Nebraska S Corporation Income Tax Booklet - Forms & Instructions

S Corporation Income Tax Booklet - Forms & Instructions
Form 1120-SN Booklet
2025

Nebraska

S Corporation
Income Tax Booklet
Included in this Booklet are:

Form 1120-SN;
Schedules A, I, II, III, K-1N, PTET;
Form 7004N; and
Use Tax information.
Electronic filing and payment options are available.

Questions?

revenue.nebraska.gov
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800-742-7474 (NE or IA) or 402-471-5729
8-301-2025

2025 Nebraska S Corporation Income Tax Return
Instructions

What’s New
Individual Income Tax Rate Change (LB 754, 2023). For the 2025 taxable year, the highest
rate for Nebraska taxable income is reduced to 5.20%.
Affordable Housing Tax Credit Act (LB 182, 2025). The definition of taxpayer was updated
to classify nonprofit corporations as taxpayers eligible for the credit. If an owner of a qualified
project is a pass-through entity, the credit shall be allocated to some or all the partners, members, or
shareholders of the owner of the qualified project. Any pass-through entity that receives an allocation
of the credit, either from the owner of the qualified project or from another pass-through entity,
may further allocate the tax credit among some or all of the partners, members, or shareholders,
or transfer, sell, or assign all or a portion of the tax credit to a taxpayer. A pass-through entity
may allocate the tax credit in any manner agreed to by its partners, members, or shareholders. A
partner, member, or shareholder of a pass-through entity may transfer, sell, or assign all or part of
his or her ownership interest, including his or her interest in the tax credits authorized. A taxpayer
may transfer, sell, or assign all or a portion of the tax credit to another taxpayer.
Bullion - Gain or Loss on the Sale or Exchange of Bullion (LB 1317, 2024). Individuals,
corporations, and fiduciaries must add to federal adjusted gross income or federal taxable income
any net capital loss from the sale or exchange of gold or silver bullion to the extent included in
federal adjusted gross income or federal taxable income. Individuals, corporations, and fiduciaries
must subtract from federal adjusted gross income or federal taxable income any net capital gain
from the sale or exchange of gold or silver bullion to the extent included in federal adjusted gross
income or federal taxable income. The adjustments do not apply to a taxable distribution of a gain
or loss on the sale of bullion from a retirement plan account.
Cast and Crew Nebraska Act (LB 937, 2023 and LB 650, 2024). Beginning with tax year
2025, a production company may be eligible to receive refundable income tax credits equal to
20% of the qualifying expenditures incurred by the production company directly attributable to
a qualified production activity. The tax credit may be increased by an additional 15% if certain
qualifications are met. Qualified production activity means a full-length film, made-for-television
movie, television series of at least five episodes, or streaming television series.
The total amount of tax credits allowed for each State fiscal year is $500,000. The maximum
allowable tax credit claimed under the Act in any single taxable year for any qualified production
activity that is a full-length film, made-for-television movie, television series of at least five
episodes, or streaming television series shall not exceed $500,000.
A production company must file an application for qualification with the Nebraska Department of
Economic Development (DED) prior to the start of principal production photography to determine
eligibility of the production activity. Applications are considered in the order they are received.
If DED approves the application, it notifies the production company and issues a screen credit
that can be used to meet the requirement for the tax credit.
To receive tax credits, the production company must submit an application for the tax credit to
DED after completing the qualified production activity. Applications are considered in the order
they are received. If DED determines the application is complete and the production company
qualifies for the tax credits, it will approve the application, notify the production company of
the approval, and conduct an audit of each qualified production activity. Once the audit has been
completed, DED will determine the value of the tax credit and issue a tax credit certification. A
production company claims the tax credit by attaching the tax credit certification to its tax return
for the taxable year in which the certificate was issued, or in the three taxable years immediately
following the taxable year in which it was issued. The tax credits can be transferred to any Nebraska
taxpayer at any time during the taxable year in which the certificate was issued, or in the three
taxable years immediately following the year of issuance. The transferee must pay the transferor
at least 85% of the value of the transferred credits in order to acquire the credits.
For more information, visit Cast and Crew Nebraska Act (CCNA) - Nebraska Department of
Economic Development.
Child Care Tax Credit Act (LB 182, 2025). The definition of taxpayer under the Child Care Tax
Credit Act (Act) was expanded to include insurance companies subject to premium and retaliatory
taxes imposed by Neb. Rev. Stat. §§ 44-150, 77-908, or 81-523 and financial institutions subject
to the franchise tax imposed by Neb. Rev. Stat. §§ 77-3801 to 77-3807. The nonrefundable tax
credit for contributors allowed under the Act can be used to offset any premium and retaliatory
taxes or any franchise tax due under the above-noted statutes.
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Community Development Assistance Act (CDAA) (LB 650, 2025). Beginning January 1, 2026,
the Community Development Assistance Act (CDAA) is reestablished and replaces the Creating
High Impact Economic Futures (CHIEF) Act. Under the CDAA, business firms and individuals
that contribute to a community betterment organization’s program which is certified for tax credit
status by the Nebraska Department of Economic Development (DED) during a tax year are eligible
for the nonrefundable credit. Applications are approved by DED. The credit for each approved
business firm or individual is limited to 40% of the contribution. Any unused credits may be
carried forward to the next five tax years after the credit was first allowed. The total amount of
approved credits is limited to $350,000 each State fiscal year.
Creating High Impact Economic Futures (CHIEF) Act (LB 650, 2025). The tax credits established
under the CHIEF Act will not be allowed for calendar year 2026 or any year thereafter, except the
tax credits allowed for calendar year 2025 that are unused may be carried forward for five years.
Food Bank, Food Pantry, Food Rescue Donation Tax Credit (LB 937, 2023; LB 208, 2025;
and LB 650, 2025). For taxable years beginning on or after January 1, 2025, and before January
1, 2026, any grocery store retailer or restaurant that donates food or any agricultural producer
that makes a qualifying agricultural food donation to a food bank, food pantry, or food rescue
during the taxable year may be eligible for a nonrefundable tax credit. The nonrefundable credit
equals the lesser of:
	
u 50% of the value of the food donations or qualifying agricultural food donations 	
	
made during the taxable year; or
	 u $2,500.
If the donation was deducted as a charitable contribution on the taxpayer’s federal return, the
donation must be added back in the determination of Nebraska adjusted gross income or Nebraska
taxable income before the certified credit amount can be claimed. The total amount of approved
tax credits is limited to $500,000 for State fiscal year 2025-2026. Credit requests received on
the day the annual limit is exceeded will be prorated and no additional credit requests will be
approved for such fiscal year.
Foreign Adversarial Company (LB 644, 2025). A foreign adversarial company is ineligible to
receive any benefits under an incentive program of the State of Nebraska.
Credits distributed from a Foreign adversarial company are also ineligible for tax credit benefits.
See DOR’s website for additional information.
Individuals with Intellectual and Developmental Disabilities Support Act (LB 937, 2024).
Beginning with tax year 2025, employers may be eligible for any of three nonrefundable credits
The three nonrefundable employer credits are:
1. Employers of one or more direct support professionals may apply for a nonrefundable 	
	
