Minnesota Shareholder's Share of Income, Credits and Modifications

Shareholder's Share of Income, Credits and Modifications
2023 KS, Shareholder's Share of Income, Credits and Modifications
*237411*

2023 KS, Shareholder’s Share of Income,
Credits and Modifications
S corporation: Complete and provide Schedule KS to each nonresident shareholder and Minnesota shareholder who has
adjustments to income or credits, or all shareholders if the S corporation is electing PTE tax.

/

Tax year beginning (MM/DD/YYYY)

/

and ending (MM/DD/YYYY)

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Shareholder’s Federal ID or Social Security Number

S Corporation’s Federal ID Number

Shareholder’s Name

S Corporation’s Name

Mailing Address

Mailing Address

City

Entity of Shareholder
(place an X in one box):

State

Individual
Trust

ZIP Code

City

Estate
Exempt Organization

/

Amended KS:

S Corporation’s Minnesota Tax ID

State

ZIP Code

Shareholder’s percentage of
stock ownership for tax year:

Calculate lines 1–35 the same for all resident and nonresident shareholders. Calculate lines 36-50 for all nonresident shareholder’s, and resident shareholders if the
Form M1 filers,
s-corporation elected PTE tax. Round amounts to the nearest whole dollar.

Modifications to Federal Taxable Income
1 Interest income from non-Minnesota state and municipal bonds . . . . . . . . . . . . . . . . .1

include on:

M1M, line 1

2 State taxes deducted in arriving at s corporation’s net income . . . . . . . . . . . . . . . . . . . 2
3 Expenses deducted that are attributable to income not taxed by Minnesota
(other than interest or mutual fund dividends from U.S. bonds) . . . . . . . . . . . . . . . . . .3

M1MB, line 2

4 100% of shareholder’s pro rata share of federal bonus depreciation . . . . . . . . . . . . . .4

M1MB, see line 1 inst.

5 Foreign-derived intangible income (FDII) deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

M1MB, line 3

M1M, line 3

6 This line intentionally left blank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
7a Shareholder’s pro rata gross profit from installment sales of pass-through
businesses (see instructions). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7a

M1AR, line 1

7b Shareholder’s pro rata installment sale income from pass-through
businesses (see instructions). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7b

M1AR, line 3

8 This line intentionally left blank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
9 This line intentionally left blank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
10 This line intentionally left blank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
11 This line intentionally left blank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
12 This line intentionally left blank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
13 This line intentionally left blank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
14 Interest from U.S. government bond obligations, minus any expenses
deducted on the federal return that are attributable to this income . . . . . . . . . . . . . .14

9995

M1M, line 14

Continued next page

2023 KS, page 2
*237421*
Shareholder’s Name
S Corporation’s Name

Shareholder’s Federal ID or Social Security Number
S Corporation’s Federal ID Number

S Corporation’s Minnesota ID Number

15 Deferred foreign income (section 965) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

M1MB, line 17

16 Disallowed section 280E expenses of a licensed cannabis business . . . . . . . . . . . . . . .16

M1MB, line 16

17 Delayed business interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

(see schedule KS inst.}

18 State income tax refund included in income (see instructions). . . . . . . . . . . . . . . . . . .18

M1, line 6

19 This line intentionally left blank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
20 This line intentionally left blank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
21 Housing Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

M1C, line 15

Enter the credit certificate number from Minnesota Housing: SHTC
22 Short Line Railroad Infrastructure Modernization Credit . . . . . . . . . . . . . . . . . . . . . . . .22

M1C, line 14

23 Credit for Sales of Manufactured Home Parks to Cooperatives. . . . . . . . . . . . . . . . . . .23

M1C, line 13

24 Credit for increasing research activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

M1C, line 16

25 Film Production Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

M1C, line 11

Enter the credit certificate number: TAXC 26 Tax Credit for Owners of Agricultural Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Enter the certificate number from the certificate received from the
Rural Finance Authority:

M1C, line 12

AO
27 Credit for historic structure rehabilitation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27

M1REF, line 6

Enter National Park Service (NPS) number
28 Employer Transit Pass Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28

M1C, line 5

29 Enterprise Zone Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29

M1REF, line 7

30 Pass-Through Entity Tax Credit. If the pass-through entity tax
satisfies the shareholder’s filing requirement, check this box

(see instructions)

. . . . . . . . . . . . .30

31 Minnesota backup withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
Relating to Alternative Minimum Tax
32 Intangible drilling costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32

9995

M1W, line 7, col C
Lines 32-35 are used to
compute M1MT, lines
6 and 7. See M1MT
instructions for details.

