K1 Box 16D

[jlacrimosa]

My K1 box 16 D has a number in it that should be ordinary income and i already filed my corporate taxes what do i di?

[MaryK4]

If you did not include the income from the Schedule K-1, you will have to amend you tax return.. See How to amend (change or correct) a return.

If your basis did not reduce below zero you do not have to report as income.

Line 16D - Property Distributions - This amount represents the property that was distributed to the taxpayer by the corporation. These distributions will reduce the basis in the taxpayer's stock in the corporation. If these distributions exceed the basis of the taxpayer's stock, the excess is treated as capital gain from the sale or exchange of property and is reported on Form 8949 and Schedule D (Form 1040).

[jlacrimosa]

I think I did it wrong in turbo tax.  We took cash not property that should have been on the k 1 box 1.  We filed our corporate taxes already but not personal.  For our personal taxes can we just add the box 1 and box 16 together on it as ordinary income as we would normally do if it was all in box 1 or do we have to file an amended corporate return to fix the k-1's?

[gloriah5200]

It sounds like your k-1s were issued correctly and you need to be sure to reduce your basis in the s corporation by the cash/property distributions taken.

Box 16D of the Form 1120S Schedule K-1 is the box where you would report cash or property distributions taken from the s corporation.  They are both treated the same way.

The way the K-1 works is this:

You must claim the income earned during the year in box 1 as taxable income on your 1040.  Then, if you take cash or property distributions from the s corporation, then you  must reduce your basis by those.

S corporations do not generally use Form 1099-DIV to report dividends (cash or property distributions to shareholders) because they would report them on the Sch K-1 box 16D.

Here is the instructions from IRS Instructions for Sch K-1 box 16D (Form 1120S):

Code D. Distributions. Reduce the basis of your stock (as explained earlier) by distributions, not reported on Form 1099-DIV, of property or money. This amount will include any amounts included in income with respect to new clean renewable energy, qualified energy conservation, qualified school construction, build America, or (for bonds issued after October 3, 2008) qualified zone academy bonds. If these distributions exceed the basis of your stock, the excess is treated as capital gain from the sale or exchange of property and is reported on Form 8949 and Schedule D (Form 1040).

[jlacrimosa]

Sorry, I am still a little confused.  Every other year, the amount listed as distributions to shareholders on the corporate return was split evenly and included as income on our k-1's between the shareholders as box 1 ordinary income and we personally paid taxes on those amounts.   This year turbo tax included the distributions as an offset against income and is not considering them in the income of the corporation or as cash distributions.  So for example instead of personally owing taxes for $80,000 in payments I received, turbo tax is saying I only owe taxes on 5,000 in income.  This doesn't seem right?  

[DaveF1006]

If you contributed to the corporation, the amount you contributed is your basis in the corporation. If you still have basis, then those distributions reduce your basis but this is not taxable income unless your basis is reduced to zero.  Any distributions after that will be taxable income. Ordinary income should not have distributions included unless you have no basis left in the corporation.

You might review your entries in Turbo Tax to see if they match, especially in the section that you report your equity in the business if you feel that your distributions are reported incorrectly.

[tangoT]

The amount in the k1 Box 16D , is this supposed to be in cash & to be received by the stock holder ? 

[AliciaP1]

Distributions to shareholders are described by the IRS:

Line 16d. Distributions

Enter the total distributions (including cash) made to each shareholder other than dividends reported on line 17c of Schedule K. Include the shareholder's pro rata share of any amounts included in interest income with respect to new clean renewable energy, qualified energy conservation, qualified zone academy (for bonds issued after October 3, 2008), qualified school construction, or build America bonds. Distributions of appreciated property are valued at fair market value. If property other than cash was distributed, attach a statement to provide the following information.

The date the property was acquired.

The date the property was distributed.

The property's FMV on the date of distribution.

The corporation's basis in the property.

@tangoT 

[tangoT]

What will I do if I did not receive the amount stated in box16D? 

[BrittanyS]

If you believe the K-1 is incorrect you will need to contact the issue to discuss how the figure listed in line 16D was determined.  The issuer would be able to give an accurate reflection of the figure listed on the form.  If it is determined that the form is incorrect a corrected K-1 will need to be issued.  Do not enter the K-1 with different figures without having the K-1 corrected first.  

@tangoT