income tax credit that equals $500 for each direct support professional who:
	
u Is employed by the employer for at least six months during the taxable year; and
	
u Worked at least 500 hours for the employer during the taxable year.
	 2. Employers of one or more individuals receiving services pursuant to a Medicaid home 	
	
and community-based services waiver may apply for a nonrefundable income tax credit 	
	
that equals $1,000 for each qualified employee who:
	
u Is employed by the employer for at least six months during the taxable year; and
	
u Worked at least 200 hours for the employer during the taxable year.
	 3. Employers that provide any of the following services to one or more individuals pursuant 	
	
to a Medicaid home and community-based services waiver during the taxable year may 	
		 apply for a nonrefundable income tax credit equal to $1,000 for each eligible individual 	
		 who received such services from the employer during the taxable year:
	
u Prevocational;
	
u Supported employment – individual;
	
u Small group vocational support; or
	
u Supported employment – follow along.
Employers must first apply to the DOR to receive approval of the credit prior to claiming it on
their income tax return. The total amount of credits that may be approved for all tax credits under
this act (including the refundable credit for direct support professionals) is limited to the statutory
limit established for each State fiscal year.

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If an employer receiving the credit is a partnership, a limited liability company, an S corporation,
or an estate or trust, the tax credit may be distributed in the same manner and proportion as the
partner, member, shareholder, or beneficiary reports the partnership, limited liability company, S
corporation, estate, or trust income.
Nebraska Biodiesel Tax Credit Act (LB 208, 2025 and LB 650, 2025). The Nebraska Department
of Revenue (DOR) may approve up to $1 million in tax credits in State fiscal year 2024-25 and
each fiscal year thereafter. Credit requests received on the day the annual limit is exceeded will
be prorated and no additional credit requests will be approved for such fiscal year.
Nebraska Pregnancy Help Act (LB 937, 2024). Beginning with tax year 2025, individuals and
entities that make cash contributions to eligible charitable organizations (approved PHOs) during
the taxable year may qualify for a nonrefundable tax credit.
Taxpayers must notify the approved PHO of their intent to make a contribution and the amount
to be claimed as a tax credit. The approved PHO notifies DOR of the intended contribution. If tax
credits are available, DOR will notify the approved PHO of the approved credit amount. Provided
the contribution is timely made, the approved PHO should issue a receipt for the contribution
made by the taxpayer to take the nonrefundable tax credit. The nonrefundable tax credit equals
the lesser of:
	 u The total amount of the contributions made to any approved PHO during the tax
		
	
year and approved by DOR; or
	 u 50% of the income tax liability of the taxpayer for such year.
Any unused credit may be carried forward five years. The credit cannot be carried back. A taxpayer
may only claim a credit on the portion of the contribution not claimed as a charitable contribution
on their federal return.
Married filing separate taxpayers may each claim one-half of the credit.
When the contribution is made by a partnership, limited liability company, or a subchapter S
corporation, the credit must be attributed to each partner, member, or shareholder in the same
proportion used to report the partnership’s, limited liability company’s, or S corporation’s income
or loss. Any credit not used by an estate or trust may be attributed to each beneficiary in the same
proportion used to report the beneficiary’s income from the estate or trust.
Nebraska Shortline Rail Modernization Act (LB 937, 2024 and LB 650, 2025). Beginning
with tax year 2025, the Nebraska Shortline Rail Modernization Act provides a nonrefundable
tax credit against income tax, franchise tax imposed by Neb. Rev. Stat. §§ 77-3801 to 77-3807,
and premiums taxes imposed by Neb. Rev. Stat. §§ 77-907 to 77-918 for qualified maintenance
expenditures incurred by a Class III railroad. The credit is 50% of the qualified shortline railroad
maintenance expenditures incurred during the tax year by the Class III railroad. Qualified shortline
railroad maintenance expenditures do not include expenditures used to generate a federal tax credit
or expenditures funded by a federal grant. The amount of the credit cannot exceed an amount
equal to $1,500 multiplied by the number of miles of railroad track owned or leased in the state
by the applicant at the end of the taxable year. The total amount of tax credits allowed is limited
to $500,000 in each State fiscal year.
To receive the tax credit, the Class III railroad must submit an application to the DOR after
incurring the relevant qualified shortline railroad maintenance expenditures. The application must
be submitted no later than May 1 of the calendar year immediately following the calendar year
in which the expenditures were incurred. DOR will issue a tax credit certificate to the Class III
railroad with an approved application. The Class III railroad will claim the credit by attaching the
certification to the tax return. Any unused credit is carried forward and can be applied against the
tax liability for the next five taxable years immediately following the taxable year in which the
credit was first allowed. The tax credits are transferable to another taxpayer by written agreement.
No new applications for tax credits can be filed after December 31, 2033.
Relocation Incentive Act (LB 1023, 2024 and LB 650, 2025). Beginning with tax year 2025, a
refundable credit is available to employers who pay relocation expenses for a qualified employee.
A qualified employee is an individual who moves to Nebraska for the purpose of accepting a
position of employment and receives an annual salary within the statutory annual wage income
range for the applicable tax year. The credit is equal to the lesser of:
	 u 50% of the relocation expenses paid during the tax year; or
	 u $5,000 for each qualified employee.
Employers must first apply to the DOR to receive approval of the credit prior to claiming it on
their income tax return. DOR may approve credits until the total amount of credits approved for
the year reaches $1 million.

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The refundable credit may be used to offset income taxes, franchise taxes imposed under Neb.
Rev. Stat. §§ 77-3801 to 77-3807, and premium taxes, including retaliatory taxes under Neb. Rev.
Stat. §§ 44-150, 77-908, or 81-523.
The credit may be recaptured from the employer if the qualified employee moves out of Nebraska
within two years after the employer claimed the credit. The recaptured amount is an underpayment
of tax and is due and payable on the tax return due immediately following the qualified employee’s
loss of residency.