Continued next page

2023 KS, page 3
*237431*
Shareholder’s Name
S Corporation’s Name

Shareholder’s Federal ID or Social Security Number
S Corporation’s Federal ID Number

S Corporation’s Minnesota ID Number

33 Gross income from oil, gas and geothermal properties . . . . . . . . . . . . . . . . . . . . . . . .33
34 Deductions allocable to oil, gas and geothermal properties . . . . . . . . . . . . . . . . . . . . .34
35 Depletion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Minnesota Portion of Amounts From Federal Schedule K-1 (1120S)
36 Minnesota source gross income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
37 Ordinary Minnesota source income (loss)
from trade or business activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
38 Income (loss) from Minnesota rental real estate
and other Minnesota rental activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38

info only (see inst.)
M1NR, line 6, col B
M1NR, line 6, col B

39 Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39

M1NR, line 2, col B

40 Ordinary dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40

M1NR, line 2, col B

41 Royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41

M1NR, line 6, col B

42 Net Minnesota short-term capital gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42

M1NR, line 4, col B

43 Net Minnesota long-term capital gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43

M1NR, line 4, col B

44 Section 1231 Minnesota net gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
45 Other Minnesota income (loss). (Describe type of income
or include separate sheet:
) . . . . . . . . . . . . . . . . . . .45

M1NR, line 4 or 8, col B

46 Section 179 expense deduction apportionable to Minnesota . . . . . . . . . . . . . . . . . . . .46
47 S corporation’s Minnesota apportionment factor
(line 5, column C of M8A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47

M1NR inst, line 6, col B

Composite Income Tax or Nonresident Withholding
48 Minnesota source distributive income (see instructions) . . . . . . . . . . . . . . . . . . . . . . .48
49 Minnesota composite income tax paid by S corporation. If the
shareholder elected composite income tax, mark an X in this box:
. . . . . . . . . .49
50 Minnesota income tax withheld for nonresident shareholder
not electing to file composite income tax. If the shareholder
completed and signed a Form AWC, mark an X in this box:
. . . . . . . . . .50
S corporations: Include this schedule and copies of federal Schedules K and K-1 when you file your Form M8.
Shareholders: Include this schedule when you file your Minnesota Form M1.

9995

M1NR, line 8, col B

information only

see schedule KS inst.
composite income tax

M1W, line 7, col C

2023 Schedule KS Instructions
Shareholder’s use of information provided on Schedule KS

Purpose of Schedule KS

Schedule KS is a supplemental schedule provided by the S corporation to its shareholders. The shareholders need this information to complete:
• Form M1, Minnesota Individual Income Tax Return
• Form M2, Minnesota Income Tax Return for Estates and Trusts
• Form M2SB, Minnesota Income Tax Computation for S Portion of ESBT
An individual shareholder who is a Minnesota resident will be taxed by Minnesota on all of his or her distributive income from the S
corporation even if the income is apportioned between Minnesota and other states. An estate, trust, and individual nonresident shareholder
will be taxed on the Minnesota distributive income from the S corporation.
These instructions are intended to help you report your share of the S corporation’s income, credits and modifications on your Minnesota
return.
You must include Schedule KS when you file your Form M1 and Form M2. If you do not include the schedule with your return as required,
the department will disallow any credits and assess the tax or reduce your refund.
If you received an amended Schedule KS from the S corporation and your income or deductions have changed, you must file an amended
Minnesota return. To amend your return, use Form M1X, Amended Minnesota Income Tax Return or Form M2X, Amended Income Tax
Return for Estates and Trusts.

Line Instructions

Include amounts on the appropriate lines as shown on Schedule KS.

Line 1 – Non-Minnesota State and Municipal Bond Interest
Individuals: Include on line 1 of Schedule M1M.

Estates and Trusts: Include on line 41 of Form M2.
Electing Small Business Trusts: Include on line 12 of Form M2SB

Line 2 – State Taxes Deducted

Individuals: Include on line 2 of Schedule M1MB.
Estates and Trusts: Include on line 42 of Form M2.
Electing Small Business Trusts: Include on line 13 of Form M2SB.

Line 3 – Expenses Deducted Attributed to Income Not Taxed by Minnesota
Individuals: Include On line 3 of Schedule M1M.

Estates and Trusts: Include on line 43 of Form M2.
Electing Small Business Trusts: Include on line 14 of Form M2SB.

