Treasury I-Bonds interest

Forum|Forum|1 year ago
February 16, 2025
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I invested into Treasury Bonds thru my corporation and reported interest as US Obligation separate from other bank interest so that's its not state taxable. BUT I am not able to figure out how it carried over to Schedule K for state to identify the non-taxable state amount. Thanks in advance and hopefully someone has figured out to share the reporting.

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Best answer by KeshaH

The corporation as the recipient will also receive the 1099-INT with the amount in Box 3. Once it's been included on the 1120S return, the interest will be reported on the Schedule K as interest. There will need to be statements included with the shareholder's K-1 that show the amount of interest received from Treasury bonds. That information from the statements will help make any necessary adjustments on the shareholder's state return to exclude the income.

KeshaH

This interest is usually reported to the recipient on a Form 1099-INT in box 3 to indicate that it is US treasury bond interest. The Schedule K-1 from an S Corp or Partnership will usually have this information provided in the statements so that the proper adjustments can be made on the state tax return.

gmohan123Author

Thanks for quick follow up but I am looking more form the Corporation how does it pass the state non-taxable amount to the shareholder. I do understand shareholder on its individua return will report on Box 3. On Schedule K it says item 9 to report any tax-exempt interest received or accrued but Item 9 description is quite different: Net section 1231 gain (loss) (attach Form 4797)