rounded for readability. Items marked (verify) are to be confirmed against IRS or Colorado DOR sources before the figures freeze in December. Written October 26, 2026.