Question on distribution on schedule k-1

Forum|Forum|4 years ago
January 26, 2022
2 replies
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Hello.

I have some questions where to put in the distribution (should be non-taxable based on my understanding)

- Using turbotax Business to file tax for our SCorp.

- this is a Single person SCorp.

- The total business income for the year is about 186k.

- Expenses / deduction is about 56k

- Reasonable Salary is at 54k

- Payment to contract $1400

On the K-1 , Box 1 shows $75k as Ordinary Business Income (Loss). Why is it a "Loss"?

On THe K-1, QBI pass through entity reporting. W-2 wages shows 54k. So i thought I am suppose to take this K-1 and only report the 54k from W2 - does it mean i have to claim K-1 into my personal tax return which will have an additional 75K as income?

I thought there is a place where the 75k will be shown as a Distribution to shareholders and it should be non-taxable.

Another question is, my balance sheet is out of balance by 5k or so according to TurboTax. This is the first time i am doing this myself, so i want to ask do i have to absolutely make it $0 balanced or risk getting auditing? Looking at my last year's return prepared by an accountant - i think it was also out of balance by likely around 30-40k by my manual calculation.

thanks

Thanks.

TurboTax Business Windows

Anonymous_

Level 15

@yekasi wrote:
Another question is, my balance sheet is out of balance by 5k or so according to TurboTax. This is the first time i am doing this myself, so i want to ask do i have to absolutely make it $0 balanced or risk getting auditing?

It is almost impossible to rectify an out of balance scenario with scant details.

However, you might want to consider whether you even need to complete the balance sheet section.

See https://www.irs.gov/instructions/i1120s#en_US_2021_publink11515kd0e6836

Read Line 11 of Schedule B:

https://www.irs.gov/pub/irs-pdf/f1120s.pdf

Critter-3

Level 15

Being out of balance with the book numbers sounds like a bookkeeping issue that needs to be resolved usually with a journal entry and a return adjustment.

And if you are having trouble doing the return yourself then go back to the accountant and ask lots of questions so you get educated on what needs to be done and how.

Anonymous_

Level 15

@yekasi wrote:
On the K-1 , Box 1 shows $75k as Ordinary Business Income (Loss). Why is it a "Loss"?

Why do you believe you have a loss? From the figures you posted you have around $75,000 in net income.

@yekasi wrote:
On THe K-1, QBI pass through entity reporting. W-2 wages shows 54k. So i thought I am suppose to take this K-1 and only report the 54k from W2

If the income qualifies for the QBI deduction, your K-1 will have a "V" code on Line 17 of your K-1 and a statement (Statement A) will be generated with the amount to report on your 1040.

@yekasi wrote:
I thought there is a place where the 75k will be shown as a Distribution to shareholders and it should be non-taxable.

In TurboTax Business, you will have to make a distribution in order for it to appear on your K-1. The figure will appear on Line 16 of your K-1.

yekasiAuthor

Level 4

@Anonymous_

I know i have a 75k in net income for the business, but because the K-1 box 1 says, "Ordinary Business Income (Loss)" and not "Ordinary Business Income (Profit)". So i am assuming that it is a marked as a "loss" and I want to understand why.

I have a V code in Line 17 - which shows a QBI worksheet of "Ordinary Business Income (Loss) of 76k and a W-2 Wages of 54k.... and other deductions. So this 54k is what I take to 1040 to report as income, and *NOT* box 1 in K-1?

>> In TurboTax Business, you will have to make a distribution in order for it to appear on your K-1. The figure will appear on Line 16 of your K-1.

Where do i put this "Distribution" in turbotax business? I did not see anywhere that it asked me "If there is any distribution to shareholders".