Retained Earnings

Forum|Forum|5 years ago
March 12, 2021
6 replies
64 views

We dissolved our small LLC in December 2020. I am filing our final return. In order to zero out the balance sheet I offset the negative Retained Earnings balance through Shareholder distributions. The review is telling me that I have an error because the shareholder distribution can't be negative. What should I do to zero a negative Retained Earnings balance?

Best answer by Rick19744

You should not have any adjustments running through that account.

Distributions should always be reflected as actual.

To zero it out, you should run the adjustment through the partner's capital; Schedule K-1 box L other increase / decrease.

Rick19744

Answer

Level 13

You should not have any adjustments running through that account.

Distributions should always be reflected as actual.

To zero it out, you should run the adjustment through the partner's capital; Schedule K-1 box L other increase / decrease.

*A reminder that posts in a forum such as this do not constitute tax advice.Also keep in mind the date of replies, as tax law changes.

jmorgan45Author

Level 2

Thank you for your response. I'm actually working in Turbo Tax Business. I think I indicated in my original question that I was working in Turbo Tax Deluxe. I apologize for that misinformation.

After reading your response and looking through Turbo Tax, I'm still not sure exactly how I should handle this in Turbo Tax. Do I override it on the K-1 and Balance Sheet or am I missing where to enter it on the step by step guide so it will automatically calculate it? Thanks!

byrnt

Level 2

I'm having the same issue - I can't see where TT Business is coming up with a negative Retained Earnings when I have "taxable income" on 1120 pg 2, although it does appear the balance sheet compels one to underreport deductions in order to get it to balance. If I put in the full amount of my deductions, it's "out of balance" by over $120k. I spent about 7 hours yesterday trying to track it down and/or get real answers. I also have the same issue you do in which there was a reply from Support that did not provide an answer, yet no replies to my followup with more details to clarify the issue to the Support person who responded.