Schedule B. Other Information

Complete all items that apply to the corporation.

Item 2 See Principal Business Activity Codes at the end of these instructions and enter the business activity and product or service. For nonstore retailers, select the PBA code by the primary product that your establishment sells. For example, establishments primarily selling prescription and non-prescription drugs, select PBA code 456110 Pharmacies & Drug Retailers.

Question 4. Constructive Ownership of Other Entities For purposes of determining the corporation’s constructive ownership of other entities, the constructive ownership rules of section 267(c) (excluding section 267(c)(3)) apply to ownership of interests in partnerships and trusts as well as corporate stock. Generally, if an entity (a corporation, partnership, or trust) is owned, directly or indirectly, by or for another entity (corporation, partnership, estate, or trust), the owned entity is considered to be owned proportionately by or for the owners (shareholders, partners, or beneficiaries) of the owning entity.

Maximum percentage owned in partnership profit, loss, or capital. For the purposes of question 4b, the term “maximum percentage owned” means the highest percentage of interest in a partnership’s profit, loss, or capital as of the end of the partnership’s tax year, as determined under the partnership agreement, when taking into account the constructive ownership rules discussed earlier. If the partnership agreement doesn’t express the partner’s share of profit, loss, and capital as fixed percentages, use a reasonable method in arriving at the percentage items for the purposes of completing question 4b. Such method must be consistent with the partnership agreement. The method used to figure a percentage share of profit, loss, and capital must be applied consistently from year to year. Maintain records to support the determination of the share of profits, losses, and share of capital.

Question 6 Answer “Yes” if the corporation filed or is required to file Form 8918, Material Advisor Disclosure Statement. For details, see the Instructions for Form 8918.

Item 8 Complete item 8 if the corporation (a) was a C corporation before it elected to be an S corporation or the corporation acquired an asset with a basis determined by reference to its basis (or the basis of any other property) in the hands of a C corporation and

(b) has net unrealized built-in gain (defined below) in excess of the net recognized built-in gain from prior years.

The corporation is liable for section 1374 tax if (a) and (b) above apply and it has a net recognized built-in gain (defined in section 1374(d)(2)) for its tax year.

The corporation’s net unrealized built-in gain is the amount, if any, by which the aggregate FMV of the assets of the corporation at the beginning of its first S corporation year (or as of the date the assets were acquired, for any asset with a basis determined by reference to its basis (or the basis of any other property) in the hands of a C corporation) exceeds the aggregate adjusted basis of such assets at that time.

Enter the corporation’s net unrealized built-in gain reduced by the net recognized built-in gain from prior years. See sections 1374(c)(2) and (d)(1).

If the corporation has more than one pool of assets (as defined in Regulations section 1.1374-3(b)(4)), attach a statement showing for each pool of assets the amount of the corporation’s net unrealized built-in gain reduced by the net recognized built-in gain from prior years.

Question 9. Business Interest Expense Election The limitation on business interest expense under section 163(j) applies to every taxpayer with a trade or business, unless the taxpayer meets certain specified exceptions. A taxpayer may elect out of the limitation for certain businesses otherwise subject to the business interest expense limitation. This is an irrevocable election.

Certain real property trades or businesses and farming businesses qualify to make an election not to limit business interest expense. This is an irrevocable election. If you make this election, you are required to use the alternative depreciation system to depreciate certain property. Also, you aren’t entitled to the special depreciation allowance for that property. For a taxpayer with more than one qualifying business, the election is made with respect to each business.

Check “Yes” if the taxpayer has an election in effect to exclude a real property trade or business or a farming business from section 163(j). For more information, see the Instructions for Form 8990.

Question 10. Conditions for Filing Form 8990 A taxpayer that isn’t a small business taxpayer (defined below) must generally file Form 8990. In addition, any taxpayer that owns an interest in a partnership with current year or prior year carryover excess business interest expense allocated from the partnership must file Form 8990.

A taxpayer who is a U.S. shareholder of an applicable CFC that has business interest expense, disallowed business interest expense carryforward, or is part of a CFC group must generally apply section 163(j) to each applicable CFC and attach a Form 8990 with each Form 5471.