Important Information for All Filers
Purpose. The instructions in this booklet provide guidance in completing the most common
Nebraska S corporation return of income forms and schedules. This booklet is intended to be useful
to the greatest number of taxpayers. Nothing in these instructions supersedes, alters, or otherwise
changes any provisions of the Nebraska tax code, regulations, rulings, or court decisions.
We encourage the preparer of any Nebraska S Corporation Income Tax Return, Form 1120‑SN, to
review applicable Nebraska law regarding any issue that may have a material effect on this return.
Nebraska law and other useful information may be found at revenue.nebraska.gov.
Enter All Amounts as Whole Dollars. Do not include cents on the return or schedules. Do not
change the pre-printed zeros in the cents column of the Form 1120-SN or schedules. Round any
amount from 50 cents to 99 cents to the next higher dollar. Round any amount less than 50 cents
to the next lower dollar.
Penalties and Interest. Either or both may be imposed under the following conditions:
											u	Failing to file a return and pay the tax due on or before the due date;
											u	Failing to pay the tax due on or before the due date;
											u	Failing to file an amended Nebraska income tax return to report changes made to your
federal return;
											u	Preparing or filing a fraudulent income tax return; or
											u	Understating income on an income tax return.
Filing a false or fraudulent Nebraska return is subject to penalty, even if the amounts reported are
taken from your federal return. Unpaid tax is subject to interest at the statutory rate of 8% from
the original due date to the date the tax is paid. See the DOR Interest Rate Assessed on State Taxes
Revenue Ruling for applicable interest rates.
Reporting Changes or Corrections. If information on a Nebraska S corporation return previously
filed is incorrect, an Amended Nebraska S Corporation Income Tax Return, Form 1120-XSN
must be filed. A Form 1120-XSN cannot be e-filed. When filing an amended return, remember:
											u Changes made by the IRS or another state must be reported to DOR within 60 days;
											u Please be sure to use the correct form for the tax year you are amending;
											u You must attach a copy of the related federal or other state amended return and all related
schedules or other documentation to explain the changes shown on the amended Nebraska
return; and
											 u When an amended return reflects a reduction in tax due because Nebraska source income
for its nonresident individual shareholders is reduced, the S corporation will not receive
a refund. Individual shareholders may file a claim for refund resulting from the reduced
Nebraska source income.	
Nebraska Extension of Time. An extension to file may only be obtained by:
											u	Attaching a copy of a timely-filed Application for Automatic Extension of Time to File
Certain Business Income Tax, Information, and Other Returns, Federal Form 7004, to the
Nebraska return when filed;
											u Attaching a schedule to the Nebraska return listing the federal confirmation number and
providing an explanation that the electronic request for automatic federal extension was not
denied; or
											u Filing a Application for Extension of Time to File Nebraska Corporation, Fiduciary, or
Partnership Return, Form 7004N, on or before the due date of the return, when you need
to make a tentative Nebraska payment or when a federal extension is not being requested.
When a federal extension of time has been granted, and additional time is necessary to file
the Nebraska return, the Nebraska Form 7004N must be filed on or before the date the federal
extension expires. Remember to attach proof of the federal extension to the Form 7004N.
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Failure to attach the applicable extension document may result in a late filing penalty. An extension
of time only extends the date to file the return. It does not extend the due date to pay the tax.
Any tax not paid by the original due date is subject to interest. By timely requesting an extension
of time to file your federal return using the Federal Form 7004, you are granted an automatic
Nebraska extension for the same number of months granted by the IRS. When a federal extension
of time has been granted and additional time is necessary to file the Nebraska return, the Nebraska
Form 7004N must be filed on or before the date the federal extension expires. An extension of
time cannot exceed a total of seven months after the original due date of the return.
Accounting Methods. The accounting method used for federal income tax purposes must be used
for Nebraska income tax purposes. A taxpayer may not change the accounting method used to
report income in prior years unless the change is approved by the IRS. A copy of this approval
must accompany the first return that shows the change in the method of accounting.
Federal Return. A copy of the federal return and supporting schedules, as filed with the IRS,
must be attached to this return.
Estimated Income Tax Payments. Estimated income tax payments must be made by every S
corporation that elected to be subject to Nebraska income tax, if the Nebraska income tax liability
can reasonably be expected to exceed allowable credits by $400 or more. The requirement to make
estimated payments applies to tax years beginning on and after January 1, 2024. For additional
information see the 2026 Nebraska Corporation Estimated Income Tax Payment Voucher Booklet.
Underpayment of Estimated Income Tax Penalty. An S corporation may owe a penalty if the
amount of tax due, after allowable credits, is $400 or more.
If the amount of tax due is $400 or more, the corporation must complete an Underpayment of
Estimated Tax for Corporations, S corporations, or Partnerships, Form 2220N, to calculate any
applicable penalty.
Notification of Scam Text Messages. The Nebraska Department of Revenue (DOR) has been
notified of scam text messages being sent asking individuals to click a link to receive their refund.
While the cited Nebraska Revised Statute adds validity to the message, the embedded link will
direct the taxpayer to a bogus site to enter their personal and/or banking information.
This scam has been reported in other parts of the country. The DOR will never send a text to ask
for personal tax return information.
If you receive a text message of this kind, DO NOT REPLY and please delete it.
If you have questions on the status of your State of Nebraska tax refund, please go to: 			
https://revenue.nebraska.gov/individuals/refund-information.
As scammers develop more sophisticated schemes, staying informed is your best defense. The
Nebraska Attorney General’s Office offers free resources to help consumers recognize and avoid
scams. Visit ProtectTheGoodLife.Nebraska.gov.

Nonresident
Shareholders

S corporations that did not elect to be subject to Nebraska income tax for 2025, must remit Nebraska
income tax withholding for each nonresident individual shareholder who does not complete a
Nebraska Nonresident Income Tax Agreement, Form 12N. For the purposes of Form 12N and the
income tax withholding requirements, an individual includes a nonresident grantor of a grantor trust.
Nonresident shareholders who sign the Form 12N agree to file a Nebraska income tax return and
pay all taxes due directly to DOR. This relieves the S corporation from the obligation to remit
income tax withholding on the shareholder’s behalf. All signed and completed Forms 12N must
be attached to the Form 1120-SN.
If a Form 12N is not signed and completed for a nonresident individual shareholder, the amount
to be paid is 5.20% of the nonresident shareholder’s share of S corporation taxable income from
Nebraska sources.
The S corporation reports the amount of income tax remitted on behalf of each nonresident
shareholder on the Nebraska Shareholder’s Share of Nebraska Income, Deductions, Modifications,
and Credits – Schedule K-1N. Attach each Nebraska Schedule K-1N to the S corporation return. Do
not remit income tax for corporations, estates, or trusts (except grantor trusts) that are shareholders.
Nebraska law does not require payment of income tax by an S corporation on behalf of these
entities. Instead, these entities are required to file a Nebraska return.
A nonresident individual shareholder may claim the amount of income tax remitted by the
S corporation as a credit against his or her Nebraska income tax liability by attaching a copy of
the Nebraska Schedule K-1N to the Nebraska Individual Income Tax Return, Form 1040N.

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Nonresident individual shareholders do not have to file a Nebraska individual income tax
return if:
											 u	Their only connection with the state is conducting business activities of the S corporation; and
	

1. The S corporation has remitted income tax from all the Nebraska income attributable 		
to the nonresident’s share of the S corporation’s income; or
2. The S corporation remitted the pass-through entity tax (PTET) and the credit for the 	
nonresident individual shareholder’s share of the PTET remitted would fully satisfytheir
Nebraska income tax liability.

