Form 1120-S and Schedule K-1 changes for 2025

• Direct deposit fields on lines 28c to 28e, with the refund on 28b; balances due on line 26 paid electronically.
• Returns due in 2026 that are more than 60 days late face a minimum penalty of the smaller of the tax due or $525.
• Section 336(e) elections: the return with the election statement is due by the 15th day of the 3rd month after the qualified stock disposition date.
• Section 174A domestic research costs: deduct, or amortize over at least 60 months.
• Section 1062: a separate Schedule A (Form 1062) for each qualifying farmland sale, with a copy of the covenant to shareholders.

• Box 12, code X: now includes qualified sound recording production expenses under section 181.
• Box 17, code BA (new): domestic research or experimental expenditures, for shareholders considering a section 59(e) election.
• Box 17, code ZZ: section 1062 farmland sale information and the section 139L rural lending interest exclusion.

A draft 2026 Form 1120-S (created June 22, 2026) is on the IRS draft forms page, but no 2026 instructions had been posted when we checked in October 2026, so we have not listed 2026 changes.

S corporation owners blur the line between salary, distributions and reimbursements more than anyone. HelloBooks categorises each bank transaction as it arrives and queues the unclear ones for review, so distributions stay separate from wages and expenses before the K-1 is drafted.