Exclusions from filing. A taxpayer isn’t required to file Form 8990 if the taxpayer is a small business taxpayer and doesn’t have excess business interest expense from a partnership. A taxpayer is also not required to file Form 8990 if the taxpayer only has business interest expense from these excepted trades or businesses.

• The trade or business of providing services as an employee.

• An electing real property trade or business.

• An electing farming business.

• Certain regulated utility businesses.

Small business taxpayer. A small business taxpayer isn’t subject to the business interest expense limitation and isn’t

Instructions for Form 1120-S (2025) 23

required to file Form 8990. A small business taxpayer is a taxpayer that (a) isn’t a tax shelter (as defined in section 448(d) (3)) and (b) meets the gross receipts test of section 448(c), discussed next.

Gross receipts test. A taxpayer meets the gross receipts test if the taxpayer has average annual gross receipts of $31 million or less for the 3 prior tax years. A taxpayer’s average annual gross receipts for the 3 prior tax years is determined by adding the gross receipts for the 3 prior tax years and dividing the total by 3. Gross receipts include the aggregate gross receipts from all persons treated as a single employer, such as a controlled group of corporations, commonly controlled partnerships, or proprietorships, and affiliated service groups. See section 448(c) and the Instructions for Form 8990 for additional information.

Question 11 Total receipts is the sum of the following amounts.

• Gross receipts or sales (page 1, line 1a).

• All other income (page 1, lines 4 and 5).

• Income reported on Schedule K, lines 3a, 4, 5a, and 6.

• Income or net gain reported on Schedule K, lines 7, 8a, 9, and

• Income or net gain reported on Form 8825, lines 2, 21, and 22a.

Question 12 Amounts related to the forgiveness of PPP loans are disregarded for purposes of this question.

Question 13 Answer “Yes” if, during the tax year, the corporation revoked a qualified subchapter S subsidiary (QSub) election or a QSub election of the corporation was terminated. If “Yes” is checked, see Regulations section 1.1361-5 for additional information.

Questions 14a and 14b If the corporation made any payment in 2025 that would require it to file any Form(s) 1099, check the “Yes” box for question 14a and answer question 14b. Otherwise, check the “No” box for question 14a and skip question 14b. See IRS.gov/businesses/ small-businesses-self-employed/am-i-required-to-file-a- form-1099-or-other-information-return , for more information

Question 15 To be certified as a qualified opportunity fund, the S corporation must file Form 1120-S and attach Form 8996, even if the corporation had no income or expenses to report. If the S corporation is attaching Form 8996, check the “Yes” box and enter the amount from Form 8996, line 15, in the entry space. See Certification as a qualified opportunity fund, earlier.

The penalty reported on this line from Form 8996, line 15, is not due with the filing of this form. The IRS will send you a notice regarding the penalty reported on line 15. This notice will include instructions on the penalty, the reasonable cause relief process, and payment instructions.

Question 16 Digital assets are any digital representations of value that are recorded on a cryptographically secured distributed ledger or any similar technology without regard to whether each individual transaction involving that digital asset is actually recorded on that ledger. For example, digital assets include non-fungible tokens (NFTs) and cryptocurrencies which include stablecoins. If a particular asset has the characteristics of a digital asset, it will be treated as a digital asset for federal income tax purposes.

Check the “Yes” box if at any time during the tax year, the S corporation (a) received (as a reward, award, or payment for

property or services) or (b) sold, exchanged, or otherwise disposed of a digital asset (or any financial interest in any digital asset).

• Purchasing digital assets using U.S. or other real currency, including through the use of electronic platforms such as PayPal and Venmo.

Do not leave the question unanswered. The S corporation must answer “Yes” or “No” by checking the appropriate box. For more information, go to IRS.gov/virtualcurrencyfaqs .

If the S corporation disposed of any digital asset that was held as a capital asset, through a sale, trade, exchange, payment, or other transfer, use Form 8949 to calculate the capital gain or loss and report that gain or loss on Schedule D (Form 1120-S). If the S corporation received any digital asset as compensation for services or disposed of any digital asset that was held for sale to customers in a trade or business, it must report the income as it would report other income of the same type.