In lieu of filing a Nebraska Individual Income Tax Return, a nonresident shareholder may elect
to allow the full amount of income tax withholding or the refundable PTET credit to be retained
by the state. Any nonresident may still file a Form 1040N, and claim a refund if one is due. A
nonresident shareholder is not relieved of its responsibility to file a Form 1040N if the S corporation
has not remitted income tax withholding or PTET attributable to the nonresident’s share of the S
corporation’s income.
No Composite Filing. DOR does not allow filing “composite” income tax returns. S corporations
with nonresident shareholders must either:
											u	Obtain a signed and completed Form 12N from the nonresident individual shareholder;	
											u Remit Nebraska income tax withholding on the nonresident shareholder’s share of Nebraska
income with Form 1120‑SN; or
											u Make the PTET election and remit the PTET due.
Nonresident Shareholder – No Income Tax Withholding Requirement. The S corporation is
not required to remit income tax for any nonresident individual shareholder who completes and
submits a Form 12N to the S corporation, before the original filing of the Form 1120-SN. The
S corporation is also not required to remit income tax for any nonresident individual if it makes
the PTET election. For purposes of the Form 12N, an individual includes a nonresident grantor
of a grantor trust. A completed Form 12N must:
											u Include all the requested information; and
											u Be signed and dated by the shareholder or the shareholder’s authorized representative (attach
a copy of Power of Attorney, Form 33).
Any nonresident shareholder who files Form 12N must file a Form 1040N. Failing to file the
required Form 1040N may result in:
											u	
An assessment issued to the nonresident individual shareholder based on the information
available to DOR; or
											u	
The loss, by the nonresident individual shareholder, of any current year Nebraska net
operating or capital loss distributed from the S corporation. A Nebraska net operating or
capital loss carryforward will not be allowed to offset Nebraska income until the Nebraska
return for the loss year has been filed.
Shareholder’s Return. Both resident and nonresident shareholders are subject to the Nebraska
income tax on their share of the S corporation income derived from sources within Nebraska.
Reporting Nebraska Source Income to Shareholders. An S corporation must provide all
shareholders with a Nebraska Schedule K-1N. See the Nebraska Schedule K-1N instructions for
additional information.
The income, loss, and deduction amounts reported on the Nebraska Schedule K-1N must be
calculated in the same manner as income is distributed.
When S corporations issue a Nebraska Schedule K-1N to shareholders, they must complete
all distribution schedules such as Nebraska Employment and Investment Growth Act Credit
Computation, Form 775N, Nebraska Advantage Act Incentive Computation, Form 312N, Nebraska
Schedule PTET - Shareholders Share of Nebraska Pass-Through Entity Tax, Form 1120-SN, and
ImagiNE Nebraska Act Incentive Computation, Form 1107N, in addition to reporting the distributed
credits to the shareholders in Part C of the Schedule K-1N.

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Income Tax Withholding on Contractors. Construction contractors are required to withhold income
tax at 5% on any payment or payments exceeding $600 made to their construction subcontractors
that are not registered on the Nebraska Department of Labor's Contractor Registration Database. An
S corporation, against whom the contractor income tax withholding was applied, must distribute
the amount withheld to its shareholders if it does not make the PTET election. The total amount of
income tax withheld from the S corporation must be distributed in the same manner as income. An
S corporation that made the PTET election, may claim a credit for the withholding. For additional
information see “Construction Contractors” section.
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Credits
Distributable to
Shareholders

Use

8

Community Development Assistance Act (CDAA) Credit. The Nebraska CDAA credit is
allowable for contributions to approved projects of community betterment organizations recognized
by the Nebraska Department of Economic Development (DED). Attach the 2025 Nebraska
Community Development Assistance Act Credit Computation, Form CDN to the Form 1120SN. Each shareholder is allowed a share of the credit calculated by using the same method used
to report income received from the S corporation. S corporations do not need to attach a copy
of the Form 1099NTC. DOR will receive the Form 1099NTC information directly from DED.
An S corporation that made the PTET election cannot use this credit to offset its PTET liability.
More detailed information on this credit can be obtained by contacting:
Nebraska Department of Economic Development
245 Fallbrook Blvd, Suite 002
Lincoln, NE 68521-4666
opportunity.nebraska.gov
Beginning Farmer Credit. This credit is available to owners of agricultural assets, when the
agricultural assets are rented to qualifying beginning farmers or livestock producers. Each
shareholder eligible for the credit will receive a copy of the Statement of Nebraska Tax Credit,
Form 1099 BFC, from the Nebraska Department of Agriculture. Each shareholder is allowed a
share of the credit calculated by using the same method used to report income received from the
S corporation. The Form 1099 BFC does not need to be filed with the shareholder’s individual
income tax return. S corporations do not need to attach a copy of the Form 1099 BFC. DOR will
receive the Form 1099 BFC information directly from the Nebraska Department of Agriculture.
School Readiness Tax Credit for providers. The credit may only be claimed after the application
has been approved in writing by DOR. S corporations retaining the tax credit will enter the
certificate number and the credit amount from your approved Form SR-3604 on the Form 1120SN. S corporations distributing the tax credit, will include the certificate number and the credit
amount on the Schedule K-1N. Attach a copy of the Schedule K-1N for each shareholder receiving
a portion of the tax credit. The total amount distributed by the S corporation must be distributed
in the same proportion as ordinary income.
Opportunity Scholarships Act Credit for contributors. Enter the carryforward credit not
used on the 2024 Form 1120-SN. An S corporation may only claim a credit on the portion of the
contribution that was not deducted as a charitable contribution on its federal return. The total amount
distributed by the S corporation must be distributed in the same proportion as the granting of the
tax credit for the contributions was limited to 2024 tax year. The unused tax credits granted in
2024 may be carried forward five years from the year granted. Taxpayers must use the carryover
credit in the earliest taxable year possible.
Creating High Impact Economic Futures (CHIEF) credit. This nonrefundable credit is allowable
for contributions to community betterment organization programs or projects certified for tax credit
status by the Nebraska Department of Economic Development. The credit must be claimed on
the tax return for the year in which the contribution was made. The granting of the tax credit for
the contributions was limited to the 2025 tax year. The unused tax credits granted in 2025 may be
carried forward five years from the year granted. Attach Form 1879NTC.
For more details regarding this credit, contact:
Nebraska Department of Economic Development
245 Fallbrook Blvd, Suite 002
Lincoln, NE 68521-4666
opportunity.nebraska.gov

Form 3800N Credits. Nebraska provides several tax incentive credits that may be earned by
entities conducting business in this state.
S corporations must file tax incentive credit distribution forms including Forms 775N, 312N, 1107N,
544N, and 3800N Worksheet HBTC before credits can be allowed to individual shareholders.
Attach a distribution schedule for Form 775N, Schedule II, Form 312N, Schedule II, Form 1107N,
Form 544N, or 3800N Worksheet HBTC (that lists each shareholder, the shareholder’s tax ID
number, the income percentage, and each shareholder’s distributed credits). The total amount
distributed by the S corporation must be distributed in the same proportion as ordinary income.
Tax							An S corporation may be subject to use tax. An S corporation owes use tax when the proper sales
tax has not been paid on purchases delivered into Nebraska. This often occurs when purchases are
made from out-of-state, mail order, or Internet sellers. Use tax is also due when items purchased
for resale are withdrawn from inventory for business or personal use.

