TurboTax Business Interview does NOT ask about Capital Contributions made by shareholders

Forum|Forum|5 years ago
March 25, 2021
3 replies
11 views

I have now completed an S-CORP tax return in TurboTax Business (i.e., the desktop software program), for tax years 2015, 2016 & 2017. Throughout this process, I have discovered that the software program DOES NOT ASK ABOUT, nor does it keep track of any Capital Contributions (i.e., increases, Paid-In-Capital) made by shareholders during the tax year as it should. By not asking about the Capital Contributions, the Stock and Loan Basis Information Worksheet is INCORRECT which in turn, makes the Shareholders' Basis Statement AND the Shareholders' Basis Report INVALID.

Now I am beginning to wonder if I made the correct choice in using TurboTax Business software to complete these S-Corporation tax returns...

If anyone out there has used TurboTax Business software to prepare your 1120 or 1120S tax return, I highly recommend that you recheck the shareholder basis that you have reported to the IRS as it may be incorrect, necessitating the need to amend your tax returns.

RESOLUTION

To resolve the issue above, it will be necessary for you to switch to Forms mode and manually enter the amount of Capital Contributions made by each shareholder on the Stock and Loan Basis Information Worksheet for each shareholder individually. This will automatically update the rest of the forms and the shareholder basis reported to the federal government (after you amend). 😲

TurboTax Business Windows

Anonymous_

Level 15

TurboTax Business contains four modules; 1120, 1120-S, 1065, and 1041.

As a result, the program is jam-packed with code and many operations are not included in the Step-by-Step process and, instead, have to be entered in Forms Mode.

Most professional tax preparation software is similarly forms-driven which requires familiarity with the entire income tax preparation process for a particular type of entity.

Regardless, thank you for pointing out entries for which users need Forms Mode.

starting2makecentsAuthor

Level 2

@Anonymous_, Thanks however, no one EXCEPT for Intuit/TurboTax Business should be responsible for pointing out entries for which users need to use Forms Mode. The shareholder section should make the user aware of the necessity when entering the other shareholder related information such as Shareholder Distributions AND Loan Repayments; both of which are clearly and correctly asked about during the interview. At minimum, there should be a link to the local help file which provides the necessary instructions to the user regarding Capital Contributions entry in Forms Mode.

Anonymous_

Level 15

@starting2makecents

I do not disagree, but then you must realize that the information to which you refer is not required of all users (see requirements for completing Schedule L).

Further, individual shareholders should be keeping track of their contributions and any other items that affect their bases outside of TurboTax.

Jeffreystone1411

Level 2

I’ve come across this exact issue which is why I now get to spend my night filing amendments, it’s ridiculous that it was not apart of the step-by-step process nor noted in any way. And this guy arguing otherwise annoys me deeply. Get it together TurboTax.

Anonymous_

Level 15

My argument is, essentially, based upon a comparison to other DIY business income tax preparation products and the primary component is simply that if users can find a better, more comprehensive DIY program, they should buy it.

StoneswoodElite

Level 2

To All Concerned:

I am a Franchisee for 7-Eleven and am working to self-perform my tax preparation. The resolution previously posted was extremely helpful to record the "Paid-in capital" contributions made toward the 7-Eleven Open Account. I wanted to provide further detail below on the specific areas updated for any other 7-Eleven Franchisee that might be working to self-perform their tax preparation and made "Paid-in-capital" contributions:

1. Following the previous post, the "Paid-in capital" contribution will need to entered manually. Access the manual entry mode by going to the path BUSINESS INFO > Shareholder Information > Shareholder Stock and Debt Basis Limitations. After this, click on "Forms" in the upper right-hand corner.

2. Enter your "Paid-in capital" contribution in the following path - Business Info > Shareholder Information > Shareholder Stock and Debt Basis Limitations > Forms > Sh Basis Wks > S Corporation Shareholder Stock and Debt Basis Limitations Worksheet > Line 2 "Basis from any capital contributions made or additional stock acquired during the tax year"

3. Either enter in or verify the number from step 2 in the following path - Business Info > Shareholder Information > Shareholder Stock and Debt Basis Limitations > Forms > Form 1120S p3-5 > Form 1120S p3-5 > Schedule K Shareholders' Pro Rata Share Item > Line 10 Other income (loss)

4. Either enter in or verify the number from step 2 in the following path - Business Info > Shareholder Information > Shareholder Stock and Debt Basis Limitations > Forms > Form 1120S p3-5 > Schedule K Shareholders' Pro Rata Share Items (continued) > Line 17a Investment income

5. Confirm that the Open Account was adjusted per your "Paid-in capital" contribution by comparing the previous year and current year data as follows - Business Info > Shareholder Information > Shareholder Stock and Debt Basis Limitations > Forms > Form 1120S p3-5 > Schedule L Balance Sheet per Books > Line 20 Mortgages, notes, bonds payable in 1 year or more (Open Account)

6. Either enter in or verify the number from step 2 in the following path - Business Info > Shareholder Information > Shareholder Stock and Debt Basis Limitations > Forms > Form 1120S p3-5 > Schedule M-2 Smart Worksheet > Line 3 Other additions: Other portfolio income (loss)