Distributions to Shareholders

[Barry_Mohn]

I have a follow up question.  There's also a spot to enter Dividend Distributions to Shareholders under the balance sheet.  Do you enter the same number as the Business Info section?  Seems strange to enter it twice. 

Thanks

[DavidD66]

No, you do not enter it again as Dividend Distributions to Shareholders.

[sjlocke]

Based on this advice (enter cash distributions in shareholder info, enter $0 in balance sheet question) and now using that Schedule K information (line 16 Items affecting shareholder basis - D $amount) on my TT personal taxes, TT is telling me:

"Based on your inputs, you have one of the following conditions that require Form 7203 (S Corporation Basis)

-received a non-dividend distribution from an S Corporation

Fill in the information on the Form 7203 below about your S Corporation basis"

And Form 7203, line C "Stock Block" in highlighted in blue.

WTH do I put here?  Like the OP, I have an LLC, file as an S-corp and take cash distributions.

Thx

[PatriciaV]

Form 7203 is used to track your cost basis in your LLC (S-Corp). The "Stock Block" line is used to identify each batch of stock reported on Form 7203. The description is not important to the IRS, so use something that is useful to you - number of shares, date of purchase, etc. 

In most cases, you would either be the Original Shareholder or purchased your stock ownership. Stock Basis at the beginning of the year would be the total amount of contributions (investments) you made to the company in prior years.

For additional info, see TurboTax FAQ When should I file Form 7203?.

[sjlocke]

I don't have or track any "stock".  But it sounds like it doesn't matter what I put there, so ....

[Rick19744]

While you may have organized as a state level LLC, you apparently made an election to be taxed as an S corporation.  As a result, you need to track your basis.

While you may not have any stock, since you organized as an LLC, you have units.  So in your case, your "stock" is a unit.  The end result is the same; tracking your basis; regardless of units or stock.

[sjlocke]

Anyone want to share what they actually ended up doing here?  What does it matter if you -do- put the same amount in both areas?

My business supports itself.  What "basis" am I supposed to put?

[Mike9241]

Schedule K item 17c -dividend distribution to shareholders. this is when the corporation was once a C Corporation that had accumulated earnings and profits. A distribution of these profits is a taxable dividend to the s/h and may even be a qualifying dividend eligible for special tax treatment at the s/h level.  Also, if such dividends are paid a 1099-DIV must be issued to the shareholder. 

[sjlocke]

Yeah, that doesn't sound like it has anything to do with the issue at question.

[RobertB4444]

The basis in your S-Corp is based on your investment into it.  

In the first year of operation you maybe put in some money to help pay bills as you got started.  That's your initial investment.

Then each year your basis goes up with the amount that the business makes as a profit and down by the amount that you take out in cash.

So, if you take out the exact amount of the profit each year and never made an initial investment then your basis is zero.  

@sjlocke