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Example 1.
The S corporation purchased a computer from a seller in South Dakota over the Internet for
$1,570 plus $30 shipping and handling charges. Both charges are taxable. The computer is
shipped to the S corporation in Scottsbluff, Nebraska and no tax is charged or collected by
the seller. The state tax is $88 ($1,600 X 5.5%) and the local tax is $24 ($1,600 X 1.5%).
The total use tax owed is $112 ($88 + $24 = $112).
Example 2.
A repair shop in Scottsbluff, Nebraska provides motor vehicle repair service. The repair shop
also owns a tow truck used for towing customer motor vehicles needing repair. The shop
purchases oil and oil filters, tax exempt, for resale using the Nebraska Resale or Exempt Sale
Certificate, Form 13. When oil and oil filters are removed from sales tax-exempt inventory
and used to change the oil in the business-owned tow truck, state and local use tax is due
on the cost of the oil and oil filters.
For additional information, see the Nebraska Use Tax Information Guide.

Purpose of Form 		 The Nebraska S Corporation Income Tax Return, Form 1120-SN, is not simply an informational return.
The Form 1120-SN and schedules are necessary to:

											u	
Calculate the income, deductions, and credits that will be passed through to the shareholders;
	 u	Calculate and pay income tax on behalf of nonresident individual shareholders;
											u	Report any applicable PTET for tax years 2018 through 2022, and 2025. For additional
information see instructions for line 18, Form 1120-SN; and
											u	
Report and pay any recapture of incentive credits. This includes the economic
development distribution schedules such as Forms 775N, 312N, 1107N, and 544N.

Who Must File?
The Nebraska S Corporation Income Tax Return, Form 1120-SN, must be filed by every
S corporation, as defined by Internal Revenue Code (IRC) § 1361, with income from Nebraska
sources. Form 1120-SN must also be filed by every S corporation that will distribute Nebraska
incentive credits to its shareholders.
Financial institutions maintaining a permanent place of business in this state, actively soliciting
deposits from residents of this state and organized as a S corporation must file a Nebraska Financial
Institution Tax Return, Form 1120NF and a Nebraska S Corporation Income Tax Return, Form
1120-SN.
Qualified Subchapter S Subsidiaries. Any subsidiary of an S corporation that is treated as a
Qualified Subchapter S Subsidiary (QSSS) for federal income tax purposes will be treated in the
same manner for Nebraska income tax purposes. All of the assets, liabilities, and items of income,
deductions, and credits of the QSSS will be considered to be those of its parent.

When and Where to File?
This return must be filed on or before the 15th day of the third month following the close of the
taxable year. For information on e-filing the return, see the Nebraska Handbook for e-file Providers
of Income Tax Returns, Publication 1345N-MeF.
Electronically file or mail the Form 1120-SN to:
	 Nebraska Department of Revenue
	 PO Box 94818
	 Lincoln, NE 68509-4818

How to Complete Form 1120-SN
Tax Period. A 2025 Form 1120-SN must be used to file for the calendar year 2025, or a fiscal year
beginning in 2025. Space is provided at the top of the return to enter the beginning and ending
dates for short-period or fiscal-year filers. The taxable year for Nebraska must be the same as the
taxable year used for the federal income tax return.
If the S corporation changes its federal taxable year, it must also change its Nebraska taxable
year. A copy of the approval from the IRS to change accounting periods must accompany the
first return that shows the change.
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Business Classification Code. Enter the six-digit code that best describes the S corporation’s
principal business activity in Nebraska. Carefully review the business classification codes before
you select one.
Principal Business Activity in Nebraska. Enter the principal business activity of the S corporation
from the Business Classification Code listing.
Federal ID Number. Enter the Federal ID number assigned to the S corporation by the IRS.
Nebraska ID Number. Enter the Nebraska ID number assigned to the S corporation by DOR.
S corporations that do not have a Nebraska state ID for S corporation income tax should e-file
using their Nebraska income tax withholding or sales and use tax number. The prefix is the
tax category and should not be included as part of the Nebraska ID number when entered. For
example, do not include the 21 or 01 prefix as part of the Nebraska ID number. S corporations
that do not have an existing Nebraska state ID number should use the online Register a Business
application to obtain a Nebraska ID number.
Foreign Adversarial Company. A foreign adversarial company is ineligible to receive incentive
benefits. Credits distributed from a foreign adversarial company are ineligible for tax credit
benefits. Failing to answer will result in denial or delay in processing the credits claimed. If you
answer yes, see Foreign Adversarial Company Notice for additional information regarding the
benefits and credits impacted.
Final Return. Check the “Final Return” box at the top of the return if the S corporation ceased
to exist during the 2025 tax year.
PTET Election. Check box 5 if the S corporation is electing or previously elected to be subject
to income tax for the 2025 tax year. The election for 2025 must be made on or before the due
date of the return including any approved extension.
Distributed Form 3800N Credit. Check the “Distributed Form 3800N Credit” box if the
S  corporation is distributing Form 3800N tax credits in this tax year. Include a distribution
schedule in addition to recording the amount of the distributed credit on the Schedule K-1N.

Line 1								 Ordinary Business Income. Enter the ordinary business income or loss as shown on line 22 of
Federal Form 1120-S.

Line 2								Nebraska Adjustments Increasing Ordinary Business Income. Enter the amount from line 12
of Nebraska Schedule A. See the Schedule A instructions for additional information.

Line 3		 						Nebraska Adjustments Decreasing Ordinary Business Income. Enter the amount from line 23

of Nebraska Schedule A. The following examples are items that are not allowable adjustments
decreasing federal ordinary business income:
											u	The wage expense disallowed by the work opportunity tax credit;
											u	Federal income taxes or other federal taxes paid;
											u	The depreciation disallowed by the investment credit or other federally-required basis reduction;
											u	Income earned in another state. Instead, Nebraska Schedule I, Apportionment for Multistate
Business, must be completed; and
											u	Income from a partnership. For additional information, see Business Entity Regulation
24‑315, Sales Factor; Business Entities As Owners in a Partnership or Joint Venture.
											u	Any food donation that was deducted as a charitable contribution on the taxpayer’s federal
return and that was also used to calculate the Nebraska Food Bank, Food Pantry, Food
Rescue Donation Tax Credit on the Nebraska return must be added back as an increase to
the federal taxable income.
										 See the Nebraska Schedule A instructions for additional information. 	

Line 4								Nebraska Adjusted Income. If the S corporation does not have adjustments to ordinary business

income, enter the line 1 amount on line 4. If the S corporation has adjustments to ordinary business
income, line 4 equals line 1 plus line 2 minus line 3.

Line 5								Income Reported to Nebraska. If all of the income earned by the S corporation is derived from

Nebraska sources, enter the line 4 amount on line 5. If the S corporation earned income from
both within and without Nebraska, enter the amount from line 3 of Nebraska Schedule I. See the
Nebraska Schedule I instructions for additional information.