Line 4 – Federal Bonus Depreciation

Individuals: See Schedule M1MB line 1 instructions, to determine how to report this amount.
Estates and Trusts: Include this amount on step 2 for the worksheet to determine Line 45 of the Form M2.
Electing Small Business Trusts: Include on line 16 of Form M2SB.

Line 5 – Foreign Derived Intangible Income (FDII) Deduction
Individuals: Include on line 3 of Schedule M1MB.

Estates and Trusts: Include on line 49 of Form M2.
Electing Small Business Trusts: Include on line 20 of Form M2SB.

Lines 7a, and 7b – Accelerated Installment Sale Gains

Nonresident Individuals: If any information is reported to you on line 7a of Schedule KS, file Form M1AR, Accelerated Recognition of
Installment Sale Gains, with your Minnesota individual income tax return.
Resident Individuals: If any information is reported to you on line 7 of Schedule KS, retain a copy of this schedule for your records for the
entire period that you or an entity, you have an interest in, is receiving installment sale payments. If you become a nonresident in a future year
while payments are being made, you are required to file Form M1AR, Accelerated Recognition of Installment Sale Gains, with your final
resident tax return.
Estates and Trusts: Pass through pro rata to your beneficiaries.
Electing Small Business Trusts: This line does not apply.
Continued

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2023 Schedule KS Instructions (Continued)
Lines 8 through 13

These lines are intentionally left blank.

Line 14 – Interest on U.S. Government Bond Obligations
Individuals: Include on line 14 of Schedule M1M.

Estates and Trusts: Include on line 57 of Form M2.
Electing Small Business Trusts: Include on line 28 of Form M2SB.

Line 15 – Deferred Foreign Income (Section 965)
Individuals: Include on line 17 of Schedule M1MB.
Estates and Trusts: Include on line 63 of Form M2.
Electing Small Business Trusts: Include on line 34 of Form M2SB.

Line 16 – Disallowed Section 280E Expenses of a Licensed Cannabis Business
Individuals: Include on line 16 of Schedule M1MB.
Estates and Trusts: Include on line 64 of Form M2.
Electing Small Business Trusts: Include on line 35 of Form M2SB.

Line 17 - Delayed Business Interest
Individuals: This line does not apply.

Estates and Trusts: This line does not apply.
Electing Small Business Trusts: This line does not apply.

Line 18 – State income tax refund included in income
Individuals: Include on line 6 of Form M1.

Estates and Trusts: Include on line 55 of Form M2.
Electing Small Business Trusts: Include on line 29 of Form M2SB.

Lines 19 through 20

These lines are intentionally left blank.

Line 21 – Housing Tax Credit

Individuals: Include on line 15 of Form M1C and enter the certificate number in the space provided. To claim this credit, you must include
this schedule with Form M1.
Estates and Trusts: Include on line 19 of Form M2 and enter the certificate number in the space provided. To claim this credit, you must
include this schedule with Form M2.
Electing Small Business Trusts: This line does not apply.

Line 22 – Short Line Railroad Infrastructure Modernization Credit

Individuals: Include on line 14 of Form M1C. To claim this credit, you must include this schedule with Form M1.
Estates and Trusts: Include on line 20 of Form M2. To claim this credit, you must include this schedule with Form M2.
Electing Small Business Trusts: This line does not apply.

Line 23 – Credit for Sales of Manufactured Home Parks to Cooperatives

Individuals: Include on line 13 of Form M1C. To claim this credit, you must include this schedule with Form M1.
Estates and Trusts: Include on line 21 of Form M2. To claim this credit, you must include this schedule with Form M2.
Electing Small Business Trusts: This line does not apply.

Line 24 – Credit for Increasing Research Activities

Individuals: Include on line 16 of Form M1C. To claim this credit, you must include this schedule with Form M1.
Estates and Trusts: Include on line 22 of Form M2. To claim this credit, you must include this schedule with Form M2.
Electing Small Business Trusts: This line does not apply.

Line 25 – Film Production Tax Credit

Individuals: Include on line 11 of Form M1C and enter the certificate number in the space provided. To claim this credit, you must include
this schedule with Form M1.
Estates and Trusts: Include on line 16 of Form M2 and enter the certificate number in the space provided. To claim this credit, you must
include this schedule with Form M2.
Electing Small Business Trusts: This line does not apply.
Continued

2

2023 Schedule KS Instructions (Continued)
Line 26 – Tax Credit for Owners of Agricultural Assets

Individuals: Include on line 12 of Form M1C and enter the certificate number in the space provided. To claim this credit, you must include
this schedule with Form M1.
Estates and Trusts: Include on line 17 of Form M2 and enter the certificate number in the space provided. To claim this credit, you must
include this schedule with Form M2.
Electing Small Business Trusts: This line does not apply.

