My husband owns 20% of a business where he is also an employee however the business accountant told me the ownership from this will be listed as passive income.
So here are my questions, the company provided us with a Schedule K 1120s for corporation. (I'm going to round off these numbers)
The Ordinary Income listed is 13,000
Then later in box 11, there is a standard 179 deduction of 11,000
The business accountant told me to list $1,000 of passive income on schedule E and then add that as income in the appropriate place on the 1040. (no other numbers are listed on schedule e) just this one

1) Is that correct for it to be the only other number listed on schedule E
2) are there any other forms we need to fill out in regard to that deduction? we weren't provided with any other business information.
Thank you for your assistance

My husband owns 20% of a business where he is also an employee however the business accountant told me the ownership from this will be listed as passive income.
So here are my questions, the company provided us with a Schedule K 1120s for corporation. (I'm going to round off these numbers)===.I guess it is not Sch K but Sch K1 of 1120s for your spouse , an S corp shareholder/employee. Sch K-1 is issued to report income, losses, dividend receipts, and capital gains of of shareholders of s corps . A K-1 is prepared for each shareholder, showing the share of income/losses, as well as dividends and other income/losses.Sch K of 1120S is for S corp shareholder/ employee prorate share items used to report shareholders’ income, deduction, or credit separately so that they can then be allocated and passed thru to shareholders on their Sch k1s.


The Ordinary Income listed is 13,000
Then later in box 11, there is a standard 179 deduction of 11,000====>The S corp must have taxable income before the sec179 expense in order for the corp to pass the sec 179 expense through to the s/h's. If not, the sec179 exp is treated as an M-1 adjustment, to be utilized in a later year.it is passed through to the shareholders in box 11 of Sch K-1
The business accountant told me to list $1,000 of passive income on schedule E and then add that as income in the appropriate place on the 1040. (no other numbers are listed on schedule e) just this one======>correct. Your spouse’s Sch K-1 income/loss, either passive or non-passive, is reported on line 28 g,h, j or royalty income if he has on line 4 or deduction for royalty on line 19 Sch E.

1) Is that correct for it to be the only other number listed on schedule E==============>> in your spouse’s case yes.
2) are there any other forms we need to fill out in regard to that deduction? we weren't provided with any other business information.================>>you need to report the passive income of $1K form Sch K1 of 1120s on 1040 line 17.