Line 6								Electing Pass-Through Entity Tax (PTET) for Tax Year 2025. If the S corporation elected to
be subject to Nebraska income tax for the 2025 tax year, enter the result of line 5 multiplied by
5.20%. If the partnership did not elect to be subject to Nebraska income tax for the 2025 tax year,
skip lines 6 through 17.

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Line 7								Premium Tax Credit. Enter the total amount of premium taxes paid (not accrued) by the S
corporation in this taxable year. These taxes include:

	 u	Premium taxes paid to the Nebraska Department of Insurance (NDOI) under
Neb. Rev. Stat. §§ 77-908 and 81-523; and
	 u	Assessments paid to the NDOI for the Comprehensive Health Insurance Pool that are
allowed as an offset against any related premium and related retaliatory tax liability
under Neb. Rev. Stat. § 44-4233.
Premium taxes do not include amounts shown on the NDOI annual tax return as fees or the
Workers’ Compensation Court cash fund tax.
	 Example 3.
An insurance company made the following 2025 estimated premium tax payments and
payments with its 2024 and 2025 NDOI returns.

	 Tax	
	 Year	

Payment	
Type	

Payment	
Date	

Payment	
Amount	

	2024	

Payment with return	

March 1, 2025	

$3,000	

	Less: Fees included on the 2024 return	

2025 Premium
Tax Credit

100	

$ 2,900

	2025	

Estimated	

April 15, 2025	

4,000	

4,000

	2025	

Estimated	

June 15, 2025	

4,000	

4,000

	2025	

Estimated	

Sept. 15, 2025	

4,000	

4,000

	2025	

Payment with return	

March 1, 2026	

4,000	

0

	Total				

$14,900

In this example, the insurance company will enter $14,900 on line 7 as a credit for premium
taxes paid.

Line

A corporation claiming this credit must attach a copy of the NDOI annual tax return related
to any payment claimed as a credit for premium taxes paid. A schedule listing the date and
amount of payment and the payee must also be attached.
8								Employer’s Credit for Expenses Incurred for TANF (ADC) Recipients. Enter the total credit
from line 2, Form TANF.

Line 9								Form 3800N Nonrefundable Credit. Enter the total nonrefundable credits reported on Nebraska

Incentives Credit Computation, Form 3800N. Attach a copy of Form 3800N and any supporting
schedules.

Line 10							NE Employer Tax Credit for Employing Convicted Felons. Enter the certified credit amount

and the certificate number from the Nebraska Employer Tax Credit Application for Employing
Convicted Felons, Form ETC-A.

Line 11 							School Readiness Tax Credit for providers. For S Corporations retaining the tax credit, enter

the certificate number and the credit amount from your approved Form SR-3604. The approved
credit may be distributed by completing the Form 1120-SN, Schedule K-1N for each shareholder
with the certificate number and amount of the distributed credit. If the tax credit was received
by a distributing entity, enter the certificate number and credit amount from the Schedule K-1N.
Attach the Schedule K-1N from the distributing entity. For more information about this credit, go
to School Readiness Tax Credit Act.

Line 12 							Opportunity Scholarships Act Credit for contributors. Enter the carryforward credit not used

on the 2024 Form 1120-SN. The granting of the tax credit for the contributions was limited to
2024 tax year. The unused tax credits granted in 2024 may be carried forward five years from the
year granted. Taxpayers must use the carryover credit in the earliest taxable year possible.

Line 13 							Child Care Tax Credit for contributors. Enter the approved child care tax credit amount and

certificate number from Form CCTC-A. An S corporation may only claim a credit on the portion
of the contribution that was not deducted as a charitable contribution on its federal return. The
taxpayer may carry forward the excess credit for up to five taxable years after the taxable year in
which the credit first was allowed. Taxpayers must use the carryover credit in the earliest taxable
year possible.

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Line 14							Creating High Impact Economic Futures (CHIEF) credit. This nonrefundable credit is allowable
for contributions to community betterment organization programs or projects certified for tax credit
status by the Nebraska Department of Economic Development. The credit must be claimed on
the tax return for the year in which the contribution was made. The granting of the tax credit for
the contributions was limited to the 2025 tax year. The unused tax credits granted in 2025 may be
carried forward five years from the year granted. Attach Form 1879NTC.

Line 15							Pregnancy Help Act Credit for contributors. Enter the lesser of the amount of contributions
made to an approved Pregnancy Help Organization and verified by DOR or 50% of the income
tax liability (line 6, Form 1120-SN). Any unused credit may be carried forward for the next five
years after the credit was first allowed. The tax credit cannot be carried back. A taxpayer may only
claim a credit on the portion of the contribution that was not claimed as a charitable contribution
on their federal return.

Line 18							PTET for Tax Years 2018 Through 2022. If the S corporation elected to be subject to Nebraska

income tax for any tax year from 2018 through 2022, enter the PTET the S corporation will
distribute to its shareholders for the 2025 tax year. The PTET credit will not be allowed to the
shareholders until the S corporation pays the amount reported on line 18.

Line 19							Income Reported to Nebraska Subject to Withholding. Enter the amount from the column (F),
Nebraska Schedule II total.

Line 20	 						Nebraska Income Tax Withholding for Nonresident Individual Shareholders. Enter the
amount from the column (G), Nebraska Schedule II total.

Line 22		 					Form 3800N Refundable Credit and Recapture. Enter the net amount of any refundable credits
and any recapture of credits reported on the Nebraska Incentives Credit Computation, Form 3800N.
If the recapture is larger than the credits, enter as a negative number.

Line 23		 					Tax Deposited with Form 7004N and 2025 Estimated Income Tax Payments. Add the total
amount paid as estimated payments and any amount paid with the Nebraska extension request,
Form 7004N. Enter the total on line 23.

Line 24	 						Beginning Farmer Credit. Enter the amount of Beginning Farmer credit from the Statement of
Nebraska Tax Credit, Form 1099BFC that is not distributed to the shareholders. The Beginning
Farmer credit is available to owners of agricultural assets, when the agricultural assets are rented
to qualifying beginning farmers or livestock producers. Any claimant eligible for the credit will
receive a copy of the Statement of Nebraska Tax Credit, Form 1099BFC, from the Nebraska
Department of Agriculture. S corporations do not need to attach a copy of the Form 1099BFC.
DOR will receive the Form 1099BFC information directly from the Nebraska Department of
Agriculture.

										 For more details regarding this credit, contact:
	
	
	
	
	

Nebraska Department of Agriculture
PO Box 94947
Lincoln, NE 68509-4947
402-471-4876
nextgen.nebraska.gov

Line 25	 						Nebraska Income Tax Withheld. If the S corporation elected to be subject to tax for the 2025

tax year, enter the amount of Nebraska withholding from Form 1099-MISC or Form 1099-NEC.
Construction contractors are required to withhold 5% of any payment or payments exceeding
$600 made to construction subcontractors that are not registered in the Nebraska Department of
Labor’s Contractor Registration Database.