Line 27 – Credit for Historic Structure Rehabilitation

Individuals: Include on line 6 of Schedule M1REF and enter the NPS project number in the space provided. To claim this credit, you must
include this schedule with Form M1.
Estates and Trusts: Include on line 29 of Form M2 and enter the NPS project number in the space provided. To claim this credit, you must
include this schedule with Form M2.
Electing Small Business Trusts: This line does not apply.

Line 28 – Employer Transit Pass Credit

Of the credit amount from Schedule ETP, any amount not claimed on line 7 of Form M8 may be passed through to shareholders based on
their distributive share.
Individuals: Include on line 5 of Form M1C. To claim this credit, you must include this schedule with Form M1.
Estates and Trusts: Include on line 23 of Form M2. To claim this credit, you must include this schedule with Form M2.
Electing Small Business Trusts: This line does not apply.

Line 29 – Enterprise Zone Credit

Individuals: Include on line 7 of Form M1REF. To claim this credit, you must include this schedule with Form M1.
Estates and Trusts: Include on line 30 of Form M2. To claim this credit, you must include this schedule with Form M2.
Electing Small Business Trusts: This line does not apply.

Line 30 – Pass-Through Entity Tax Credit

Individuals: Include on line 9 of Schedule M1REF. To claim this credit, you must include this schedule with Form M1.
Estates and Trusts: Include on line 26 of Form M2. To claim this credit, you must include this schedule with Form M2.
Electing Small Business Trusts: This line does not apply.
Nonresidents: If your only Minnesota source income is from entities making a PTE tax election, or entities in which you elected composite
income tax, you do not need to file Form M1.

Line 31 – Minnesota Backup Withholding

Individuals: Include on line 7, column C of Schedule M1W. To claim this credit, you must include this schedule with Form M1.
Estates and Trusts: Pass through pro rata to your beneficiaries. You must include this schedule with Form M2.
Electing Small Business Trusts: This line does not apply.

Lines 32 – 35 Items Relating to Alternative Minimum Tax

Individuals: Use the information on lines 32 through 35 to complete Schedule M1MT.
Estates and Trusts: Use the information on lines 32 through 35 to complete Schedule M2MT.
Electing Small Business Trusts: Use the information on lines 32 through 35 to complete Schedule M2MT.

Lines 36 – 47 Minnesota Portion of Federal Amounts

Lines 36-47 apply to estate, trust, and nonresident individual shareholders.
If certain items are not entirely included in your federal income because of passive activity loss limitation, capital loss limitations, section 179
limitations or for other reasons, include only the amounts that you included in your federal adjusted gross income.
Individuals: Use the information on lines 36 through 48 to complete Schedule M1NR.
Minnesota source gross income is used to determine if a nonresident is required to file a Minnesota individual income tax return. Gross
income is income before business or rental deductions and does not include losses.
If your 2023 Minnesota source gross income is $13,825 or more and you did not elect composite tax filing or elected to have the PTE tax
filing to fulfill your filing requirement, you are required to file Form M1 and Schedule M1NR, Nonresident/Party-Year Residents.
If your 2023 Minnesota source gross income is less than $13,825 and you had Minnesota tax withheld (see line 30 and line 40 of Schedule
KF), file Form M2 to receive a refund.
Estates and Trusts: Use the information on lines 36 through 47 to complete Schedule M2NM.

3

2023 Schedule KS Instructions (Continued)
Line 40

Individuals: If you are a nonresident or part-year resident, include the amount on line 2, column B of Schedule M1NR.
Estates and Trusts: Use this information to complete Schedule M2NM.

Line 48 – Minnesota Source Distributive Income

Although Minnesota source gross income (line 36 of Schedule KS) determines whether you must file a Minnesota return, your Minnesota
source distributive income is ultimately taxed.

Line 49 – Minnesota Composite Income Tax

Individuals: If you elected composite income tax filing, the amount paid on your behalf equals 9.85% of your Minnesota taxable income on
line 48, minus your share of any credits on lines 21-23, 25-29 and 31. You are not required to file Form M1.
Estates and Trusts: This line does not apply.

Line 50 – Minnesota Nonresident Withholding

Individuals: Include the amount from line 50 on Schedule M1W, line 7, column C. Also include the amount from line 50 on Schedule M1W,
line 7, column B.
Estates and Trusts: This line does not apply.

4