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Treasury I-Bonds interest

gmohan123 — Sun, 16 Feb 2025 15:14:38 GMT

I invested into Treasury Bonds thru my corporation and reported interest as US Obligation separate from other bank interest so that's its not state taxable. BUT I am not able to figure out how it carried over to Schedule K for state to identify the non-taxable state amount. Thanks in advance and hopefully someone has figured out to share the reporting.

Re: Treasury I-Bonds interest

KeshaH — Sun, 16 Feb 2025 15:15:09 GMT

This interest is usually reported to the recipient on a Form 1099-INT in box 3 to indicate that it is US treasury bond interest. The Schedule K-1 from an S Corp or Partnership will usually have this information provided in the statements so that the proper adjustments can be made on the state tax return.

Re: Treasury I-Bonds interest

gmohan123 — Sun, 16 Feb 2025 15:19:29 GMT

Thanks for quick follow up but I am looking more form the Corporation how does it pass the state non-taxable amount to the shareholder. I do understand shareholder on its individua return will report on Box 3. On Schedule K it says item 9 to report any tax-exempt interest received or accrued but Item 9 description is quite different: Net section 1231 gain (loss) (attach Form 4797)

Re: Treasury I-Bonds interest

KeshaH — Sun, 16 Feb 2025 15:28:13 GMT

The corporation as the recipient will also receive the 1099-INT with the amount in Box 3. Once it's been included on the 1120S return, the interest will be reported on the Schedule K as interest. There will need to be statements included with the shareholder's K-1 that show the amount of interest received from Treasury bonds. That information from the statements will help make any necessary adjustments on the shareholder's state return to exclude the income.