Line 26	 						Credit for Community College Property Taxes. To claim the credit, taxpayers must complete

and submit a Nebraska Property Tax Credit, Form PTC. Enter the amount from line 1 of Form
PTC and attach Form PTC.
										 S Corporations that claimed the amount from line 1 of Form PTC on line 21 of Form 1120NF,
enter zero. Financial institutions that elected to be treated as S corporations may claim the credit
on either Form 1120-SN or Form 1120NF, but not both.
Line 27	 						PTET Credit Received From an Electing Partnership. If you are not distributing the PTET
credits received from a partnership, enter the total amount of PTET credit received from electing
partnerships on line 27 and complete lines 27a, 27b, 27c, 27d, and 27e; and attach the Schedules
K-1N. If PTET credits were received from more than one partnership, attach a schedule in the
same format as lines 27a, 27b, and 27c, 27d, and 27e. Financial institutions that elected to be
12

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treated as S corporations may claim the credit on either Form 1120-SN or Form 1120NF, but not
on both. If the PTET credits received from partnerships will be distributed to your shareholders
do not include that amount here, instead include that amount in the shareholders Schedule K-1N
and add the distributed credit to the Schedule PTET.

Line 29	 						Tax Due. If line 21 minus line 28 is greater than zero, enter the result on line 29.
Line 30	 						Penalty for Underpayment of Estimated Income Tax. Use the Underpayment of Estimated Tax

for Corporations, S corporations, and Partnerships, Form 2220N, to determine if the corporation
owes this penalty. A Form 2220N must be completed if the Nebraska tax less allowable credits
is greater than $400. If the corporation is required to complete Form 2220N, enter the amount of
penalty from line 20, Form 2220N.
Line 31							 Amount Due. There is an amount due when line 28 is less than the total of lines 21 and 30.
										 Mandates of Electronic Payment. Some entities are required to make their payments (tax, penalty,
and interest) electronically. All electronic payment and credit card options satisfy the mandate
requirement. All entities are encouraged to make their payments electronically.

Electronic Payment Options
Electronic Funds Withdrawal (EFW). With this payment option, you provide your payment
information within your electronically-filed return. Your payment will automatically be
withdrawn from your bank account on the date you specify.
Nebraska e-pay. Nebraska e-pay is DOR’s web-based electronic payment system. You enter
your payment and bank account information, and choose a date (up to a year in advance)
to have your account debited. You will receive an email confirmation for each payment
scheduled.
ACH Credit. You (or your bank) create an electronic file in the appropriate ACH file
format. It is submitted to the Federal Reserve and instructs your bank to “credit” the state’s
bank account.
Nebraska Tele-pay. Nebraska Tele-pay is DOR’s phone-based electronic payment system.
Call 800-232-0057, enter your payment and bank account information, and choose a date
(up to a year in advance) to have your account debited. You will receive a confirmation
number at the end of your call.
Credit Card. Secure credit card payments can be initiated through ACI Payments, Inc. at
acipayonline.com or via phone at 800-272-9829. Eligible credit cards include American
Express, Discover, MasterCard, and VISA. A convenience fee is charged to the card you
use. This fee is paid to the credit card vendor, not the state, and will appear on your credit
card statement separately from the tax payment. At the end of your transaction, you will be
given a confirmation number. Keep this number for your records. [If you are making your
credit card payment by phone, you will need to provide the Nebraska Jurisdiction Code,
which is 3700.]
Cancel a payment. To cancel a scheduled EFW payment, contact our Taxpayer Assistance
office at 800-742-7474 or 402-471-5729 before 4:00 pm Central Time two business days prior
to your scheduled payment date. You may cancel a payment scheduled through Nebraska
e-pay by logging into the e-pay program from our website and selecting “cancel payment.”
To cancel a credit card payment, contact ACI Payments, Inc.
Check or Money Order. If you are not using one of the electronic payment options described
above, include a check or money order payable to the “Nebraska Department of Revenue.” Checks
written to DOR may be presented for payment electronically.

Line 32	 						Overpayment. If line 28 minus lines 21 and 30 is less than zero, enter the result on line 32.
Line 33 							Amount Credited to 2026 Estimated Income Tax. Enter the amount of overpayment shown on
line 32 that you want credited as a tax year 2026 estimated payment for the S corporation.

Line 34 							Overpayment to be Refunded. Enter the amount of overpayment shown on line 32 that you

want refunded. The overpayment to be refunded is calculated by subtracting line 33 from line 32.
DOR recommends having any refund on line 34 directly deposited into the S corporation’s bank
account. See line 35 instructions below.

Line 35 							Direct Deposit. To deposit the refund directly into the S corporation’s checking or savings account,
enter the routing number and account number found on the bottom of the checks used with the
account. The routing number is listed first and must be nine digits. The account number is listed
to the right of the routing number and can be up to 17 digits. Enter these numbers in the boxes
found on lines 35a and 35c, and complete line 35b, Type of Account.

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13

										 The box on line 35d must be checked if the refund will go to a bank outside the United States.
This is necessary to comply with banking rules regarding International ACH Transactions (IATs).
These refunds cannot be processed as direct deposits and instead will be mailed.

Signature 						 Sign and Date the Tax Return. This return must be signed by a corporate officer. Include a

daytime phone number and an email address in case DOR needs to contact you.
										Email. By entering an email address, the taxpayer acknowledges that DOR may contact the
taxpayer by email. The taxpayer accepts any risk to confidentiality associated with this method
of communication. DOR will send all confidential information by secure email or the State of
Nebraska’s file share system. If you do not wish to be contacted by email, write “Opt Out” on the
line labeled “email address.”
If a corporate officer authorizes another person to sign the return, there must be a Power of Attorney,
Form 33, on file with DOR or attached to the return.
The act of e-filing a return is your signature. By e-filing the return, taxpayers and their preparers, if
applicable, are declaring under penalties of perjury, that they have examined the electronic return,
and to the best of their knowledge and belief, it is true, correct, and complete.
Paid Preparer’s Use Only. Any person who is paid for preparing a taxpayer’s return must sign
the return as preparer. Additionally, the preparer must enter their Preparer Tax ID Number (PTIN),
their firm’s name, and Federal Employer ID Number (EIN).

Nebraska Schedule A Instructions
Adjustments to Ordinary Business Income
Purpose. The Nebraska Schedule A is used to adjust the S corporation’s ordinary business income
for items of income and deduction that are required under federal or Nebraska law to be reported to
the shareholders separately. The ordinary business income, plus or minus these adjustments, will
estimate the income that was distributed to the shareholders, and become part of the shareholders’
federal adjusted gross income. These adjustments to ordinary business income are necessary to
calculate any required PTET for the 2025 tax year or income tax withholding on Nebraska Schedule
II – Shareholder’s Share of Nebraska Income.

Adjustments Increasing Ordinary Business Income
Lines 1-8						 The amounts on each of these lines come directly from Federal Form 1120-S, Schedule K.
Line 9								State and Local Government Interest and Dividend Income. Enter all state and local bond

interest or dividends that are exempt from federal income tax and not issued by Nebraska state
and local government subdivisions.

