After the changes highlighted in Expanded and new filing exceptions for Schedules K-2 and K-3 (Form 1120-S) beginning tax year 2024, the 2024 instructions for the Form 1120-S, Schedules K-2 and K-3, are updated as follows (with changes noted in tracked changes):
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3. No 2024 Schedule K-3 requests by the 1-month date.
The S corporation does not receive a request from any shareholder for Schedule K-3 information on or before the 1-month date. The 1-month date is 1 month before the date the S corporation files the Form 1120-S. For tax year 2024 calendar year S corporations, the latest 1-month date is August 15, 2025, if the S corporation files an extension. A shareholder must request that the S corporation provide subsequent year Schedule K-3 information or must request such information on an annual basis.
Note. If an S corporation receives a request from a shareholder for the Schedule K-3 information after the 1-month date for the tax year 2024 and has not received a request from any other shareholder for Schedule K-3 information on or before the 1-month date, the domestic filing exception is met and the S corporation is not required to file the tax year 2024 Schedules K-2 and K-3 with the IRS or furnish the tax year 2024 Schedule K-3 to the non-requesting shareholders. ob体育ever, the S corporation is required to provide the tax year 2024 Schedule K-3, completed with the requested information, to the requesting shareholder on the later of the date on which the S corporation files the Form 1120-S or 1 month from the date on which the S corporation receives the request from the shareholder. See Example 3.
Example 3. Domestic filing exception met—Issuance of Schedules K-3 still required.
The facts are the same as in Example 2 except that SC receives the request from A on August 20, 2025. SC qualifies for the domestic filing exception because A requested the Schedule K-3 after the 1-month date. SC is not required to file the tax year 2024 Schedules K-2 and K-3 with the IRS or furnish the Schedule K-3 to the married couple. ob体育ever, SC is required to provide the Schedule K-3, completed with the requested information, to A on September 20, 2025, the later of the date on which SC files the Form 1120-S or 1 month from August 20, 2025.
Note. If an S corporation does not meet the domestic filing exception, it may meet the Form 1116 exemption to filing the Schedules K-2 and K-3. See Form 1116 Exemption, later.
Small S Corporation filing exception
Form 1120-S, Schedule B, Question 11 excepts an S corporation from completing Schedules L and M-1, if the S corporation meets two conditions:
- the corporation’s total receipts (see instructions) for the tax year were less than $250,000.
- the corporation’s total assets at the end of the tax year were less than $250,000.
An S corporation is excepted from completing Schedules K-2 and K-3 if the S corporation meets all two conditions of Question 11 of Schedule B.
The shareholders must receive a notification from the S corporation at the latest when the S corporation furnishes the Schedule K-1 to the shareholder. The notice can be provided as an attachment to Schedule K-1. The notification must state that shareholders won't receive Schedule K-3 from the S corporation unless the shareholders request the schedule.
If an S corporation receives a request from any shareholder for Schedule K-3 information on or before the 1-month date, the S corporation is required to file the tax year 2024 Schedules K-2 and K-3 and furnish the tax year 2024 Schedule K-3 to the requesting shareholder(s). The 1-month date is 1 month before the date the S corporation files the Form 1120-S. For tax year 2024 calendar year S corporations, the latest 1-month date is August 15, 2025, if the S corporation files an extension.
If an S corporation receives a request from a shareholder for Schedule K-3 information after the 1-month date for tax year 2024 and hasn't received a request from any other shareholder for Schedule K-3 information on or before the 1-month date, the S corporation isn't required to file the tax year 2024 Schedules K-2 and K-3 or furnish the tax year 2024 Schedule K-3 to the non-requesting shareholders. ob体育ever, the S corporation is required to provide the tax year 2024 Schedule K-3, completed with the requested information, to the requesting shareholder on the later of the date on which the S corporation files Form 1120-S or 1 month from the date on which the S corporation receives the request from the shareholder.
Schedules K-2 and K-3 are required to be completed only for the parts and sections relevant to the requesting shareholder. For example, if a shareholder requests the information reported on Part III, Section 2, the S corporation is required to complete and file Schedule K-2, Part III, Section 2, for the S corporation’s total assets and Schedule K-3, Part III, Section 2, for the requesting shareholder’s share of the assets. On the date that the S corporation files Schedules K-2 and K-3, the S corporation must provide a copy of the filed Schedule K-3 to the requesting shareholder. The S corporation doesn't need to complete, attach, file, or furnish any other parts or sections of Schedules K-2 and K-3 to the IRS, the requesting shareholder, or any other shareholder.
If an S corporation receives requests from shareholders for Schedule K-3 information both on or before the 1-month date and after the 1-month date, the S corporation is required to file Schedules K-2 and K-3 as described in the prior paragraph only for the shareholder requests received on or before the 1-month date. For requests received after the 1-month date, the S corporation is required to provide Schedule K-3, completed with that shareholder’s requested information, on the later of the date on which the S corporation files Form 1120-S or 1 month from the date on which the S corporation receives the request from the shareholder.
A shareholder must request Schedule K-3 information for each year, unless the shareholder specifically requests to receive Schedule K-3 information for the 2024 tax year and all subsequent years (or if the shareholder specifically requested in a prior year to receive Schedule K-3 for each subsequent year).