Retained Earnings

[jmorgan45]

We dissolved our small LLC in December 2020.  I am filing our final return.  In order to zero out the balance sheet I offset the negative Retained Earnings balance through Shareholder distributions.  The review is telling me that I have an error because the shareholder distribution can't be negative.  What should I do to zero a negative Retained Earnings balance?

[Rick19744 · Accepted solution]

You should not have any adjustments running through that account.

Distributions should always be reflected as actual.

To zero it out, you should run the adjustment through the partner's capital; Schedule K-1 box L other increase / decrease.

[jmorgan45]

Thank you for your response.  I'm actually working in Turbo Tax Business.  I think I indicated in my original question that I was working in Turbo Tax Deluxe.  I apologize for that misinformation.

After reading your response and looking through Turbo Tax, I'm still not sure exactly how I should handle this in Turbo Tax.  Do I override it on the K-1 and Balance Sheet or am I missing where to enter it on the step by step guide so it will automatically calculate it?  Thanks!

[byrnt]

I'm having the same issue - I can't see where TT Business is coming up with a negative Retained Earnings when I have "taxable income" on 1120 pg 2, although it does appear the balance sheet compels one to underreport deductions in order to get it to balance. If I put in the full amount of my deductions, it's "out of balance" by over $120k. I spent about 7 hours yesterday trying to track it down and/or get real answers. I also have the same issue you do in which there was a reply from Support that did not provide an answer, yet no replies to my followup with more details to clarify the issue to the Support person who responded. 

[Anonymous_]

Many of us on this board (called "Champs") are simply volunteers and not compensated "Support" personnel.

Regardless, it must be understood that troubleshooting balance sheet issues is rather difficult in this format (i.e., on a Q&A-type forum), particularly without sufficient details which, in some cases, would involve posting the entire balance sheet and other relevant figures.

[byrnt]

thanks, tagteam! I sincerely appreciate your voluntary time and certainly didn't mean to imply otherwise. Always good to know if a question can't be answered with the info supplied. I will try again by creating a post with a screen shot of the issue. 

[Anonymous_]

@byrnt 

That might help but you should start a new thread for the screenshot and issue.