Line 10							Other Income. Enter any other additions to income for the S corporation that are includible in the

shareholders’ federal income, but are not reflected in lines 1 through 9. List the type of adjustment
on line 10a, Schedule A, and the associated amount on line 10b. Attach a schedule if needed. Any
food donation that was deducted as a charitable contribution on the S corporation’s federal return
and that was also used to calculate the Nebraska Food Bank, Food Pantry, Food Rescue Donation
Tax Credit on the Nebraska return must be added back as an increase to the federal taxable income.

Line 11							Nebraska and Local Income, Sales, and Use Taxes Deducted on Federal Form 1120-S Under
Section 164 of the IRC. The amount entered includes any Nebraska PTET deducted on the S
corporation’s 2025 Federal Form 1120-S.

Line 12							Total Adjustments Increasing Ordinary Business Income. Enter the total of lines 1 through
11 here and on line 2 of Form 1120-SN.

Adjustments Decreasing Ordinary Business Income
Line 13							Qualified U.S. Government Interest Deduction. Enter the amount of interest and dividend

income from U.S. government obligations exempt from state taxation.
										The Taxability of Interest and Dividend Income From State, Local, and U.S. Government
Obligations Information Guide, lists U.S. interest and dividend income that can be included
on line 13, Nebraska Schedule A. Interest income from repurchase agreements involving U.S.
government obligations is not deductible as U.S. government interest.
										 Gains or losses from the sale or other disposition of federal securities are taxable for state income
tax purposes and should not be included on line 13.
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Lines 14-21 					 The amounts on each of these lines come directly from Federal Form 1120-S, Schedule K.
Line 22 							Other Deductions. Enter any other deductions to income for the S corporation that are deductible
in the shareholders’ federal income, but are not reflected in lines 13 through 21 above. List the
type of adjustment on line 22a, Nebraska Schedule A, and the associated amount on line 22b.
Attach a schedule if needed.

Line 23 							Total Adjustments Decreasing Ordinary Business Income. Enter the total of lines 13 through
22 here and on line 3 of Form 1120-SN.

Nebraska Schedule I Instructions
Apportionment for Multistate Business
Purpose. The Nebraska Schedule I is used to determine the amount of Nebraska source income
(Form 1120-SN, line 5, Income Reported to Nebraska) received by an S corporation deriving income
from both within and without Nebraska.
Nebraska source income is determined by apportioning the S corporation income using a single,
sales-only factor. Apportionment refers to the division of income between states by the use of a
formula containing one or more apportionment factors.
Sales Factor. The sales factor is a fraction. The numerator is the total sales of the S corporation in
Nebraska during the taxable year. The denominator is the total sales of the S corporation everywhere
during the taxable year. Total sales includes gross sales of real and tangible personal property less
returns and allowances, and all other items of gross receipts, except income for the discharge of
indebtedness, amounts received from hedging transactions involving intangible assets, and net gains
from marketable securities held for investment. The sales factor on this schedule is rounded to six
decimal places. It is entered as a percentage.
For tax years beginning January 1, 2014 or after, a corporation may no longer use the costs of
performance method of apportioning sales other than sales of tangible personal property except for
a corporation operating as a communications company. For additional information, see the Nebraska
Apportionment Factor – Sales or Gross Receipts section.
An S corporation using an alternative method of apportionment must attach a copy of the Tax
Commissioner’s prior written approval of the alternative method. The alternative apportionment
factor computation must be included. Enter the factor on line 2, Nebraska Schedule I.
Note: Approval of an alternative method of apportionment is rare.
If the S corporation is a partner in a partnership or joint venture, see Business Entity Regulation 24315, Sales Factor; Business Entities As Owners in a Partnership or Joint Venture.
If an S corporation is a member of a unitary group which includes a C corporation, the apportionment
factor for the S corporation will be the apportionment factor as determined for the unitary group.
This factor will be applied to the income of the S corporation. Separate returns must be filed for the
S corporation and the C corporation.
An S corporation that operates a trucking business and has income from both within and without
this state, must compute its sales factor in accordance with Business Income Tax Regulation 24‑343,
Special Apportionment Rules; All Tax Years; Trucking Companies.
The method of computing the sales factor must be consistent with prior tax years and with the S
corporation’s filings in other states. If the S corporation modifies the basis for including or excluding
gross receipts in the sales factor used in returns for prior years, the 2025 return must disclose the
nature and extent of the modification.
If the S corporation files returns with other states that are not uniform in the inclusion or exclusion of
gross receipts, the Form 1120-SN filed with DOR must disclose the nature and extent of the variance.

Computation of Nebraska Source Income —
You must complete lines 4-15 prior to completing lines 1-3.
Line 1								 Nebraska Adjusted Income. Enter the amount from line 4 of Form 1120-SN.
Line 2								Nebraska Apportionment Factor. Enter the amount from line 15, Nebraska Schedule I,
Form 1120‑SN.

Line 3								 Income Apportioned to Nebraska. Enter the result of line 1 multiplied by line 2. Also enter this
amount on line 5, Form 1120-SN.

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Nebraska Apportionment Factor - Sales or Gross Receipts
Nebraska sales include all items of income received by the S corporation from Nebraska sources.
The following types of sales are from Nebraska sources:
	 u Sales of tangible personal property delivered in Nebraska;
	 u	
Sales of tangible personal property shipped from Nebraska to the U.S. government;
											 u	
Gross receipts from the interest or service charges arising from the sale of tangible personal
property if the sale of the property is attributed to Nebraska;
											 u Sales of other than tangible personal property —
	 	 	 	 	 	 	 	 	 	 	 	 P 	To the extent a service relates to real or tangible personal property located in Nebraska;
	 	 	 	 	 	 	 	 	 	 	 	 P 	To the extent a service relates to part of the buyer’s trade or business operated in Nebraska;
	 	 	 	 	 	 	 	 	 	 	 	 P	
A service provided to an individual present in Nebraska at the time the service is received;
	 	 	 	 	 	 	 	 	 	 	 	 P	
To the extent an application service is used in Nebraska;
	 	 	 	 	 	 	 	 	 	 	 	 P 	To the extent intangible property is used in Nebraska;
	 	 	 	 	 	 	 	 	 	 	 	 P 	To the extent an intangible asset used in a treasury function is managed in Nebraska;
	 	 	 	 	 	 	 	 	 	 	 	 P 	To the extent a loan is secured by real or tangible personal property located in Nebraska;
	 	 	 	 	 	 	 	 	 	 	 	 P 	To the extent a loan is not secured by real or tangible personal property, if the borrower
is in this state. The location is presumed to be the borrower’s billing address;
	 	 	 	 	 	 	 	 	 	 	 	 P 	Fees, charges, and net gains from credit card receivables, if the credit card holder’s billing
address is in Nebraska;
	 	 	 	 	 	 	 	 	 	 	 	 P	 Gross receipts from selling, renting, licensing, or leasing o