Where Does Other Income Go on a Business Tax Return?
Other income is line 10 on Form 1120, line 5 on Form 1120-S and line 7 on Form 1065, and all three require a supporting statement. It is for trade or business income that has no line of its own, which means several things clients put there actually belong on Schedule K or nowhere at all.
| Trial balance account | Where it goes on the return | Watch for |
|---|---|---|
| Miscellaneous business income | 1120 line 10, 1120-S line 5, 1065 line 7 | Attach a statement |
| Interest income | Schedule K on a pass through, 1120 line 5 | Not other income |
| Gain on sale of equipment | Form 4797, then 1120 line 9, 1120-S line 4, 1065 line 6 | Not other income |
| Loan proceeds | Nowhere. A liability | Never income |
| Capital contributions | Equity on Schedule L | Never income |
| Employee retention or other credits | Often other income, with an M-1 effect | Tax item, not book income |
| Insurance proceeds | Depends what was insured | May be Form 4797 |
One account at a time works until there are 200 of them.
Try it freeWhere Does Other Income Go on a Business Tax Return? on a trial balance
| Acct # | Account | Debit | Credit |
|---|---|---|---|
| 1000 | Cash | 42,800.00 | |
| 1200 | Accounts receivable | 68,500.00 | |
| 1300 | Inventory | 55,000.00 | |
| 1500 | Equipment | 145,000.00 | |
| 1510 | Accumulated depreciation | 47,500.00 | |
| 2000 | Accounts payable | 28,400.00 | |
| 2100 | Accrued expenses | 9,200.00 | |
| 2400 | Notes payable | 92,000.00 | |
| 2450 | Due to shareholder | 15,000.00 | |
| 3000 | Common stock | 10,000.00 | |
| 3900 | Retained earnings | 86,300.00 | |
| 3950 | Shareholder distributions | 52,000.00 | |
| 4000 | Gross receipts | 612,000.00 | |
| 5000 | Cost of goods sold | 318,000.00 | |
| 6000 | Salaries and wages | 88,000.00 | |
| 6050 | Officer compensation | 72,000.00 | |
| 6300 | Depreciation expense | 21,500.00 | |
| 6900 | Other operating expenses (the account this page is about) | 37,600.00 | |
| Total | 900,400.00 | 900,400.00 |
Example journal entries
| Account | Debit | Credit |
|---|---|---|
| Cash | 20,000.00 | |
| Notes payable | 20,000.00 |
A different line on each form
Other income is line 10 on Form 1120, line 5 on Form 1120-S and line 7 on Form 1065. All three need a statement listing what is in it, which is the point: the line exists for trade or business income with no line of its own, not as a place to put anything that did not fit.
What usually should not be there
Interest income. On a pass through it is a separately stated item that leaves page 1 for Schedule K, and on Form 1120 it has its own line 5. Dropping it into other income overstates ordinary business income and, on an 1120-S or 1065, misstates every K-1.
Gains on asset sales. These run through Form 4797 and arrive at line 9 of the 1120, line 4 of the 1120-S or line 6 of the 1065.
Loan proceeds. Not income at all. Cash and debt both go up and the income statement sees nothing. This is the one that overstates taxable income rather than understating it, so clients rarely catch it.
Capital contributions. Equity. An owner wiring money in during a slow quarter is not revenue, and an undescribed deposit coded by a bank rule is the usual way it becomes revenue.
What legitimately belongs
Scrap sales, vendor rebates, settlements from a business dispute, forfeited customer deposits, and credits that the law requires to be included in income.
That last category matters on the reconciliation: certain credits require the credit amount to be included in other income, which is a tax item and not part of book income, so it produces a Schedule M-1 difference by design.
Why reviewers look here first
A large other income figure with a thin statement is one of the easier things to question on a business return, because the line is by definition unexplained until the statement explains it.
The useful discipline is to make the statement specific enough that nobody has to ask: amounts by description, with anything unusual named rather than grouped as miscellaneous.
Tax return treatment
| Form | Line |
|---|---|
| Form 1120 | Page 1 line 10, other income, with a statement |
| Form 1120S | Page 1 line 5, other income, with a statement |
| Form 1065 | Page 1 line 7, other income, with a statement |
Common questions
What line is other income on each business return?
Line 10 on Form 1120, line 5 on Form 1120-S and line 7 on Form 1065. All three require a supporting statement listing what the figure consists of.
Are loan proceeds reported as other income?
No. Borrowing increases cash and debt by the same amount and never touches the income statement. Recording proceeds as income overstates taxable income, which is why it often goes unnoticed.
Should interest income go in other income?
No. Form 1120 has its own interest line, line 5. On an 1120-S or 1065 interest is separately stated and leaves page 1 for Schedule K, so putting it in other income overstates ordinary business income and misstates the K-1s.
Where does a gain on selling equipment go?
Through Form 4797, Part II, line 17, which carries to line 9 of Form 1120, line 4 of Form 1120-S or line 6 of Form 1065. It is not other income.
Related answers
Go deeper
This page is the short answer. These articles work through the same ground in detail.
Last reviewed October 18, 2026.