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1120S Business Bank Interest

Why doesn't TurboTax include the business bank interest on Line 5 of 1120S? I see it is included on the K1 so we pay taxes on it, but it seems it is income for the business which I would think would increase QBID if it were also included on the 1120S? The IRS instructions seem to say interest income can go here so I am wondering why TurboTax doesn't include it on 1120s and what impact it would have if it were included? Like could I go to forms and type it in on line 5 myself, and would it have the desired affect of increasing QBID without causing any other issues?  

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3 Replies
M-MTax
Level 11

1120S Business Bank Interest

The IRS instructions seem to say interest income can go here

 

That is correct but it applies to interest income derived in the ordinary course of the corporation's trade or business, not investment interest.

1120S Business Bank Interest

Ok thanks. A quick internet search showed this for TaxSlayer for the K-1: Line 4 - Interest - Amounts in Box 4 are not passive income. Amounts entered on this line will automatically flow to Line 2a of Form 1040.

 

Is that also true for TurboTax, that when you enter your K-1 information when doing a personal return, that the amount on line 4 of K-1 automatically flows to the 1040 line 2 (but actually 2b since that is taxable interest?). Meaning, if someone enters their K-1 info, they do not also enter it again in the interest income section where you enter 1099-INT forms for your personal bank account(s), right?

M-MTax
Level 11

1120S Business Bank Interest

Yes, it would be entered only once, from the K-1.

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