My partnership had some retained earnings when it elected s-corp. From my understanding, s-corp starts with a clean balance sheet, so retained earnings should be zero. And the RE from the partnership goes to the "capital stock".
Is this understanding correct? If so, how do I instruct TurboTax to do this? Thanks!
That depends on whether your state has a minimum capital stock requirement. If this was an LLC that elected partnership then S-Corp status since an LLC has no stock that equity balance would more properly be recorded as additional paid-in capital. its treated the same as capital stock for tax purposes
From what I understand you can not convert a 1065 to an 1120S in Turbotax. You have to start from scratch
The link says "transfer all of its assets and liabilities to the corporation in exchange for the corporation’s stock", which seems to confirm my understanding. However, it's still not clear how to do this in TurboTax. It still keeps the previous retained earnings on the balance sheet and carries it over to the s-corp side. Any idea how to tell it to move to stock instead? Thank you.
Just to be clear, your partnership did not have retained earnings reflected on a balance sheet.
What your balance sheet reflected was partner capital.
That depends on whether your state has a minimum capital stock requirement. If this was an LLC that elected partnership then S-Corp status since an LLC has no stock that equity balance would more properly be recorded as additional paid-in capital. its treated the same as capital stock for tax purposes
From what I understand you can not convert a 1065 to an 1120S in Turbotax. You have to start from scratch