Entering tax exempt income for an S-Corporation in ProConnect Tax

How do I enter tax exempt income for an S-Corporation?

1. From the Input Return tab, go to Balance Sheet ⮕ Schedule M-1, M-3 ⮕ Schedule M-1.
2. Scroll down to the Income Recorded on Books Not Included on Schedule K  section.
3. Locate the Tax-exempt Income subsection.
4. Expand the details on Other (Click on button to expand).
5. Enter the Description.
6. Enter the amount under the Federal column.
7. Click OK.

This amount will flow to:

• Form 1120S, Schedule K, line 16b,
• Form 1120S, Schedule M-2, line 3.
• Schedule K-1, line 16 with code B.

Per the Form 1120S instructions,

Tax exempt income. Do not include any tax-exempt income on lines 1a through 5. A corporation that receives any tax-exempt income other than interest, or holds any property or engages in any activity that produces tax-exempt income, reports this income on line 16b of Schedule K and in box 16 of Schedule K-1 using code B.

Report tax-exempt interest income, including exempt-interest dividends received as a shareholder in a mutual fund or other regulated investment company, on line 16a of Schedule K and in box 16 of Schedule K-1 using code A."