Entity Return
Schedule K-1, line 16, code F is the
amount of foreign taxes paid or accrued. Details about international shareholder pro rata share items are reported on Schedules K-2 (filed with Form 1120-S) and K-3 (furnished to each shareholder). See KB 17945 for more information about Schedules K-2 and K-3.
Shareholder Returns
For shareholders who receive Schedules K-1 and K-3 reporting international income from an S corporation, data entry is as follows.
1040 or 1041
A shareholder will receive Schedule K-1 with an amount listed in box 16, code F and Schedule K-3. Both items are related to foreign or international income; however, they are entered differently.
Enter the amount reported for foreign taxes paid or accrued on Schedule K-1 on screen K1S > 1120S K1 11-17 tab > line 16, using code F. This amount flows to Form 7203 and is used for basis calculations, but is not carried to Form 1116. Per the 1120-S Schedule K-1 Instructions:
"Report
this amount on Form 7203, line 46(a). Do not use this amount to
complete your Form 1116. See Schedule K-3 to complete your Form 1116."
Use Schedule K-3 to complete screen 1116 for Form 1116 and calculate any available Foreign Tax credit. See KB 11619 for data entry details. See the Schedule K-3 Instructions for more information on how to use Schedule K-3.
1065 or 1120-S
Pass-through entities that receive information from other pass-through entities cannot use the information to claim any tax credit; the data from the pass-through entity must be re-entered and continue to
pass-through until it gets to an individual partner or shareholder who is allowed to take the credit. Use Schedule K-3 to complete the K-2 Information - International screens (located on the respective SBS K, K-1, K-2, K-3 or PTR K, K-1, K-2, K-3 tab of the Data Entry Menu). (Foreign taxes are entered on screen III4.)
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