U.S. · Tax forms
Form 1120-S line 22, ordinary business income.
How ordinary business income (loss) is figured for an S corporation and where it is reported.
Line 22 (“Ordinary business income (loss). Subtract line 21 from line 6”) is entered on Schedule K, line 1. It is not used in figuring the excess net passive income or built-in gains taxes.
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Result
How line 22 is built, 2025 form
| Line | Meaning | What the IRS says |
|---|---|---|
| Line 6 | Total income (loss) | Add lines 3 through 5 |
| Line 7 | Compensation of officers | Attach Form 1125-E |
| Line 8 | Salaries and wages | Less employment credits |
| Lines 9 to 20 | Other deductions | Repairs, bad debts, rents, taxes and licenses, interest, depreciation, depletion, advertising, pension plans, employee benefits, energy efficient commercial buildings deduction (Form 7205) and other deductions |
| Line 21 | Total deductions | Add lines 7 through 20 |
| Line 22 | Ordinary business income (loss) | Subtract line 21 from line 6 |
| Schedule K, line 1 | Where line 22 goes | Enter this income or loss on Schedule K, line 1 |
| Line 23a | Excess net passive income or LIFO recapture tax | Line 22 income is not used in figuring the excess net passive income or built-in gains taxes |
Income or loss
Line 22 can be a loss. The form labels it “Ordinary business income (loss),” and the same sign carries to Schedule K, line 1.
What line 22 is not
The instructions say line 22 income is not used in figuring the excess net passive income or built-in gains taxes, and point to the line 23a instructions for figuring taxable income for those taxes. Those taxes can apply if the corporation was previously a C corporation or engaged in a tax-free reorganization with one.
Pass-through to shareholders
Line 22 is an entity-level total entered on Schedule K, line 1. The shareholders’ shares are reported on Schedule K-1.
Worked example
Birchwood Design Co. (made up) has total income of $315,500 on line 6 and total deductions of $262,000 on line 21. Line 22 is 315,500 − 262,000 = $53,500, entered on Schedule K, line 1. Names and figures are made up.
More line pages in this set
Related lines: Form 1120-S Line 6.
Sources
- Instructions for Form 1120-S (2025): the line-by-line instructions on this page. Page last reviewed or updated April 30, 2026. Read November 2, 2026.
- Form 1120-S (2025), U.S. Income Tax Return for an S Corporation: the printed line wording and arithmetic on the form (Form 1120-S (2025), created 4/7/25). Read November 2, 2026.
Tax year 2025 forms and instructions: Form 1120-S (2025) and its 2025 instructions. Line numbers and labels were read from the IRS PDF and instructions on the date read and can change between tax years, so check them against the form for your year. Names in worked examples are made up.
Frequently asked questions
What is Form 1120-S line 22?
Ordinary business income (loss): line 6 total income (loss) minus line 21 total deductions.
Where is line 22 reported?
On Schedule K, line 1, per the instructions.
Is line 22 used for the built-in gains tax?
No. The instructions say line 22 income is not used in figuring the excess net passive income or built-in gains taxes.
What deductions make up line 21?
Lines 7 through 20: compensation of officers, salaries and wages, repairs, bad debts, rents, taxes and licenses, interest, depreciation, depletion, advertising, pension plans, employee benefits, the Form 7205 deduction and other deductions.
Can line 22 be a loss?
Yes. The line is labeled ordinary business income (loss).
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. A CPA or an enrolled agent can confirm what a line means for your return. Everything runs in your browser; nothing you enter is sent anywhere.