How do I enter tax exempt income for an S-Corporation?
- From the Input Return tab, go to Balance Sheet ⮕ Schedule M-1, M-3 ⮕ Schedule M-1.
- Scroll down to the Income Recorded on Books Not Included on Schedule K section.
- Locate the Tax-exempt Income subsection.
- Expand the details on Other (Click on button to expand).
- Enter the Description.
- Enter the amount under the Federal column.
- Click OK.
This amount will flow to:
- Form 1120S, Schedule K, line 16b,
- Form 1120S, Schedule M-2, line 3.
- Schedule K-1, line 16 with code B.
Per the Form 1120S instructions,