What’s New

Schedule K-1, box 12, code X. P.L. 119-21, enacted July 4, 2025, and commonly known as the One Big Beautiful Bill Act, expanded section 181 to include certain qualified sound recording production expenses. Code X has been updated to include the additional expense. See Code X under Box 12, later.

Schedule K-1, box 17, code BA. Code BA is added to report domestic research and experimental expenditures needed when making a section 59(e) election. See Code BA under Box 17, later.

P.L. 119-21 added section 174A, which pertains to domestic research and experimental expenditures. Section 174A(a) allows a deduction for domestic research and experimental expenditures paid or incurred during the tax year for tax years beginning after 2024.

Section 174A(c) allows an election to charge research and experimental expenditures to a capital account. Under section 174A(c), you may elect to charge such expenditures to a capital account rather than deducting them and be allowed an amortization deduction of such expenditures ratably over a period of not less than 60 months.

P.L. 119-21, section 70302(f)(1), allows an election by small business taxpayers to retroactively claim a deduction for amounts expended or incurred after 2021 and before 2025. P.L. 119-21, section 70302(f)(2), allows an election to deduct certain unamortized amounts paid or incurred in tax years beginning after 2021 and before 2025. For more information about section 174A, and the provisions contained in P.L. 119-21, sections 70302(f)(1) and (2), see Rev. Proc. 2025-28.

complete a separate Schedule A (Form 1062) for each sale or exchange of qualified farmland property to qualified farmers as defined under section 1062 and attach the form(s) to Form 1120-S and provide shareholders with a copy of the convenant and information regarding the gain from the sale or exchange of qualified farmland property. See Code ZZ under Box 17, later.

Section 139L allows a partial exclusion from the gross income of interest received by qualified lenders on loans secured by rural or agricultural real property. See section 139L and Code ZZ under Box 17, later. Also, see Notice 2025-71 .