Schedule K-1
The form an S corp or partnership gives each owner showing their share of the business's income, deductions and credits.
Schedule K-1 reports an owner's share of a pass-through business's results. An S corp attaches one to its Form 1120-S for each shareholder. Partnerships, including multi-member LLCs, issue their own version with Form 1065.
The S corp version is titled "Shareholder's Share of Income, Deductions, Credits, etc." The owner uses the figures on it to fill in their own Form 1040. Tax is owed on the profit shown whether or not any cash was paid out.
The K-1 also reports distributions. The shareholder's instructions say distributions reduce the basis of your stock, and anything above your basis is treated as capital gain. They also say you are responsible for keeping the information to figure your basis, and point to Form 7203 for it.
A K-1 often arrives late, because the S corp return is due March 15 for a calendar year. Owners who wait on one sometimes need to extend their personal return.
The salary an S corp pays an owner isn't on the K-1. It is on a W-2.