U.S. · Tax forms
K-1 box 20 code N.
Business interest expense the partnership already deducted, reported for your basis limit.
Box 20, code N is your share of the partnership’s deductible business interest expense (BIE). It is for information only, because the amount was already deducted elsewhere on your K-1. The partnership reports it so you can include it in the separate loss class when you test the basis limit under section 704(d). Interest that is not deductible under section 163(j) is not here: it is in box 13, code K.
Look up a business interest item
Result
Business interest on the K-1
| Item | Meaning | Where it goes (per the IRS instructions) |
|---|---|---|
| 20-N | Box 20, code N: Business interest expense (BIE) | Information only; already deducted elsewhere on the K-1. Used for the basis limitation under section 704(d). An attached statement allocates it by K-1 line number |
| 13-K | Box 13, code K: Excess business interest expense (EBIE) | Not deductible under section 163(j) this year; included for the basis limitation and not reported in box 20. See Form 8990 |
| BASIS-4n | Basis worksheet, Part I, line 4n | Enter the BIE from box 20 code N, or the amount by which BIE reduced positive ordinary income in box 1, 2 or 3, if less |
Applies to tax years beginning after November 12, 2020
The instructions say the partnership reports code N for tax years beginning after November 12, 2020. The amount is deductible business interest that is already part of another figure on the K-1, with a statement showing how the partnership allocated it by K-1 line number. You do not deduct it a second time.
Why it exists
Losses are limited to your basis, and the interest was already deducted at the partnership level. Under Regulations section 1.163(j)-6(h) it belongs in a separate loss class when you work out the basis limitation. If your losses are limited under section 704(d), this is the information you need. The Worksheet for Adjusting the Basis of a Partner’s Interest in the Partnership uses it on line 4n.
Worked example
Noor receives a K-1 with $10,000 in code N. The attached statement shows the partnership already deducted that interest in arriving at the box 1 amount. Noor does not deduct anything separately. When she completes the basis worksheet, line 4n takes the $10,000 or, if less, the amount by which that interest reduced positive ordinary income in boxes 1, 2 or 3. If the partnership also had $2,000 of excess business interest, it appears in box 13 code K instead.
More K-1 (Form 1065) pages
Other pages in this set: K-1 (1065) Box 1, K-1 (1065) Box 17, K-1 (1065) Box 18, K-1 (1065) Box 20 Codes A and B, K-1 (1065) Box 20 Code V, K-1 (1065) Box 20 Code W, K-1 (1065) Box 20 Code AH, K-1 (1065) Box 20 Code Y, K-1 (1065) Box 20 Code AA, K-1 (1065) Box 20 Code AB. The 1099-R box 7 lookup and W-2 box 12 lookup cover the same kind of question for those forms.
Sources
- Instructions for Schedule K-1 (Form 1065) (2025): Box 20, Other Information, code N; Box 13, code K; Worksheet for Adjusting the Basis of a Partner’s Interest in the Partnership, line 4n. Read November 2, 2026.
IRS page last reviewed April 30, 2026. Tax year 2025 edition. Line numbers are those printed in the 2025 instructions and can change. Names in worked examples are made up.
Frequently asked questions
What is box 20 code N on a Schedule K-1 (Form 1065)?
Your share of the partnership’s deductible business interest expense, reported for the basis limitation under section 704(d). It was already deducted elsewhere on the K-1.
Do I deduct the code N amount on my return?
No. It is for information only and was already included as a deduction on another line of your K-1.
What is the difference between code N and box 13 code K?
Code N is deductible business interest already taken. Excess business interest expense that is not deductible under section 163(j) is reported in box 13 code K, not in box 20.
Where does code N go in the basis worksheet?
On Part I, line 4n: the BIE reported in code N, or the amount by which BIE reduced positive ordinary income in box 1, 2 or 3, if less.
Which years does code N apply to?
Tax years beginning after November 12, 2020, according to the 2025 instructions.
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.