U.S. · Tax forms
1120-S K-1 box 16 codes.
Code D distributions and the other five items that move an S corporation shareholder’s basis.
Box 16 of an S corporation Schedule K-1 reports items that affect your stock basis. Code D is distributions the corporation made to you that are not on a Form 1099-DIV. They reduce your basis, and any amount above basis is treated as capital gain. Codes A and B are tax-exempt income and raise basis, code C is nondeductible expenses and lowers it, code E is repayment of shareholder loans and code F is foreign taxes. Use the estimator to see how much of a distribution is covered by basis.
Check a distribution against basis
Result
Box 16 codes (2025 K-1)
| Box / code | Meaning | What it does and where it goes (per the IRS instructions) |
|---|---|---|
| A | Tax-exempt interest income | Report the share on your return as an item of information; individual shareholders include it on Form 1040 or 1040-SR, line 2a. It generally increases the basis of your stock. |
| B | Other tax-exempt income | Generally increases the basis of your stock by the amount shown. Do not include it in income on your tax return. |
| C | Nondeductible expenses | Not deductible on your return. Generally decreases the basis of your stock by this amount. |
| D | Distributions | Reduces stock basis for distributions of property or money that are not reported on Form 1099-DIV. If the distributions exceed basis, the excess is capital gain reported on Form 8949 and Schedule D (Form 1040). |
| E | Repayment of loans from shareholders | If made on a loan with reduced basis, the repayment is allocated partly to a return of loan basis and partly to income. See Regulations section 1.1367-2. |
| F | Foreign taxes paid or accrued | Report in column (a) of Form 7203, Part III, line 46. Do not use this amount to complete Form 1116; use Schedule K-3. |
How basis moves
The 1120-S instructions list the order in which a shareholder’s stock basis is adjusted each year. Basis is first increased by all income on the K-1, including tax-exempt income. It is then decreased, but not below zero, by distributions reported in box 16 code D. Next it is decreased by nondeductible expenses and oil and gas depletion, and last by losses and deductions. The IRS says you are responsible for keeping the records, and generally should use Form 7203 to figure stock and debt basis.
An S corporation reports on Form 1099-DIV only distributions made out of accumulated earnings and profits. Other distributions show up in box 16 code D, so a K-1 and a 1099-DIV from the same company are not duplicates.
Worked example
Marcus starts the year with $1,000 of stock basis. His K-1 shows $500 of income and $2,000 in box 16 code D. His basis available for distributions is $1,000 plus $500, or $1,500. The distribution is $500 more than that, so $500 is capital gain on Form 8949 and Schedule D, and his stock basis falls to zero. Nondeductible expenses and losses would be applied only after that.
Limits of this page
The estimator follows the ordering in the instructions and ignores loan basis, the optional election to reduce basis for nondeductible expenses first, and share-by-share basis. A CPA who prepares Form 7203 can confirm the result.
More form decoders
For the matching partnership boxes see the capital gains tax calculator for tax on a resulting gain and the S corp election deadline checker for the election itself.
Sources
- Instructions for Schedule K-1 (Form 1120-S) (2025): Box 16, Items Affecting Shareholder Basis, codes A through F; Basis Limitations. Read November 2, 2026.
- Instructions for Form 1099-DIV: Box 1a: S corporation distributions out of accumulated earnings and profits. Read November 2, 2026.
IRS page last reviewed April 30, 2026. Form and line references are those printed in the 2025 instructions and can change.
Frequently asked questions
What is box 16 code D on an S corporation K-1?
It is distributions of money or property made by the corporation that are not reported on Form 1099-DIV. They reduce the basis of your stock.
What happens if distributions are more than my basis?
The excess is treated as capital gain from the sale or exchange of property. It is reported on Form 8949 and Schedule D (Form 1040).
Do I report box 16 code A as income?
Code A is tax-exempt interest. Individual shareholders include the amount on Form 1040 or 1040-SR line 2a as an item of information, and it generally increases stock basis.
Does the K-1 show my stock basis?
No. The K-1 gives the items that adjust basis, but you must keep the records. The IRS suggests Form 7203, S Corporation Shareholder Stock and Debt Basis Limitations, to figure it.
Why is code F not used on Form 1116?
The instructions say to report code F on Form 7203, Part III, line 46, and to use Schedule K-3 to complete Form 1116 instead.
Not tax advice
This page summarizes IRS instructions, mostly written for the people who prepare the form, and is not tax, legal or financial advice. The payer, a CPA or an enrolled agent can confirm what a box or code means for your return. Everything runs in your browser; nothing you enter is sent anywhere.